Boosting business in the Bangladesh corridor is crucial to India’s ‘Act East’ policy

[Banglar Bir]

Boosting business in the Bangladesh corridor is crucial to India’s ‘Act East’ policy
Leveraging the potential of the India-Bangladesh economic relationship has the power to change the economy of Northeast India
ANALYSIS Updated: Sep 26, 2017 10:01 IST

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Digital connectivity is increasingly important. Broadband connectivity of 10 gbps for Northeast India is now being provided from Bangladesh’s Cox’s Bazar to Tripura and beyond, to help improve the speed and reliability of internet access in Northeast India. And Bangladesh has the capacity to provide more.

Trade relations have been gathering strength, going up from $1 billion in 2002, to over $6 billion now. With India providing duty-free treatment to all Bangladeshi products (save 25 “sin” products such as alcohol, arms, etc.) since 2011, India’s (dollar value) imports from Bangladesh grew an average of 6% per year over 2012-16, even as its imports from the world dropped by 8% per year.

For Northeast India, Bangladesh is potentially its most important economic partner, given the latter’s size and location. However, the potential of the relationship between Northeast India (NEI) and Bangladesh has barely begun to be tapped. For example, agricultural products, where NEI has a strong advantage can feed into Bangladesh’s vibrant food processing industry, while NEI can provide a market for its processed foods.

Investment is another untapped area. At a national level, India is a growing investor in Bangladesh, and now has land earmarked for development of special “Indian economic zones” in Bangladesh. At the sub-national level, however, it is Bangladeshi companies which could become some of the key investors in Northeast India — a process that has just scratched the surface so far.

Energy cooperation is delivering results. India already exports 600 MW of power (including 100 MW from Tripura) to Bangladesh, and much more is in the offing. In the future, this energy trade could well link up with potential hydropower exports from Bhutan and Nepal to form a BBIN (Bangladesh, Bhutan, India and Nepal) power market. Deeper cooperation would also facilitate access to energy supplies through projects such as the natural gas pipeline linking Myanmar to India via Bangladesh.

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Leveraging the potential of the India-Bangladesh economic relationship has the power to change the economy of Northeast India, and also advance India’s Act East vision.

Some critical steps to move this agenda forward would involve expanding direct connectivity between Northeast India and the rest of India via Bangladesh, while giving Bangladesh similar access to Nepal and Bhutan via India; reducing the time and cost of trading across the two borders, which will require reducing perceived and real non-tariff barriers and promoting efficient customs procedures and border facilities; encouraging Bangladeshi companies to invest in Northeast India, and Indian companies to expand their presence in Bangladesh.

Finally, the continued and growing momentum in the India-Bangladesh relationship also offers a tantalising glimpse of the possibilities of a more integrated South Asia.
Sanjay Kathuria is lead economist and coordinator, South Asia Regional Integration, in the World Bank’s trade & competitiveness global practice.
The views expressed are personal
http://www.hindustantimes.com/analy...east-policy/story-QQil8gOEvRPEX6XZshJteP.html

 

[mb444]

I am all for economic linkage and growth.... however this favours Indian interest more than it does BD.

BD is not land locked and it does not really serve BDs national interest for the Seven sisters to economically grow or become more integrated with the Indian mainland.

BD serve its national interest and not indias.

 

[UKBengali]

I am all for economic linkage and growth.... however this favours Indian interest more than it does BD.

BD is not land locked and it does not really serve BDs national interest for the Seven sisters to economically grow or become more integrated with the Indian mainland.

BD serve its national interest and not indias.

I am not sure what BD is actually getting out of this close relationship with India.

1. With the just signed 4.5 billion dollar line of credit from India to BD, that makes it 8 billion US dollars in total but not all of the 1 billion US dollars from 2010 has even been disbursed yet. There does not seem much benefit to BD as if it takes 20 years for BD to benefit from the money, then what is the point? Japan regularly gives 1-1.5 billion dollars of low interest loans to BD each year and many more billions each year flow in from World Bank and ADB and other sources. With China's 24 billion US dollars promised(6.8 billion dollars already cleared), this Indian LOC seems more like a gimmick to somehow justify Awami League's friendship with India that mostly benefits India and not BD.

2. In contrast to China where BD exports have been going up on average 30% a year since 2010, exports to India are stagnant in the same period. India is no more developed than BD and the two economies are competing with each other in garments unlike the case between BD and China.

3. Despite BD helping India with connectivity and shutting down the NE militant camp, India is fully behind rogue Myanmar in it's campaign of rape and murder against the Rohingya. There was a report that BD will need to spend 1 billion US dollar each year just to provide basic food and shelter to Myanmar's Rohingyas.

