India and Bangladesh celebrated the fiftieth anniversary of the surrender of the Pakistani army to the Indian army in Dhaka in 1971. Bangladesh subsequently became an independent country. Bilateral relations between India and Bangladesh remain strong, but it is the strength of our economic ties that has the potential to unleash immense possibilities. President Ram Nath Kovind’s visit to Bangladesh is important as it will open up such possibilities through his discussion with the Bangladeshi leadership. He is on a three-day visit to Bangladesh at the invitation of his counterpart Abdul Hamid to represent India at the celebrations marking the neighboring country’s 50th Victory Day.
With a total trade volume of USD 10 billion, Bangladesh is India’s largest 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 rapidly growing trade relationship.
If you look at the data from the Ministry of Commerce, there are some good indicators because even during the pandemic, imports from Bangladesh have increased. They amounted to $ 685 million in 2017-2018, $ 1.04 billion in 2018-2019, $ 1.26 billion in 2019-2020 and $ 1.09 billion in 2020-2021. Meanwhile, Indian exports to Bangladesh hovered around $ 9 billion in the same four years.
This is reflected in the statement of President Ram Nath Kovind during the Victory Day celebrations and Mujib Borsho in the National Parliament of Bangladesh when he said: “We have witnessed the commendable economic growth achieved by Bangladesh during of the past decade, which has also created opportunities for its citizens to realize their full potential. The President further underlines the strength of economic ties: “The exceptional economic performance of your country, complemented by a geographic advantage, can benefit the entire sub-region and the world. International experts increasingly recognize that close sub-regional trade, economic cooperation and connectivity will help accelerate the process of achieving a Shonar Bangla as soon as possible.
What could further strengthen economic 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 bilateral relations. But it is also linked to the issue of infrastructure and connectivity to rationalize logistics issues. The supply chain side of commerce demands robust connectivity and ease of movement across the border.
Although India and Bangladesh are already part of a regional preferential trade agreement, the South Asian Free Trade Area (SAFTA), a CEPA is essential to address trade barrier issues and will attract more of investments. It should also be taken into account that the provision of duty-free access for Bangladeshi products under the South Asian Free Trade Area (SAFTA) regime will no longer be applicable because Bangladesh change from least developed country (LDC) status. As India’s Foreign Minister pointed out: “An alternative framework is needed within a CEPA. “
In addition, as the leaders’ statements underline, India and Bangladesh look forward to stepping up cooperation in new areas such as green technologies, renewable energy, and computer and digital platforms. A CESP will further strengthen the scope of the investment because it includes topical areas and modes of cooperation. President Kovind also noted that there are many opportunities for partnership in areas such as space, nuclear technology, defense, pharmaceuticals and other advanced science and technology fields. He said that a formal “comprehensive economic partnership agreement” would give a significant boost to bilateral trade.
Besides the implementation of CEPA, the most important aspect of the Indo-Bangladesh bilateral relationship is connectivity and early resolutions if there are any issues around it. Overall, South Asia is the least interconnected region and intraregional trade is low compared to other regions.
India and Bangladesh are involved in a number of other initiatives. It is a priority within the framework of India’s “Neighborhood Policy†as well as the “Policy of looking towards the Eastâ€. Topping 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 connectivity project clusters that will shape future trade are the Asian Highway Network Routes (AH-1 and 2), which will connect India and Bangladesh with Petrapole-Benapole, Fulbari-Banglabandha and Dawki- Tamabil. and a new rail link between Akhaura (Bangladesh) and Agartala (India), among others.
Speaking on trade and connectivity, during the meeting with President Hamid, President Kovind reaffirmed that connectivity is an important pillar of Indo-Bangladesh relations. “The two countries have a lot to gain from their geographic proximity,†he said.
Connectivity must remain the priority area for India and Bangladesh and it could potentially lead to a new era of economic partnership with many investments from both sides.