Home ›› 09 Sep 2022 ›› Front
The outcome of Prime Minister Sheikh Hasina’s latest visit to India will depend on reciprocity, and improving Bangladesh’s negotiation skills to better utilise the neighbouring country’s offers – including the free transit, and connectivity to increase bilateral trade.
India has to be more open in creating an enabling environment by removing the tariff and non-tariff barriers. In FY22, bilateral trade value between the two nations reached nearly $16 billion, but Bangladesh’s share in the figure was just $2 billion due to several non-tariff barriers.
Eminent economists, international relation experts and business leaders made the remarks just a day after the issuance of a joint statement, where both Bangladesh and India agreed to improve connectivity, and remove trade barriers to boost trade and commerce in the region.
In the joint statement, India offered free transit via its territory to Bangladesh, aiming to help the country export products to other destinations through specific land customs stations, airports and seaports.
While Bangladesh requested to ensure supply of essentials and petroleum putting emphasis on energy and food security.
Both nations also agreed to collaborate in new areas of cooperation, such as, environment, climate change, cyber security, ICT, space technology, green energy, and blue economy.
Abul Kasem Khan, former president of the Dhaka Chamber of Commerce & Industry (DCCI), said, “As India is a large economy, it would not be possible to reduce the trade gap significantly. But we can increase bilateral trade to bring down the gap to a minimal level.”
“To do so, there is a need for political will. It is in place, but absent at the implementation level – such as ports and borders.”
He added, “The Indian government has to be more willing in removing trade barriers and easing regulations. As connectivity goes up, Bangladesh has to be more and more cautious about fees, and terms and conditions.”
Dhaka University’s International Relations Department Professor Imtiaz Ahmed said, “Bangladesh’s achievements made during Prime Minister Sheikh Hasina’s latest India visit are not very high.
“But when a country’s leader spearheads the process of building ties [with another country], it helps build long term partnerships. Such relationships are necessary to increase bilateral trade. But, success will depend on how much profit the traders make as a result.”
Research and Policy Integration for Development (RAPID) Chairman Mohammad Abdur Razzaque said, “As neighbours, our engagement with India – one of the world’s biggest economic powers – is the most important issue. I think we performed well in this area.
“We achieved a few goals in terms of water distribution, border issues and other political matters. Besides, in terms of expanding our businesses and food security, I think we have some achievements as well.”
During the visit, India requested Bangladesh a full-fledged transit facility utilising the Mongla and Chattogram ports. India also offered Bangladesh free transit for exports to Bhutan and Nepal.
Bangladesh sought support from India to build up rail connectivity with Bhutan, and connectivity with Myanmar and Thailand. Meanwhile, the neighbouring country expressed interest in using Bangladesh’s inland waterways and coastal ships to transport goods to other parts of India.
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan told The Business Post that during the visit discussed visa issues, non-tariff barriers and bilateral trade increase.
Industry insiders say most of the time, India issues single entry visas to Bangladeshi visitors, and this is why a businessman frequenting the country multiple times a year has to apply for a visa several times.
Moreover, many non-tariff barriers are causing low exports despite huge opportunities and duty-free market access provided by India. The land ports in the neighbouring country are also posing a lot of trade barriers.
Industry leaders say such issues must be resolved to increase bilateral trade between Bangladesh and India.
A joint statement on Wednesday mentioned that both countries agree to remove barriers to boost bilateral trade. India specifically requested at least one port – such as Akhaura-Agartala land port – without port restrictions or a negative list of restrictions for easier market access.
Meanwhile, economists and experts said there are many examples that India did not move forward with many initiatives even after making commitments with Bangladesh.
They added that the complicated relationship between Indian central government and states, following up on commitments sometimes do not get momentum.
Former president of DCCI Abul Kasem Khan said, “Amid Bangladesh’s low export performance with India, the country sought easier transit facility to their North-Eastern territories, which is likely to reduce our exports further.
“As we are far behind in terms of bilateral trade, it is quite difficult to reduce this deficit. India should invest more in Bangladesh, so that goods produced here can be exported to their other territories.”
Industry insiders say India already wants to invest in Bangladesh – especially in man-made fibre, renewable and non-renewable energy, and other potential sectors.
BGMEA President Faruque Hassan said, “We and our government asked our Indian counterparts to invest in Bangladesh and to remove the trade barriers. They assured us that such issues will be resolved.
“We expect that a big chunk of investment will come from India, especially in the renewable energy and man-made fibre sector.”
RAPID Chairman Abdur Razzaque said, “We definitely achieved a lot except in big issues such as the Teesta deal and zero border killing. It is important that we continue discussions on such issues to reach an amicable solution.”
It should be noted that India’s Adani Group Chairman Gautam Adani called on Prime Minister Sheikh Hasina during her visit to India. He sought to invest in Bangladesh in energy and power, water transportation, and service sectors.
India is already providing Bangladesh – which is close to graduating from LDC – duty-free trade facility. But after LDC graduates in 2026, this particular facility will stop. To keep its duty free market access, Bangladesh needs a Comprehensive Economic Partnership Agreement (CEPA).
During the visit, both countries agreed to start a discussion to move forward towards materialising CEPA.
Former president of Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) Mir Nasir Hossain said, “CEPA should get more focus, because we will need it after LDC graduation.
“While making the agreement, we have to include some clauses that can help reduce our trade gap with India. We must be comprehensive in terms of transit. We have to see how much benefit we will get for providing this facility to India.”
He added that to achieve a win-win situation, Bangladesh will need to show stronger negotiation skills.
