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Strengthening Bangladesh-India economic collaboration

Enamul Hafiz Latifee and Md Sajib Hossain | August 19, 2019 00:00:00

Given the fast pace of their economic growth, India and Bangladesh have a number of common issues that are potentially capable of reinforcing the growth momentum of both countries. India is now the 7th largest and one of the fastest growing economies in the world with a current GDP (gross domestic product) size of US$ 2,972 billion (FY 2018-19). On the other side, Bangladesh has demonstrated impressive economic performance over the last decade marking annual average GDP growth rate of 6.76 per cent and now the country is moving towards 8.0 per cent-plus growth. The sustained growth momentum has accelerated the economic journey of Bangladesh. It is poised to become a developing country by the year 2024 and hopes to become a developed country by the year 2041.

NEED FOR FORGING GREATER COLLABORATION: Empirical researches show that long-term economic growth among close neighbours is in most cases mutually reinforcing. Hence, Bangladesh and India should forge greater economic collaboration reducing the impediments that stand in the way of unhindered flow of bilateral trade, commerce and investment.

Source: Calculated and compiled from the sources of Bangladesh Bureau of Statistics (BBS), Export Promotion Bureau (EPB), Bangladesh Bank (BB), International Monetary Fund (IMF), Ministry of Statistics and Programme Implementation- India, and Department for Promotion of Industry and Internal Trade (DPIIT) India.

INDO-BANGLA TRADE GROWING STRONGER: The bilateral trade between India and Bangladesh has witnessed unprecedented heights over the last few years. At the end of FY 2018-19, bilateral trade amounted to US$ 10.46 billion. The top 10 items imported from India during the time included raw cotton; petroleum oils and bituminous minerals; electrical energy; yarn; motor cycle and engines; semi- and wholly-milled rice; vehicles and engines; chassis; fresh and chilled onions. On the other hand, the main products Bangladesh exported to India during the time included: men's cotton trousers, shirts, vegetable fats and fractions, unbleached woven fabrics of jute, soya-bean oil, women's cotton trousers, palm oil, knitted T-shirts, single yarn of jute, rags and ropes.

To keep up this pace, it has to be realised first that Bangladesh and India both have big domestic markets for agro and consumer goods as the population size of Bangladesh is 160.7 million and India is 1.36 billion. It should be noted that sourcing intermediary manufactured products from competitive neighbouring countries always means cost-cut in the transportations and logistics that result from importing those items from faraway sources.


Development of land ports with sufficient infrastructure is of paramount importance to expand bilateral trade between the two countries. According to Bangladesh Land Port Authority (BLPA), 23 Land Customs Stations have so far been declared as Land Ports. Of the declared land ports, namely Benapole, Bhomra, Burimari, Akhaura, Nakugaon and Tamabil are being operated by own management of BLPA. On the other hand, Sonamosjid, Hili, Teknaf, Bibirbazar and Banglabandha Land Ports are being operated by private port operators on BOT (Build, Operate and Transfer) basis. A private port operator has also been appointed to develop and operate Birol Land Port. The development of the remaining 11 land ports (Darshana, Belonia, Gobrakura-Koroitoli, Ramgarh, Sonahat, Chilahati, Tegamukh, Daulatganj, Sheola, Dhanua Kamalpur, Balla) is under process.

For smooth flow of export-import activities and boosting bilateral trade in a cost-effective manner, there is an urgency of speeding up sufficient infrastructural development both in the existing ports and the proposed ports, jointly by India and Bangladesh. Such development includes building of required number of warehouses, transshipment yards and shades, standby power generators, installing CCTV surveillance for security and wireless high-speed internet zone for automating total customs procedures. Most importantly, India and Bangladesh should establish single-point of customs inspection and clearance system at every land port rather than practising the existing two-point inspection system separately in India and Bangladesh. This will decrease the time by half accelerating the movement of trucks loaded with consignments.

EMBRACING REGIONAL VALUE CHAIN: Due to the new trade equation of the United States of America with China and India, and frequently fluctuating diplomatic relationship between India and China, it is pertinent for India to embrace the concept of regional value chain (RVC) to sustain economic growth. India could easily enter into RVC and lead the process that will create the production and work-sharing network in readymade garments (RMG), leather goods, light engineering, information technology (IT) and IT-enabled services (ITES) -- especially the business process and management outsourcing, agro-processing with Bangladesh, going beyond the arrangement of South Asian Free Trade Area (SAFTA). This arrangement may be extended to cover Nepal, Bhutan and Sri Lanka.

However, for building a vibrant RVC, India will require to improve its cross-border infrastructure, remove tariff and non-tariff barriers, speed up harmonisation of regulations and technical standards by recognising the existing standards and tests conducted by the designated counterparts in Bangladesh, which, in turn, could make trade between the two countries more vibrant.

ENHANCING TRADE THROUGH BORDER HAATS: With the visit of Prime Minister Sheikh Hasina to New Delhi on January 10-13,2010, it was decided by both the countries to establish "border haat" aiming at the promoting well-being of the people dwelling in remote areas across the borders of the two countries. In an attempt to increase more bilateral trade, initiatives need to be taken on the part of both countries by setting up more and more border haats at potential connecting points and increasing the number of days in a week for arranging haats. In border haats, there is a huge demand for Indian products by Bangladeshi consumers including chocolates, saris cosmetics, sandals, betel nuts, and baby food that are available at a cheaper rate, whilst Bangladeshi vendors sell a few products like dry fish, sweet water raw fish, plastics and basic readymade garments.

To boost trade at the border haats, consumer's preference survey should be conducted jointly by India and Bangladesh at regular intervals, and disseminate that information to the local micro-entrepreneurs. Both parties should pursue "Entrepreneurship Skills" training programmes targeting the local villagers, especially the women and making them aware of quality improvement of their products.

India-Bangladesh synergy will hopefully reach a new height with the next visit of PM Sheikh Hasina to India in October 2019 - the first one during PM Modi's second term.

Enamul Hafiz Latifee is Deputy Secretary, Dhaka Chamber of Commerce and Industry (DCCI).

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Md. Sajib Hossain is Senior Assistant Secretary,Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

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Views expressed are of the writers and not the organisations they represent.

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