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23 September 2014

INDIA-BANGLADESH BUSINESS: ENGAGEMENT OF NORTHEAST ESSENTIAL – ANALYSIS

By Rupak Bhattacharjee

In their bid to boost economic cooperation and connectivity, policy makers, government officials, bankers, economists, business and industry leaders of India and Bangladesh participated in a business conclave titled “A New Phase in Bilateral Economic Relations” on Aug 23-24 in Dhaka.

The conclave attached priorities to issues concerning Bangladesh’s trade ties with north eastern states. The representatives of both the countries discussed the challenges and opportunities of connectivity between Bangladesh and north eastern states and the possible ways of improving infrastructure at land ports, removing non-tariff barriers and increasing investment to enhance bilateral trade between the two countries.

Bangladesh demanded that India should do away with non-tariff and para-tariff barriers to help Dhaka in increasing its exports to India for minimising the trade imbalance between the two nations.

Bangladeshi business leaders and experts identified a number of impediments, including testing and certification, packaging and labelling issues that stood in the way of doing business with India. They maintained that in most cases, India does not recognise certification of Bangladesh Standard and Testing Institution, which is hampering exports to the country.

The Indian delegation led by Development of North Eastern Region (DoNER) Minister General (retd) V.K. Singh tried to convey the message that New Delhi is keen on forging ties with Bangladesh with special focus on expansion of business with north east because of geographical contiguity. Singh said at the conclave that there is endless scope for expanding Bangladesh’s trade with seven states and the union government would provide all possible support to explore the opportunities.

He reiterated India’s commitment to ensure prospects of neighbouring countries as it believes that India’s prosperity lies in the neighbour’s prosperity. General (retd) Singh, who fought Bangladesh’s Liberation War in 1971 alongside the Bengali freedom fighters, urged Bangladeshi entrepreneurs to explore his government’s neighbourhood policy for mutual benefit. Singh said his government had decided that the north east must develop in terms of infrastructure, which means rail, road and air connectivity and connectivity with neighbouring countries.

The minister noted that despite getting duty free access in the Indian market, Bangladeshi exporters could not fully exploit the opportunity as they failed to “understand the Indian market”. Indian Chamber of Commerce president Rajeev Singh observed that Bangladesh with its natural resources has enough potential to broaden trade ties with north east India

He has listed commodities having “comparative trade advantage”, including coal, limestone, stone chips, bamboo, cement, palm oil, wheat, sugar, readymade garments, processed food and drinks.

Meghalaya Chief Minister Mukul Sangma proposed joint investment with his state given its rich deposits of granite and very high quality limestone. Sangma invited Bangladesh for making joint investments in hydropower projects and the agro-forest sector in Meghalaya.

He said Meghalaya has huge potential in hydro-electricity and Bangladesh could get electricity through investment. He also suggested organising a separate conclave focusing on tourism as Meghalaya is well known for its tourist spots. Furthermore, the conclave saw business-to-business (B2B) meetings between Indian and Bangladeshi investors and entrepreneurs.

India is the biggest trading partner of Bangladesh. Following its decision in November 2011 to allow duty free and quota free access for Bangladeshi items, Dhaka’s exports to India registered an upward growth. In the last fiscal, Bangladesh’s $563.9 million exports to India were the highest ever against India’s exports of over $4.5 billion. Currently, Bangladesh is India’s largest trading partner among the South Asian Association for Regional Cooperation (SAARC) member nations.

According to the India-Bangladesh Chamber of Commerce and Industry, Indian investment stood at $2.5 billion in 2013-14. The trade deficit between the two countries has been persisting over the years despite taking several corrective measures. In its efforts to reduce the trade imbalance, Bangladesh submitted a list of 61 more items for duty free access to the Indian market.

On Aug 23, the Indian delegation met Bangladesh Prime Minister Sheikh Hasina on the sidelines of the conclave and submitted seven proposals for connectivity, including access to Chittagong port.

During her talks with Singh, Hasina reiterated Bangladesh’s primary demand to sign the much-awaited Teesta water sharing agreement. Hasina also urged India to provide transit to Bangladesh with Nepal and Bhutan through Indian territory.

The Indian side reassured Dhaka of providing the transit facility and added that a railway line should be built along the existing road that connects Bangladesh with Nepal and Bhutan.

Singh noted that the existing “border haats” have expanded people-to-people contacts between the two countries to a considerable extent. He also met Bangladesh Foreign Minister Abul Hassan Mahmood Ali and stressed on further widening and deepening of the relationship between the two nations, especially between the north east and Bangladesh.

Another north eastern state, Tripura will be largely benefited from improved trade ties and connectivity with neighbouring Bangladesh. This small state is surrounded by Bangladesh from three sides. The Manik Sarkar government, which enjoys warm relationship with the Awami League regime in Bangladesh, has been seeking transit facilities through Bangladesh and access to Chittagong port.

After meeting Hasina, Tripura Minister Tapan Chakraborty said the Bangladesh government has decided to allow its neighbours to use both Chittagong and Ashuganj sea ports to strengthen economic integration among South Asian countries.

It may be noted that the Indian government is providing financial assistance for the construction of a bridge on Feni river, building a 70-km road from Sabroom in South Tripura district to Chittagong port and laying railway tracks between Agartala and Akhaura (in Chittagong division).

The Bangladesh Prime Minister’s Economic Affairs Advisor Dr Mashiur Rahman maintained that both the countries should institutionalise the existing river and road transit facilities between them as a “multi-modal” one. He suggested that a new warehouse should be built in Chittagong port to handle export and import of Indian goods through the port. Dhaka on its part has taken some initiatives for reaching out to India’s north east.

The Hasina government has already sought New Delhi’s permission to open its Deputy High Commission in Guwahati and upgrade Agartala Visa Office to an Assistant High Commission to boost diplomatic and commercial presence in the north east.

Following formation of the National Democratic Alliance (NDA) government at the centre, India has been consistently engaged with Bangladesh. Singh is the second Indian minister to visit Dhaka since the tour of External Affairs Minister Sushma Swaraj in June. Singh said that Prime Minister Narendra Modi is also keen to visit Bangladesh in future.

The recently concluded India-Bangladesh Business Conclave assumes significance against the backdrop of the Modi government’s new initiative of promoting greater engagement between Indian states and foreign nations.

(Rupak Bhattacharjee has worked as Senior Research Fellow at Kolkata’s Maulana Abul Kalam Azad Institute of Asian Studies and New Delhi’s Institute for Conflict Management. He can be contacted atsouthasiamonitor1@gmail.com)

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