Home ›› 05 Sep 2022 ›› Editorial
There is no denying that the relation between India and Bangladesh at this moment is enjoying what in diplomatic terms is called an ‘entente cordiale’. This bonhomie is manifested in all sectors with state to state improvement of relations along with an astronomical rise in trade. As per TBP, in the last decade, Bangladesh-India bilateral trade has expanded threefold to almost reach the $16 billion milestone. Both export to and import from India has increased. While this is certainly a sign of robust relations, the trade deficit has also gone up significantly.
As per data from the Bangladesh Bank (BB) and the Export Promotion Bureau (EPB), Bangladesh and India recorded $5.3 billion in bilateral trade in FY 2012-13. In the last FY 2021-22, it reached $15.93 billion. There has been a 200 per cent expansion in bilateral trade between the two countries.
According to BB and EPB data, the trade deficit between Bangladesh and India was $4.18 billion in FY 2012-13. It had gone up to $11.95 billion by FY 2021-22. Experts contend that India is the main source of raw materials for the Bangladesh industrial sector and since these are used to manufacture products which enrich the export basket, the issue about trade deficit is peripheral.
Bangladesh’s export income from India has increased by 253 per cent in the last decade. Bangladesh’s export earnings were $534 million in FY 2012-13, which went up to nearly $2 billion in the last FY.
In FY 2018-19, Bangladesh reached the milestone of $1 billion in export earnings for the first time. Exports in that financial year were $1.25 billion. After just four years, in the last FY, this amount has reached $1.99 billion.
The main export item from Bangladesh to India is ready made garments with the earning for last fiscal standing at $ 715 million.
Bangladesh can reduce the trade deficit if India allows jute products; however, India’s anti-dumping duty creates the main obstacle.
India imposed the anti-dumping duty on Bangladesh’s jute yarn, hessian items and bags, ranging between $19 and $352 per tonne, in January 2017, resulting in further widening of the trade gap between the two neighbours. Naturally, Indian government has the right to protect its own industry and the anti-dumping duty is usually imposed to save local manufacturers. But India has to take into account that when the relation with Bangladesh is at its apex, a few gestures of magnanimity can only strengthen the bond.
In addition, Bangladesh should be allowed to open up a special economic zone or a trade center in at least three major Indian cities to promote items made in Bangladesh, ranging from plastic products, to car batteries to electronic products.
Another effort may be to open up car manufacturing plants of premium marques in Bangladesh which are now exclusively based in India. Manufacturing done through joint collaboration will be beneficial for both nations. One other aspect which has never been given much importance is the usage of natural sites in Bangladesh for the filming of Indian movies. Apart from Bollywood, India has several other film industries which can consider Bangladesh as a destination for making films at a lower cost.
It’s certainly heartening to see the warm relations between the two nations; this current mood of trust and camaraderie can be solidified with some collaborative moves dictated by a spirit of brotherhood and not merely by profit. Hopefully, during the PM’s visit to India, there will be fruitful talks about scrapping anti-dumping tariff for jute made items plus the establishment of joint ventures which will bring prosperity, employment and progress for both nations.
