Home ›› 12 Jan 2022 ›› Front
Bangladesh – in the first half of the current fiscal year – posted a robust growth of 62 per cent to over $1 billion in exports to India, made possible by a multi-pronged strategy to enhance bilateral trade and business partnership.
Latest data from the Export Promotion Bureau shows that Bangladesh earned $1.06 billion during the July-December period of FY2021-22, up from $655 million recorded in the previous fiscal year.
Apparel products remained Bangladesh’s top export item to the neighbouring country, followed by Jute and jute goods, vegetable fat and inorganic chemicals.
Lauding Bangladesh’s stellar performance in this sector, exporters and economists credited this achievement to the country’s gradual improvement in removing trade barriers, easing of trade facilities at the border, and cash incentives against exports based on product categories.
Jute exporters currently enjoy 20 per cent cash incentives. Meanwhile, apparel exporters get a 4 per cent incentive for India as it is a non-traditional market.
Major exports
Bangladesh earned $366 million, or 34.50 per cent of the $1 billion figure, through apparel exports to India during the July-December period of current FY. This sector also posted 58 per cent growth when compared year-on-year.
Export earnings from the home textile sector increased by 30.76 per cent to $68 million, which was $52 million. Jute and jute goods sector posted a 28.57 per cent growth to $90 million. Vegetable fat exports rose to $130 million with 41.30 per cent growth.
During this period, earnings from inorganic chemicals rose 1,050 per cent to $46 million, which was $4 million in July-December of 2020. Leather and leather goods sector earned $31 million, up by 244.44 per cent compared to $9 million in the same period last FY.
The footwear sector earned $16 million, which was $12 million in the same period last fiscal year.
Electronic products and home appliance products provided another push for the rise in exports earnings. During the July-December period, Bangladesh exported refrigerators and freezers worth around $15 million to India.
What are the growth factors?
Along with the traditional items, a few other goods such as iron, steel, glassware and cotton also contributed to Bangladesh’s excellent export performance in the first half of FY22.
Stakeholders say if the present trend continues, Bangladesh’s exports to India will cross $2 billion by the end of this fiscal year.
Speaking to The Business Post, Managing Director of Classic Fashion Concept Shahidullah Azim said, “The export process has become easier, and there is less hassle compared to the previous years.
“These improvements have made exporting goods to India smoother and less costly. We exported goods worth around $3.5 million in the first half of FY22, which was about $1.5 million annually.”
Md Khosru Chowdhury, managing director of Nipa Group and a director of the Bangladesh Garment Manufacturers and Exporters Association, said, “If the government allows exports through all land ports, we will be able to further boost this sector, and cash in on the opportunities waiting in India – which has the second largest population after China.”
The jute and jute goods sector also contributed a fair amount to the total export volume.
Esrat Jahan Chowdhury, director of Bangladesh Jute Goods Exporters Association, said, “Around 50 per cent of our earnings came from raw jute exports. If the government manages to strike a deal with the Indian government, we will be able to export three times more.”
Commenting on the progress, Distinguished Fellow at the Centre for Policy (CPD) economist Prof Mustafizur Rahman said, “Bangladesh managed to remove non-tariff barriers to some extent.
“Improvement in the broader trade facilitation and unified taxation in India also helped. We are gradually getting benefits of the zero tariff facility in the Indian market for most products. Bangladesh diversified its export items to that market, and the new products performed well.”
Zahid Hussain, former lead economist of World Bank Dhaka office, said, “Indian economic growth was better, which pushed the demands up. While a rise in raw material prices increased the rates of finished goods, which mostly reflected in the apparel goods sector.
“Bangladesh’s main obstacle against exploring the Indian market was the non-tariff barrier, which has eased to some extent, and testing quality of export goods has improved. Another reason for the export boom could be shifting export destinations such as Myanmar.”
Export Promotion Bureau’s Vice Chairman AHM Ahsan said, “It is a good sign that Bangladesh’s exports to India doubled, and topped the billion dollar mark in the first half of the current fiscal year.
“When the pandemic heavily spread in India, it disrupted their production line. During that period, we were able to supply goods to them without any interruption. It is helping us to boost exports.”
Full potential yet to be explored
Bangladesh’s exports to the neighbouring country are still far below the full potential, indicated by the fact that India imported $389 billion worth of goods from the global market in FY2020-21.
Addressing the issue, Prof Mustafizur Rahman said, “India is a big market for Bangladesh with a scope of $400 billion, but we are yet to explore this potential. It took Bangladesh 48 years to hit the $1 billion mark. Now we are going to touch $2 billion in the next three years.”
Abhisek Das, vice president of India-Bangladesh Chamber of Commerce and Industry, said the culture and tradition of Bangladesh and India are almost the same, so there is big potential for increasing bilateral trade.
“So we need to strengthen our trade relations. We were facing some trade barriers against exporting goods to India, but this issue has eased. I hope the export figure will go up soon.”
How can we sustain this growth?
Instead of becoming complacent, Bangladesh has to identify new areas of business opportunities to grow further, said Zahid Hussain, adding, “Moreover, the ongoing initiatives to improve bilateral trade should be completed without any delay.
“Land, river and air connectivity should be strengthened for improving trade and commerce. Also, joint initiatives should be taken to set a common standard for enhancing trade.”
Khondaker Golam Moazzem, research director at Centre for Policy Dialogue (CPD), said, “In FY2018-19, India became a billion dollar export market for Bangladesh. The continuous growth is a good sign.
“As a big regional market with potential, India carries a big importance for Bangladesh.”
There are however challenges in retaining the export growth and to grow further. “For growing and sustaining the growth, we should focus on product diversification and concentrate on consumer goods,” said the economist.
Bangladesh-India bilateral trade
As of FY21, Bangladesh-India bilateral trade stands at $9.87 billion. Bangladesh imported goods worth $8.59 billion in FY21 against an export of $1.28 billion. Bilateral trade is in favor of India with a gap of $7.31 billion, data from the Bangladesh Bank shows.
Cotton dominates India’s exports to Bangladesh. In 2020, India exported cotton worth $1.7 billion to Bangladesh, followed by mineral fuels, oils and distillation products of $856 million.
Bangladesh also imported different types of vehicles worth $588 million, machinery $536 million, cereals $352 million, organic chemicals $289 million, and electrical and electronic equipment $264 million.