Hopefully India's total disregard of BD national interest in Myanmar will even force the pathetic Awami League to start showing a distance with India. BD should not be hostile to India but needs to downgrade relations to a minimal level as India cannot or will not assist BD's national interests.

 

[mb444]

I am not sure what BD is actually getting out of this close relationship with India.

1. With the just signed 4.5 billion dollar line of credit from India to BD, that makes it 8 billion US dollars in total but not all of the 1 billion US dollars from 2010 has even been disbursed yet. There does not seem much benefit to BD as if it takes 20 years for BD to benefit from the money, then what is the point? Japan regularly gives 1-1.5 billion dollars of low interest loans to BD each year and many more billions each year flow in from World Bank and ADB and other sources. With China's 24 billion US dollars promised(6.8 billion dollars already cleared), this Indian LOC seems more like a gimmick to somehow justify Awami League's friendship with India that mostly benefits India and not BD.

2. In contrast to China where BD exports have been going up on average 30% a year since 2010, exports to India are stagnant in the same period. India is no more developed than BD and the two economies are competing with each other in garments unlike the case between BD and China.

3. Despite BD helping India with connectivity and shutting down the NE militant camp, India is fully behind rogue Myanmar in it's campaign of rape and murder against the Rohingya. There was a report that BD will need to spend 1 billion US dollar each year just to provide basic food and shelter to Myanmar's Rohingyas.

Hopefully India's total disregard of BD national interest in Myanmar will even force the pathetic Awami League to start showing a distance with India. BD should not be hostile to India but needs to downgrade relations to a minimal level as India cannot or will not assist BD's national interests.

Who actually believes that a nation with the largest amount of open air deficators can loan anyone billions of dollars in loan. The reason not even a billion dollar has been forthcoming in 7 years is because it was never there to begin with. It's B.S sham.... who even cares....

 

[dy1022]

Who actually believes that a nation with the largest amount of open air deficators can loan anyone billions of dollars in loan. The reason not even a billion dollar has been forthcoming in 7 years is because it was never there to begin with. It's B.S sham.... who even cares....

People in BD do need a reason about why India first policy for these years, no matter 4,5,6 billion, it doesn't matter which it will never reach the land of BD

 

[Banglar Bir]

Connectivity ‘crucial’ in Dhaka-Delhi ties; 3rd $4.5b LoC deal signed
SAM Staff, October 5, 2017

Indian Minister of Finance and Corporate Affairs Arun Jaitley on Wednesday (4 October) said connectivity is crucial to the success of Bangladesh-India bilateral development partnership, sub-regional economic cooperation and economic prosperity in the region.

“India-Bangladesh relations are at their best today and stand out as a model for other countries to emulate,” he said after his meeting with Finance Minister AMA Muhith at the latter’s office before Bangladesh and India signed the final agreement of $4.5 billion 3rd Indian Line of Credit (LoC).

Economic Relations Division Secretary KaziShofiqulAzam and Managing Director of the Export-Import Bank of India (Exim) David Rasquinha signed the deal on behalf of their respective sides.

Muhith also expressed satisfaction over the existing bilateral relations between the two countries terming it “excellent relations”.

He hoped that the two countries will continue to cooperate with each other in the coming days and the relations will further be deepened.

Both the ministers reviewed bilateral relationship, in particular economic cooperation, which has recorded “significant progress” in recent years.

The Indian minister said he is deeply impressed by the rapid progress made by Bangladesh in achieving economic growth along with inclusive social development.

“India continues to attach the highest importance to its relations with Bangladesh, which has seen steady growth during recent times. A strong, stable and prosperous Bangladesh is in India’s interest and we are committed to working with Bangladesh to deepen our mutual engagement,” he said.

Arun Jaitley said Prime Minister Sheikh Hasina’s visit to India was a landmark event that resulted in the signing of a record 36 agreements.

Several investment proposals by Indian public and private sector companies in Bangladesh are in the pipeline.

The two ministers witnessed the signing of the Loan Agreement to operationalise the 3rd Line of Credit of US$ 4.5 billion announced during Hasina’s visit.

“India is fully committed to partner Bangladesh in its economic development. As a longstanding development partner of Bangladesh, we have extended three Lines of Credit worth US$ 8 billion to Bangladesh in recent years,” Arun Jaitley said.

This is the largest quantum of credit India has extended to any other country by far and comes with a highly concessional rate of interest.

Arun Jaitley said the signing of the 3rd LOC agreement will enable the implementation of 17 pre-identified projects of developmental priority to Bangladesh in key sectors of the infrastructure such as power, railways, roads, shipping, ports, etc.

He said as in the case of past Lines of Credit extended by India to Bangladesh, this line of credit is also highly concessional with interest at 1 percent per annum and repayment over a period of 20 years (inclusive of 5 years moratorium).

