Unlocking irritants to India-Bangladesh trade | SupportBiz


Unlocking irritants to India-Bangladesh trade

India and Bangladesh have much to gain by opening up more trading routes through India's landlocked northeast. While Airtel, Arvind Mills and other Indian firms are already in Bangladesh, the country's eastern neighbours are keen to show that it has "more to offer than just Jamdani saris and Hilsa fish".

Besides opening up more road and rail links to India's northeast, accepting each other's standards certifications and quick testing of goods would also boost trade enormously, say officials.

Around 60 percent of Bangladesh's exports to India passes through the Benapole (Bangladesh side)-Petrapole (India side) check point, though the two countries have several other such Integrated Check Posts (ICP).

"There is too much dependence on one trading point; it creates too much pressure and consequently hampers trade. There is need to open up the other ICPs too," a Bangladesh diplomatic source told IANS, declining to be identified.

He was echoing what the country's envoy had said at a recent Confederation of Indian Industry (CII) seminar here. 

Bangladesh High Commissioner Tariq Ahmed Karim had made an impassioned plea to open up other border trading points, saying, "We need to sit down and say, apart from two ICPs we have a dozen other customs trading posts, let's open up the passage of goods.. That is where connectivity takes up meaning."

"Till connectivity is not opened up, northeast will remain landlocked and business will remain peanuts."

Karim had said Bangladesh was eager to export to the northeast its manufactured goods - ranging from electronics items like refrigerators, airconditioners, LCD TVs, etc.

"We have more to offer than just Jamdani saris and Hilsa fish," he had said.

India last year removed 46 apparel items from its negative list of trading. The two countries also removed all tariff lines except on 25 items from the negative list.

Karim had praised India's "grand gesture" of removing tariff lines, but he voiced concern over it not being implemented at the ground level.

"There is a problem of mindset.. At the senior, political level, we have very good relations and things are sorted out. But when it gets down to the level of customs functionaries at the trading posts, they say they havn't received the written order," a Bangladesh diplomatic official said.

Another niggling problem is of the Bangladesh Standards and Testing Institution (BSTI) certification not yet being accepted by Indian traders. India is moving towards sorting out the problem.

Indian Foreign Secretary Ranjan Mathai had said India "would also welcome investments by Bangladesh companies in India."

Airtel has invested US$1 billion in Bangladesh and taken over Warid and launched operations in the name of 'Airtel-Bangladesh'. TATA International has announced two joint ventures for leather shoes and bicycles, while Arvind Mills signed a JV with Nitol Group to invest $66 million over three years in a denim manufacturing plant to be set up in the Comilla Export Processing Zone.

Bangladesh says it too wants its manufacturers' visibility in India. But Bangladesh companies face a major problem in banking transactions in India.

"We are still bracketed with Pakistan in terms of security... 'for the RBI we are still a security risk," Karim had said, adding he had taken up the issue with Indian authorities.

"These are little things, but huge in terms of how they translate," he had said.

"Things are getting better; both sides are working to solve irritants and hope they are solved in the near future," a Bangladesh official told IANS.

A World Bank study had pointed to the immense benefits of a Free Trade Agreement (FTA) between the two countries. Talks on it have been stalled for many years.

World Bank lead economist for Bangladesh Sanjay Kathuria said an FTA along with increased connectivity would lead to a "win win situation" for both the countries.

The study said free trade between the two countries could increase bilateral trade volume by over 100 percent.

Transit access between the two countries would not only open up the northeast but also help solve the problem of border poverty, according to Kathuria.

During 2011-12, two-way trade between Bangladesh and India stood at $4.3 billion, which was loaded heavily in India's favour. India sold goods worth over $3.5 billion to Bangladesh against the latter's export to India of about $0.6 billion.

Bangladesh, a country of 150 million-plus and growing at six percent, is aiming at eight percent growth.