Home ›› 30 Aug 2022 ›› Front
With the growing demand for and popularity of Bangladeshi products, mostly consumer goods, many manufacturers and exporters are eyeing to grab the markets in India’s Seven Sisters as direct transportation through land ports has made trade with the neighbouring country easier.
In recent months, Bangladesh set up more land ports to ship goods to India, mostly to Seven Sisters. Currently, exporters can send goods through 11 land ports, up from only a few a couple of years back.
Nakugaon, Tamabil, and Gobrakura land ports connect Bangladesh with Meghalaya while Akhaura, Bibirbazar, Belonia, and Balla land ports connect the country with Tripura. Besides, Sonahat and Sheola land ports connect Bangladesh with Assam.
Apart from these, Benapole, Burimari, Bhomra, and Darshana land ports connect Bangladesh with West Bengal.
As greater connectivity opens a new window, many conglomerates and companies, including, PRAN-RFL, Meghna, Akij, and ACI, are thinking about increasing their export volumes to grab more market share in the neighbouring country.
Because it is difficult to reach this region directly from other parts of India, importers there are also choosing Bangladesh to import goods.
The Seven Sister States is a popular term for the contiguous states of Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland, and Tripura in northeast India.
Bangladesh currently exports a wide range of products, mostly consumer items, to India, such as bakery food, beverages, cosmetics, soybean oil, plastic goods, melamine items, different types of cement, rod, ceramic, flush doors, washing machines, refrigerators, heat pumps, electric water and space heaters, hairdressing apparatus, iron, tableware, kitchenware, toilet articles, soaps, pharmaceutical items, animal and vegetable fat, oil and waxes, food residues and waste, animal fodder, inorganic chemicals, and organic/inorganic metal compounds.
According to the Export Promotion Bureau (EPB), Bangladesh’s exports to India rose by 55.62 per cent to $2 billion in FY22, which was $1.27 billion in the previous fiscal year.
Of the total exports, $715 million came from apparel goods, which was $422 million in the previous year.
The demand for Bangladeshi goods has increased gradually in recent times and is likely to grow in future as bilateral trade is becoming more vibrant.
Regarding the matter, Muzibur Rahaman, general manager and head of accounts at Meghna Group, told The Business Post they exported around 1,600 tonnes of soybean oil and 60 tonnes of toast biscuits to India last year.
“We want to export more as the demand is high, but we cannot because of the rising prices of ingredients. However, a number of traders are now showing interest in energy drinks and different types of dry food,” he said.
The demand for electronics and home appliances is growing sharply in the Seven Sisters markets, and Bangladeshi manufacturers are trying to penetrate those. According to EPB data, in the last fiscal year, Bangladesh exported refrigerators and freezers worth around $27 million to India.
Md Abdur Rouf, head of sales and global business division at Walton Hi-Tech Industries, said, “We have been exporting various electronics, including refrigerators, air-conditioners, washing machines, and fans, to India. So far this year, we have exported one lakh refrigerators.”
“Till now, we could not directly export our products to the Seven Sister States. But that has changed, and we have started directly exporting our products there this month,” he added.
Major advantage
Of the seven states, Meghalaya, Tripura, Mizoram, and Assam are geographically the closest ones to Bangladesh.
Traders in Bangladesh can easily export their products through the land ports to these states in the shortest possible time. From there, the goods can be distributed to the other states without any trouble.
For example, from the Sunamganj district under Sylhet, vehicles carrying export products can reach Tripura by road, travelling around 200 kilometres, which is not that long of a distance.
At the same time, they would have to cross around 350 kilometres to go to Assam and nearly 250 kilometres to Meghalaya.
From these states, the products can be sent to the three other sister states via plane, train, or road. Products from Bangladesh can even directly be sent to Arunachal Pradesh, Manipur, and Nagaland by road, but that would take more time.
Bangladesh in general has close relations with West Bengal, Assam, Meghalaya, and Tripura in terms of language, culture and history. This has also boosted the confidence of importers and traders in these states.
Talking to The Business Post, PRAN-RFL Group Marketing Director Kamruzzaman Kamal said, “We are exporting to India confectionery items, such as chocolates, chips, and juice; bakery items like biscuits, cakes, and bread; electronics like refrigerators and fans; and various plastic and household products.”
“We have recorded nearly 20 per cent year-on-year growth and are trying to export more and more products,” he added.
Compared to the past, sending goods to India is easier as the number of land ports has increased and connectivity with the country has improved.
Chance to cut trade deficit
According to the Bangladesh Bank data, in FY21, Bangladesh imported goods worth over $8.59 billion from India while exports to the country were $1.27 billion. It means there were trade deficits of around $7.32 billion.
If Bangladesh can grab more shares in the Seven Sister States, it would help reduce that deficit.
Bangladeshi companies can play a major role in balancing the trade deficit by increasing the exports of various products to the seven states.
Both Bangladesh and Northeast India can benefit immensely through increased trade and cooperation, which will also gradually cement the proper economic growth of the two geographically contiguous parts of the sub-continent.
A business manager of ACI said they were yet to start exporting their products to the seven north-eastern Indian states due to some complications. “But we are working on it and hope to begin exports soon.”
Shah Md Abdul Wadud, director of Kohinoor Chemical Company, said one of their products, talcum powder, was being exported to those states.
Square Toiletries Head of Marketing Jasmine Jaman told The Business Post, “We are exporting our laundry and beauty soaps to the Seven Sisters. But the neighbouring country imposes more duties when the import volume increases. This discourages both importers and exporters.”
Akij Group is currently exporting several products on a trial basis but plans to send more to these Indian states, said its Managing Director and Chief Executive Officer Syed Alamgir. “Hopefully, we will be able to export a variety of products soon.”
Barriers to further boost
Despite having vast trade opportunities, there are challenges, including difficulties in getting visa, congestion at land ports, and non-tariff barriers, said exporters.
Both governments have to take steps to remove trade barriers, mostly the non-tariff ones, as that would increase bilateral trade between the two friendly countries, they added.
“For Bangladesh, India is a big export destination and the present growth is encouraging. The most important thing is that the lion’s share came from non-apparel items,” said Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue (CPD).
“As the Seven Sisters are close to Bangladesh, we should concentrate on capturing those markets along with the others in the country,” said Moazzem.
To boost regional trade, the government should concentrate on bilateral factors rather than multi-lateral or regional initiatives, he said.
“Bangladesh should work to expedite the South Asian Association for Regional Cooperation (SAARC) motor vehicles agreement as well as the Bangladesh, Bhutan, India, Nepal (BBIN) initiative. This will make trade easier,” said the economist.
He also stressed removing non-tariff and para-tariff barriers with the neighbouring country to boost apparel exports.
Apparel has great potential
In FY22, Bangladesh’s apparel exports to India rose by 69.58 per cent to $715 million, which was $422 million in FY21.
“India is a very big and potential market for Bangladesh. The potential is gradually increasing,” Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Vice-President Shahidullah Azim told The Business Post.
As the government is offering cash incentives against exports to India as a non-traditional market, exports will continue to grow, he said.
“On the other hand, global apparel brands and retailers are opening outlets there, which will increase the demand for Bangladeshi goods,” said Azim.
