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New thrust in ties with Bangladesh needed from India

Black_cats

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New thrust in ties with Bangladesh needed

China is not only capturing Bangladesh market by flooding it with cheap exports but also investing aggressively there

Pravakar Sahoo

Pravakar Sahoo, Durgesh K Rai,
  • JAN 16 2022, 22:02 IST
  • UPDATED: JAN 17 2022, 01:06 IST
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Given Bangladesh’s vitality in India’s external relations, India must enhance its economic relations to contain China in Bangladesh. Credit: iStock Photo

On December 16, President Ram Nath Kovind joined the 50th Victory Day celebrations of Bangladesh as the chief guest to signify the importance of our bilateral relations with the strategic neighbour. The robust economic relations are a vital and growing component of India-Bangladesh bilateral ties.

Bangladesh is not only the largest trading partner of India in South Asia but is also one of India’s leading export destinations. However, China’s growing economic prowess coupled with its strategic investments in South Asia has eroded India’s clout in Bangladesh’s external economic profile in the recent past. China is proposing to offer tariff concessions on 97% of imports from Bangladesh. Therefore, if India is to retain its economic presence in Bangladesh, it will have to address the existing issues that impede trade and investment flows, and identify the key areas for mutual cooperation.

India-Bangladesh bilateral trade has witnessed notable growth and almost tripled - from $3.4 billion in 2010 to $9.8 billion - in 2018. During the last decade, India’s trade with Bangladesh witnessed faster growth vis-a-vis the rest of the world. Even during Covid-19 (2020), the bilateral trade showed more resilience — India’s trade with the world contracted by 19.8% while with Bangladesh it declined only by 5.5%. In 2021, trade with Bangladesh grew faster than that with the rest of the world. However, India has always maintained a favourable trade balance with Bangladesh and this has been viewed as an area of concern for the Bangladesh side.

Bangladesh’s share in India’s exports increased from 1.4% in 2010 to 3.5% in 2021. India’s share in Bangladesh goods exports stood at 3.3% and it was the eighth largest export destination. On the other hand, China was ranked as the 15th largest export destination with a share of 1.75% in Bangladesh’s exports. Moreover, China constituted about 30% of global exports to Bangladesh and was the top exporter to Bangladesh in 2020 followed by India with 16% share. Overall, Bangladesh has a more severe unfavourable trade balance with China compared to India.

Being part of the South Asian Free Trade Area (SAFTA), both India and Bangladesh get preferential treatment in terms of tariff concessions in each other’s market, but there exist several non-tariff barriers (NTBs) that hamper the realisation of the full potential of India-Bangladesh trade relations. The Bangladesh side highlights two specific concerns over its exports to India — first, the new Indian customs rules that stipulate the verification of certificate of origin from Bangladesh, and second, the anti-dumping duty imposed by India on imports of jute products, hydrogen peroxide and fishing nets.

Limited routes

Indian companies also complain about discriminatory treatment with regard to the tenders floated by various ministries and departments of the Bangladesh government. These NTBs along with other issues like limited routes, customs harassment, visa problems etc increase the trade cost and dampen bilateral trade. Infrastructure connectivity through sea routes from China is more efficient than trading on roadsides at Benapole and Petrapole with India.

One of the key areas that could boost trade in a significant manner and requires urgent attention is upgradation of infrastructure at existing land customs stations (LCSs) along with the establishment of new LCS without port restrictions. With rising trade volumes, the bilateral trade basket is getting diversified, which is making it necessary to have harmonisation of standards and mutual recognition of certificates between the two countries. Being an LDC (least developed country), Bangladesh gets market access with zero tariffs in most of the developed economies of the world. Both countries could explore ways to cooperate to strengthen their positions in the global supply chains. Similar opportunities exist in the jute sector as well.

China is capturing the Bangladesh market by flooding it with cheap exports, investing aggressively and extending credit lines for various strategically important projects. Some of the important investments by China in Bangladesh are financing and constructing the Deep Sea Port project (Chittagong and Mongla) and developing generation and distribution lines in the power sector. China has been investing in visible public infrastructures such as friendship bridges, sewage treatment plants, economic zones, expansion of airports, roads and rail links. All these certainly create a positive public perception of China.

Given Bangladesh’s vitality in India’s external relations, India must enhance its economic relations to contain China in Bangladesh. In fact, it is also good for Bangladesh as trade with China is more unfavourable to it and is likely to bring it into China’s debt trap. India must invest in visible public infrastructure and help to Bangladesh without considering the economic gains but to minimise the growing influence of China in the region.

(Sahoo is Professor, Institute of Economic Growth, Delhi; Rai is Fellow, Indian Council for Research on International Economic Relations, Delhi)

 

Bilal9

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This Indian academic Sahoo is so far out of line in his drivel - it is laughable.

Mongla is sixty miles inland - it is not a deep sea port. neither is Chittagong. Do some fact-checking before you "publish" crap.

India's exports to Bangladesh are price-leader products ("cheap") and only sell on merit of low prices and definitely not on account of quality (yes Tata and AL buses/trucks are in that category too) - Chinese exports are not. Chinese quality on products is far ahead of Indian ones now on most items including construction equipment. The less said about Indian construction equipment the better it is.

India has no money to invest in Bangladesh, keep your rupees to yourselves, we don't want your measly loans with strings.

If anything. Indians should reduce the trade gap with Bangladesh which has been 90% plus in favor of India because of illegal Non-Tariff Barriers by Indians on the pretext of "dumping" for more than fifty some years. China OTOH allows mostly tariff free exports of Bangladeshi goods to their market.

And now Indians want more than 90% of trade gap with Bangladesh - maybe 100%? The greed of these Itar Sanghi low-lifes knows no end. And they are accusing Bangladesh of imposing NTBs on Indian products. Hilarious! :lol:

Total faaltu misleading cherry-picked content in this piece with no connection with reality on the ground in Bangladesh.

And they are planning to 'contain' China in Bangladesh - like Bangladesh is their baap-ka Zameendari.

This is the type of "talent" that gets to teach in Indian universities. SMH.
 
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bluesky

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New thrust in ties with Bangladesh needed

China is not only capturing Bangladesh market by flooding it with cheap exports but also investing aggressively there
The best thing India can do is to allow BD goods to enter its market by withdrawing its unwritten laws that almost prohibit our goods to that Miserland called India.
 

Bilal9

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The best thing India can do is to allow BD goods to enter its market by withdrawing its unwritten laws that almost prohibit our goods to that Miserland called India.

Miser and selfish, small-hearted moves is because of why no formerly good neighbors of India are India's friends any longer.

This includes Sri Lanka, Maldives and even their co-religionist Hindu-Majority country Nepal.

Bangladesh is just playing diplomacy, but its universally well known how Bangladeshis feel about New Delhi's dadagiri and bullying.

India's bullying foreign policy is f*cked up and needs severe re-vamping. Especially in the Modi era - they are beyond help.
 
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