“I am happy to note the increased thrust placed by both our governments on the restoration of pre-1965 linkages, encompassing road, rail, water, and coastal shipping connections. I am confident that this will help to increase bilateral trade and foster people-to-people contacts between our countries,” he said.

The Representative Office of the EXIM Bank of India in Dhaka was formally inaugurated on the same day.

The Indian minister said this will facilitate the development partnership between the two countries and also help in facilitating Indian investments into Bangladesh.

“All these developments highlight the increasing economic cooperation and inter-linkages between our two countries,” Arun Jaitley said.

The Indian Finance Minister arrived here on Tuesday.
SOURCE UNB, DHAKA
http://southasianmonitor.com/2017/1...al-dhaka-delhi-ties-3rd-4-5b-loc-deal-signed/

 

[Banglar Bir]

Bangladesh corridor vital to India’s ‘Act East’ policy
SANJAY KATHURIA ON THU, 09/28/2017

India-Bangladesh land border crossing. Credit: Sanjay Kathuria
Deepening connectivity and economic linkages between India and Bangladesh will be critical for the success of India’s ‘Act East’ policy.
Here are five priority areas that have the potential to change the economy of Northeast India:
1. Transport Connectivity
After 1947, Northeast (NE) India has had to access the rest of India largely via the “Chicken’s Neck” near Siliguri, greatly increasing travel times. Traders travel 1600 km from Agartala (Tripura) to Kolkata (West Bengal) via Siliguri to access Kolkata port. Instead, they can travel less than 600 kms to reach the same destination via Bangladesh, or even better, travel only 200 km to access the nearby port of Chittagong in Bangladesh.

This is set to change as close cooperation between Bangladesh and India (including various ongoing initiatives such as the transshipment of Indian goods through Bangladesh’s Ashuganj port to Northeast India, expanding of rail links within Northeast India and between the two countries, the BBIN Motor Vehicles Agreement) can dramatically reduce the cost of transport between Northeast India and the rest of India.

The resultant decline in prices of goods and services can have a strong impact on consumer welfare and poverty reduction in the Northeast. Such cooperation also opens up several additional possibilities of linking India with ASEAN via Myanmar.

Moving forward, expanding direct connectivity between NE India and the rest of India via Bangladesh, while giving Bangladesh similar access to Nepal and Bhutan via India, is critical.
2. Digital Connectivity
Broadband connectivity of 10 gbps is now being provided from Bangladesh’s Cox’s Bazar to Tripura and beyond, to help improve the speed and reliability of internet access in NE India. Bangladesh has the capacity to provide more.
3. Trade
Trade relations have been gathering strength, going up from $1 billion in 2002, to over $6 billion now (see chart). Since 2011, with India providing duty free treatment to all Bangladeshi products (save 25 “sin” products - alcohol, arms, etc.), India’s (dollar value) imports from Bangladesh grew an average of 6 percent per year over 2012-16, even as its imports from the world dropped by 8 percent per year. For NE India, Bangladesh is potentially its most important economic partner, given the latter’s size and location.

However, the potential of this NE India-Bangladesh relationship has barely begun to be tapped. For example, agricultural products, where NE India has a strong advantage can feed into Bangladesh’s vibrant food processing industry, while NE India can provide a market for its processed foods. Reducing perceived and real non-tariff barriers and promoting efficient customs procedures and border facilities remain key to reducing the time and cost of trading across the two borders, thereby further expanding trade between the two countries.

4. Investment
At a national level, India is a growing investor in Bangladesh, and now has land earmarked for development of special “Indian economic zones” in Bangladesh. At the sub-national level, however, it is Bangladeshi companies which could become some of the key investors in NE India- a process that has just scratched the surface so far. Better investment and trade linkages can also help deepen regional value chains and help both Bangladesh and Northeast India access other Asian markets.
5. Energy Cooperation
India already exports 600 MW of power (including 100 MW from Tripura) to Bangladesh, and much more is in the offing. Bangladesh would be the “power corridor” for transmission of hydro energy from Arunachal Pradesh to the rest of India. In the future, this energy trade could well link up with potential hydropower exports from Bhutan and Nepal to form a BBIN (Bangladesh, Bhutan, India and Nepal) power market.

The India-Bangladesh economic relationship has the potential to change the economy of Northeast India, and advance India’s Act East vision. In addition, the continued and growing momentum in the bilateral relationship offers a tantalizing glimpse of the possibilities of One South Asia.
Sanjay Kathuria on Twitter @Sanjay_1818
Full Post published in Hindustan Times
http://blogs.worldbank.org/endpover...india-s-act-east-policy?CID=SAR_TT_SAR_EN_EXT