IndiaBangladesh

By:-Manoj Kumar Singh

[email protected]

Fortune Institute of International Business, New Delhi

India-Bangladesh Trade Relations

Introduction

Both India and Bangladesh are two major countries of the SAARC.

High-level exchanges, visits and meetings take place regularly alongside the wide-ranging people-to-people interaction.

India’s land border with Bangladesh – nearly 4096 km – is the longest that India has with any of its neighbours.

Historical Background“Treaty of Friendship, Cooperation, and Peace”

on 19th March 1972 in Dhaka for 25 Years.

First one year trade agreement on 28th March 1972.

In October 1972, the first trade agreement was further extended up to 27th September 1973.

On 5th July 1973, the first trade agreement was replaced by another trade agreement for three years. This agreement became effective from 28th September 1973.

Cont…………….On 12th January 1976, both countries signed a

trade protocol for higher volume of trade. This was further extended for another three years till 27th September 1979 on 5th October 1976.

On 4th October 1980, third trade agreement was signed.

On 8th November 1983, Protocol on trade of 1980 was renewed for further three years.

In May 1986, the agreement was further extended till October 1989. Subsequently this agreement was renewed a number of times and was valid up to 31st March 2009.

Export to BangladeshYear Export to

BangladeshTotal Export % Share

2004 – 2005 732887.78 37533953.56 1.9526

2005 – 2006 736872.20 45641786.98 1.6145

2006 – 2007 736596.95 57177926.53 1.2883

2007 – 2008 1174321.29 65586352.04 1.7905

2008 – 2009 (Till Dec. 2009)

893747.31 58656738.94 1.5237

Source : Ministry of Commerce, GOI

The major items exported were cereals, dairy products, oils meals, cotton yarn, fabrics, made ups, primary and semi finished iron and steel, pulses transport equipments drugs pharmaceuticals, etc.

Values in Rs. Lacs

Import from BangladeshYear Import from

BangladeshTotal Import % Share

2004 – 2005 26676.51 50106455.82 0.0532

2005 – 2006 56240.09 66040889.34 0.0852

2006 – 2007 103390.56 84050633.03 0.1230

2007 – 2008 103468.16 101231170.10 0.1022

2008 – 2009 (Till Dec. 2009)

117402.43 105273688.63 0.1115

Source : Ministry of Commerce, GOI

The major items imported were fertilizers, iron products, vehicles and spare parts, mineral products, textile fibres, etc.

Values in Rs. Lacs

IEAM on visit to Bangladesh

On 9th Feb 2009, the former Indian External Affairs Minister Pranab Mukherjee was on a daylong visit to Bangladesh.

Both countries inked two deals to further strengthen economic ties.

Once the agreement comes into being, both countries will be allowed to transport their goods using their water, rail and road routes for transportation of goods.

Tariff Concessions By IndiaSubstantial duty concessions have been

extended to Bangladesh.

At 14th SAARC Summit held in New Delhi in April 2007, Indian PM Manmohan Singh announced zero duty market access wef 1st January 2008 for products originating from SAARC LDCs.

India agreed to extend duty-free access to eight million pieces of readymade garments from Bangladesh every year under SAFTA.

ICC Offers SEZ to Bangladesh

On 6th April 2009 in Dhaka, a delegation of Indian Chamber of Commerce from India offered to set up a SEZ to attract investments from India.

It also assured an investment worth $5 billion.

The ICC also suggested opening of a Depty High Commision office at Guwahati or Shillong.

Mutual Investments

A large number of Indian firms from both public and private sector have been working on different turn key projects in Bangladesh.

Bilateral Investment Protection and Promotion Agreement (BIPPA) has been signed on 9th Feb. 2009.

A total 181 FDI and joint venture investment proposals from India worth over us $435 million have been registered with the Board of Investment, Govt. of Bangladesh.

CooperationEconomic – India, as always, has stood by

Bangladesh in its hour of need with aid of Taka 250 crore to help it with natural disasters and floods.

Technical – Bangladesh is an important ITEC partner country, and a number of participants from Bangladesh have availed of training courses under the ITEC program.

Energy – India is ready to pen a deal with Bangladesh to sell up to 1,000 MW of electricity.

Problems

High trade deficit of Bangladesh with India.

Illegal trade between both countries.

Infrastructure Deficiencies.

Conclusion

India and Bangladesh could still greatly benefit from cooperation in other areas, without necessarily implementing an FTA. Improvements in the transport, storage and administrative infrastructure at land borders would yield substantial benefits. Greater harmonization and cooperation in customs administration and banking relationships would also be highly beneficial.