Indo-Bangladesh To Boost Bilateral Ties On Comprehensive Trade Agreements And Connectivity
India and Bangladesh celebrated the fiftieth anniversary of surrender of Pakistan Army to Indian Army at Dhaka in 1971. Bangladesh became an independent country thereafter. The bilateral relations between India and Bangladesh remain robust but it is the strength of our economic ties that has the potential to unfold immense possibilities. President Ram Nath Kovind’s visit to Bangladesh is important as it will unlock such possibilities with his discussion with Bangladeshi leadership. He is on a three-day visit to Bangladesh at the invitation of his counterpart Abdul Hamid to represent India at celebrations marking the neighbouring country’s 50th Victory Day.
With a total trade volume of USD 10 billion, Bangladesh is India’s biggest trading partner in South Asia and India is Bangladesh’s second-largest trading partner after China. Bangladesh’s exports to India have tripled over the past decade, indicating a fast-growing trade relationship.
If we take a look at the data from the commerce ministry, there are good indicators as even during the pandemic, imports from Bangladesh have increased. They stood at $685 million in 2017-18, $1.04 billion in 2018-19, $1.26 billion in 2019-20 and $1.09 billion in 2020-21. Meanwhile, Indian exports to Bangladesh hovered at around $9 billion in the same four years.
This is reflected in the statement of the President Ram Nath Kovind at the Victory Day and Mujib Borsho celebrations at the National Parliament of Bangladesh when he said: “We have witnessed the commendable economic growth achieved by Bangladesh in the last decade, which has also created opportunities for its citizens to realize their full potential.” President further highlights the strength of the economic ties: “Your country’s stellar economic performance complemented by geographical advantage can benefit the entire sub-region and the world. There is a growing recognition among international experts about the fact that close sub-regional trade, economic cooperation and connectivity will help accelerate the process of achieving a Shonar Bangla in the shortest possible period of time.”
What could further boost the economics ties?
A Comprehensive Economic Partnership Agreement (CEPA) and Connectivity
A Comprehensive Economic Partnership Agreement (CEPA) between India and Bangladesh will unleash the full potential of the bilateral ties. But it is equally linked to the issue of infrastructure and connectivity to streamline the logistics challenges. The supply chain side of the trade demands the robust connectivity and ease of the movement across the border.
Though India and Bangladesh are already part of a regional preferential trading arrangement, the South Asian Free Trade Area (SAFTA), a CEPA is much needed to address the issues related to trade barriers and will attract more investment. Also it is to be factored that the provision of the duty-free access for Bangladeshi products under the South Asian Free Trade Area (SAFTA) regime will no longer be applicable as Bangladesh is moving up from least developed country (LDC) status. As foreign secretary of India pointed out: “There is a need for an alternative framework under a CEPA.”
Further, as the statements from the leadership highlights, India and Bangladesh are looking forward to step up cooperation in new areas such as green technologies, renewables, and IT and digital platforms. A CEPA will further strengthen the scope of investment as it includes the news areas and ways of cooperation. President Kovind also noted that that there is a lot of scope in partnering in areas like space, nuclear technology, defence, pharmaceuticals and other advanced science and technology fields. He said that a formal 'Comprehensive Economic Partnership Agreement' would give a significant boost to two-way trade.
Besides the implementation of CEPA, the greater aspect of Indo- Bangladesh bilateral relations rest on the connectivity and the early resolutions if there are issues around it. Overall, South Asia is the least interconnected region and intraregional trade is low as compared to other regions.
India and Bangladesh are involved in a number of other initiatives. It is prioritized under India’s ‘Neighbourhood Policy’ as well as ‘Look East Policy’. Top on the list is the Indo-Bangladesh Friendship Pipeline, which will transport high-speed diesel from the Numaligarh refinery in Assam to Parbatipur in Bangladesh.
Another important milestone is the clusters of the connectivity projects which will shape the future trade are the Asian Highway Network routes (AH-1 and 2), which will be connecting India and Bangladesh at the Petrapole-Benapole, Fulbari-Banglabandha and Dawki-Tamabil points, and a new rail link between Akhaura (Bangladesh) and Agartala (India), among others.
Speaking about trade and connectivity, during the meeting with President Hamid, President Kovind reiterated that connectivity forms an important pillar of India-Bangladesh relations. "The two countries have much to gain from their geographical proximity," he said.
Connectivity must remain the focus area for India- Bangladesh and It could potentially lead to the new era of economic partnership with lot of investments from both sides.
