Economic ties with Bangladesh must be strengthened

On Thursday, India and Bangladesh will celebrate the fiftieth anniversary of surrender of Pakistan Army to Indian Army at Dhaka in 1971. Bangladesh became an independent country thereafter. In half a century since then, the India-Bangladesh ties have seen several ups and downs. But, the relationships have been on the upswing since the advent of Sheikh Hassina as Prime minister of Bangladesh in 2009.

Last week, Hassina said that the relationship between the two countries is anchored in history, culture, language and shared values of secularism, democracy, and countless other commonalities. She said that two countries now should concentrate on people-to-people contact, trade, business and connectivity as the issues became increasingly important for the two sides.

In the last few years both countries have signed several bilateral instruments in various sectors including hydrocarbons, agriculture, trade and development projects. The multi-dimensional cooperation between the two countries ranges from traditional sectors of tourism, health and education to frontier technologies of nuclear science, space, and information technology.

In recent months, the newly restored railway link between Chilahati (Bangladesh) and Haldibari (India) was inaugurated. Both countries started using side-door container and parcel trains to maintain uninterrupted supply chains. India gave 10 broad guage diesel locomotives as part of grant assistance to Bangladesh Railways. Both the governments decided to commence bus service from/to Dhaka from/to Gangtok and Darjeeling via Siliguri.  Sonamura-Daudkandi Protocol Route was also operationalized and trial run of transshipment of Indian goods from Kolkata to Agartala via Chattogram was successfully conducted. India has extended 3 Lines of Credits to Bangladesh in the last 8 years amounting to US$ 8 billion for development of infrastructure in various sectors including roads, railways, shipping and ports. In addition, India has also been providing grant assistance to Bangladesh for various infrastructure projects including construction of Akhaura-Agartala rail link, dredging of inland waterways in Bangladesh and construction of India-Bangladesh Friendship Pipeline.

India exports about US$ 10 billion worth of goods to Bangladesh, which is about 15% of total imports of Bangladesh. India imports a little over US$ 1 billion worth of goods from Bangladesh, which is a fraction of India’s total imports. Some of the textile manufacturers in India are complaining about competition from duty free import of garments from Bangladesh. However, given the significant trade surplus with Bangladesh and the need to limit China’s growing influence through investments in various projects in Bangladesh, the government has ignored the complaints. Bangladesh is importing 1160 MW of power from India. India has also been helping Bangladesh in coping with the Covid-19 pandemic by donating surgical masks, RC-PTR test kits, surgical latex gloves, vaccines etc.

In nominal terms, the per capita income in Bangladesh is almost the same as in India, although India is slightly ahead on purchasing power parity terms.  Competitive labour costs, fast rising middle class, duty free access in 39 countries for Bangladesh goods attract investments in Bangladesh. The economic growth in both countries is likely to be robust in the coming years. So, the scope for greater cooperation in trade and investment between the two countries is very good.

So, Hassina’s call for focusing on trade and connectivity issues between the two countries is very timely. India should step up its efforts to further strengthen the economic co-operation and help create a favorable climate for cross-border investments.    

email:tncrajagopalan@gmail.com