India broaches idea of new trade deal as Bangladesh moves out of LDC

The visiting Indian commerce minister has said a new bilateral arrangement would be needed to enhance trade and commerce with Bangladesh as the country is graduating from the LDC.

“India and Bangladesh have an existing Trade Agreement and both countries are also members of the Agreement on South Asian Free Trade Area (SAFTA), under which India has granted duty free quota free access to Bangladesh as an LDC,” Suresh Prabhu said.

“As Bangladesh graduates from the LDC status in the next few years, we would need to work out a bilateral arrangement to enhance trade and commerce between the two countries,” the minister for commerce and industry and civil aviation said.

“We may explore the possibility of concluding a Comprehensive Economic Partnership Agreement covering trade in goods and services and investments.”

Prabhu also stressed “multi-nodal connectivity” between the countries to take ties forward while speaking before the business people in Dhaka on Tuesday.

He arrived in Dhaka on Monday at the invitation of his counterpart Tofail Ahmed. The bilateral meeting will be held on Wednesday at the state guesthouse Padma.

Prabhu said they would discuss ways to increase bilateral trade and cross-border investments in the meeting.

“I believe that our emphasis should be on creating an open trading system, increasing economic integration and entering into mutually beneficial arrangements for the same.”

He said ties between India and Bangladesh are “deep and multifaceted covering socio-cultural and linguistic aspects and spanning several centuries”.

India and Bangladesh also share the historical legacy of fighting and winning the Bangladesh Liberation War together. Very few countries have fought and shed blood together, he said, referring to 1971.

“Today, our relations are unique, special and comprehensive covering cooperation in areas ranging from trade, commerce and connectivity to culture and people-to-people exchanges.”

He said both the countries are amongst the fastest-growing economies of the world and both populations are young with similar developmental aspirations.

“Both India and Bangladesh aim to modernise manufacturing, add new industries in emerging sectors and improve infrastructure through global collaboration and seek investments for the same.

“We need to identify ways to cooperate and work together to create global value chains for enhancing economic opportunities for our people leading to to betterment of living standards for them,” Prabhu said.

“Bangladesh’s strength in apparel sector and India’s yarn and fabric sector can synergise together to create value chains in textile products.”

He said India believes that growth in Bangladesh could spur development in the entire sub-region including the neighbouring Indian states.

“As you all are aware, historically, Bangladesh and the neighboring Indian states have been part of a sub- regional economy. Both our Governments are working to revive this sub-regional economy by opening the borders to trade and improving sub-regional connectivity and trade infrastructure,” he told the business leaders.

As the two-way trade crossed $9 billion mark last year, he said the full market access granted to Bangladesh since 2011 has contributed to an increase in Bangladesh’s exports to India, particularly in the area of readymade garments.

There are nearly $10 billion of Indian investments in Bangladesh in the pipeline, mainly in the power and energy sectors, according to the Indian commerce minister.

“Three Indian economic zones in Mirsarai, Bheramara and Mongla are under development and will further facilitate Indian investments in Bangladesh.”

He said improvement of border infrastructure is also “essential for ensuring seamless movement of goods and people”.

The minister said India fully supports Bangladesh’s vision of becoming a middle income country by 2021 and a developed country by 2041 and has been partnering with Bangladesh in making substantial investments in improving road, rail, port, power, energy and ICT infrastructure and facilitating investments in the country.

During the visit of Prime Minister Sheikh Hasina, $5 billion was pledged by India in concessional financing in addition to the earlier $3 billion in the first and second lines of credit, taking the total up to $8 billion.

“These developments have made investing in India and Bangladesh economic ties an attractive proposition for business community on both sides of the border,” Prabhu said.

The apex business chamber, FBCCI, organised the dialogue on India-Bangladesh trade. Tofail was also present.