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India-Bangladesh Trade Relations

By:Manoj Kumar Singh 9910845011 mkumarsingh@hotmail.com Fortune Institute of International Business, New Delhi

Introduction
Both

India and Bangladesh are two major countries of the SAARC. place regularly alongside the people-to-people interaction. wide-ranging

High-level exchanges, visits and meetings take

India’s land border with Bangladesh – nearly

4096 km – is the longest that India has with any of its neighbours.

Historical Background
“Treaty

of Friendship, Cooperation, and Peace” on 19th March 1972 in Dhaka for 25 Years. March 1972.

First one year trade agreement on 28th In October 1972, the first trade agreement

was further extended up to 27th September 1973.
On 5th July 1973, the first trade agreement

was replaced by another trade agreement for three years. This agreement became

Cont…………….
On 12th January 1976, both countries signed

a trade protocol for higher volume of trade. This was further extended for another three years till 27th September 1979 on 5th October 1976. was signed.

On 4th October 1980, third trade agreement On 8th November 1983, Protocol on trade of

1980 was renewed for further three years.

In May 1986, the agreement was further

extended till October 1989. Subsequently this agreement was renewed a number of

Export to Bangladesh
Year 2004 – 2005 2005 – 2006 2006 – 2007 2007 – 2008 Export to Bangladesh 732887.78 736872.20 736596.95 1174321.29 Total Export 37533953.56 45641786.98 57177926.53 65586352.04 58656738.94

Values in Rs. Lacs

% Share 1.9526 1.6145 1.2883 1.7905 1.5237

2008 – 2009 893747.31 (Till Dec. 2009)

Source : Ministry of Commerce, GOI

The major items exported were cereals, dairy products, oils meals, cotton yarn, fabrics, made ups, primary and semi finished iron and steel, pulses transport equipments drugs pharmaceuticals, etc.

Import from Bangladesh
Year 2004 – 2005 2005 – 2006 2006 – 2007 2007 – 2008 Import from Bangladesh 26676.51 56240.09 103390.56 103468.16 Total Import 50106455.82 66040889.34 84050633.03 101231170.10 105273688.63

Values in Rs. Lacs

% Share 0.0532 0.0852 0.1230 0.1022 0.1115

2008 – 2009 117402.43 (Till Dec. 2009)

Source : Ministry of Commerce, GOI

The major items imported were fertilizers, iron products, vehicles and spare parts, mineral products, textile fibres, etc.

IEAM on visit to Bangladesh
On 9th Feb 2009, the former Indian External

Affairs Minister Pranab Mukherjee was on a daylong visit to Bangladesh.
Both countries inked two deals to further

strengthen economic ties.
Once the agreement comes into being,

both countries will be allowed to transport their goods using their water, rail and road routes for transportation of goods.

Tariff Concessions By India
Substantial duty concessions have been

extended to Bangladesh.
At 14th SAARC Summit held in New Delhi in

April 2007, Indian PM Manmohan Singh announced zero duty market access wef 1st January 2008 for products originating from SAARC LDCs.
India agreed to extend duty-free access to

eight million pieces of garments from Bangladesh under SAFTA.

readymade every year

ICC Offers SEZ to Bangladesh
On 6th April 2009 in Dhaka, a delegation of

Indian Chamber of Commerce from India offered to set up a SEZ to attract investments from India.
It also assured an investment worth $5 billion. The ICC also suggested opening of a Depty High

Commision office at Guwahati or Shillong.

Mutual Investments
A large number of Indian firms from both

public and private sector have been working on different turn key projects in Bangladesh.
Bilateral

Investment Protection and Promotion Agreement (BIPPA) has been signed on 9th Feb. 2009. total 181 FDI and joint venture investment proposals from India worth over us $435 million have been registered with the Board of Investment, Govt. of

A

Cooperation
Economic – India, as always, has stood by

Bangladesh in its hour of need with aid of Taka 250 crore to help it with natural disasters and floods.
Technical – Bangladesh is an important

ITEC partner country, and a number of participants from Bangladesh have availed of training courses under the ITEC program.
Energy – India is ready to pen a deal with

Bangladesh to sell up to 1,000 MW of electricity.

Problems
High trade deficit of Bangladesh with India. Illegal trade between both countries. Infrastructure Deficiencies.

Conclusion
India and Bangladesh could still greatly

benefit from cooperation in other areas, without necessarily implementing an FTA. Improvements in the transport, storage and administrative infrastructure at land borders would yield substantial benefits. Greater harmonization and cooperation in customs administration and banking relationships would also be highly beneficial.