|Nafees Imtiaz Islam Senior Assistant Director, Daffodil International University (DIU)
Note: This article has been co-authored by Mohammad Monir Hossan, Assistant Director, Daffodil International University (DIU)
India-Bangladesh relationship have witnessed significant upswing over the last decades. Recent visit of the Indian Prime Minister at Dhaka (6-7 June, 2015) accelerated and deepened the relationship between India and Bangladesh and shaped the tie in different altitudes. The India-Bangladesh Land Boundary Agreement, passed by Indian Parliament on May 7, 2015 is a noteworthy initiative of India. Bangladesh thinks that the exchange of the letters of ratification of the 1974 Land Boundary Agreement (LBA), a humanitarian issue comes to a peaceful end. Under the agreement, each country will take over most of the enclaves on its territory and residents will have the right to stay where they are or move to the other side of the border. In this visit, both the countries have signed 22 important bilateral documents including four agreements, three protocols, 14 memorandums of understanding and one letter of consent covered varied areas of cooperation: economic, trade and investment, security, infrastructure development, education, Science and Technology, IT.
Development of appropriate transport connectivity between two countries is a pre-requisite for smooth trade and investments flows. In view to increase connectivity, two agreements and two protocols were signed on operation of passenger bus service between Kolkata and Agartala via Dhaka and Dhaka and Guwahati in Assam via Sylhet and Shillong. We think Bangladesh may impose service charges on this facility, proposed for its neighbor India. Regarding imposition of any charges in this context, needs to be settled in detail through mutual discussion. Both the countries signed protocol on inland water transit and trade (renewal), incorporating a provision that ‘third countries’ like Nepal and Bhutan could be included in the communication system for transshipment of goods.
Water sharing issues:
In view of recent issues on sharing water of Teesta River, we now need to reach a fair solution on Teesta and Feni rivers. Apart from traditional diplomacy, we should have transmitted the feelings of its people to those on the other side of the border. We hope Indian counterparts will feel as Bangladeshi people depend upon the river for survival. We need to understand that rivers of the north-east and central Bangladesh would dry down due to upstream withdrawal of water. Regarding Tipaimukh Hydroelectric Power Project, we respect the statement of Prime Minister of India (at the joint declaration) as, “India would not take any unilateral decision on this matter that may adversely impact Bangladesh”.
Power and Energy:
The government of Bangladesh inked memorandum of understanding (MoU) with two leading privately-owned Indian firms (Reliance and Adani) for building 4,600 megawatt (MW) capacity power plants. But, tariff rate for buying electricity was not disclosed in the MoU. Another important issue regarding investment of Bangladeshi entrepreneurs in power sector should be tagged with Indian entrepreneurs or they should get the opportunity to invest in power sector of north-eastern part of India. With the current and previous agreements with Indian counterpart in power and energy, Bangladesh now entered into a sub-regional energy integration which would hopefully meet the challenges of power shortage of the country and facilitate its economic empowerment towards a developed Middle Income Country (MIC) before 2021. We also need to focus on sustainable energy cooperation in this region. Refer to the previously signed MoU on India-Bangladesh Renewable Energy Cooperation (on 6th September 2011), both the countries could stress on the issue of sustainable energy generation. Regarding Rampal Power Plant, we should think on the impact of this coal transport through Sundarbans, of its effects in the ecosystem. The proposed navigation route for coal transportation is also very sensitive as there lies the dolphin sanctuaries.
In a joint declaration, both the countries have agreed to work closely in elevating regional and sub-regional cooperation and in the UN and other multilateral organizations, including WTO, for benefit of the people in the region. But, we expected that the Honorable Prime Minister of India would highlight more specific issues like how to strengthen SAARC, BIMSTEC and BCIM or ought to be included in agenda at his visit.
During this visit of the Prime Minister of India, Bangladesh and India jointly signed MoU on Blue Economy and Maritime Cooperation in the Bay of Bengal and the Indian Ocean. It means national and international freight transport within and to/from neighboring countries with medium sized ships. Coastal shipping forms an important means of transport within most of the transport system and this figure will be higher for Bangladesh having extended coastlines along the rim of the Bay of Bengal. It caters to the transport needs of economies by providing maritime point-to-point transport of all kinds of commodities; provides the maritime link that connects the road network across the seas; serves as feeder transport distributing container flows from the major seaports hubs to smaller ports, or other land locked countries. For the long term annual growth expected in the range of 5-6 percent for the coming decade in the region, coastal shipping from India, Sri Lanka, Singapore, Malaysia, Thailand and Myanmar ports could play as a game changer in the feeder services. Such transshipment at Singapore, Kelang, Colombo and other ports of the region would be cost effective, save time and increase employment opportunities. Blue Economy: Maritime functions in the context of Blue economy are not just economic sectors; they cover the relevant maritime value chains – including backward and forward linkages. We think that India as a neighboring country can extend its cooperation in this regard. India may engage with Bangladesh for joint development of the maritime territory that has been awarded to Bangladesh by the international arbitration tribunal.
Trade and Investment: India Bangladesh Trade Scenario
|FY||Bangladesh Export to India||Bangladesh Import from India||Trade Imbalance||Trade in Favor of|
Bangladesh is an important trading partner for India. The trade deficit with India is frequently highlighted by Bangladesh as a major contentious issue. Trade deficit with India in FY 2013-14 for Bangladesh was more than $5.5 billion.
It was expected that Bangladeshi export to India would be increased with this laudable initiative by Indian Government. But, later on Bangladesh Government could realize that the businessmen face lots of non-tariff barriers (NTBs) while exporting to India. Hon’ble Indian Prime Minister, during recent official visit to Bangladesh has also confessed the high trade imbalance despite duty-free and quota-free (DFQF) access for all but 25 Bangladeshi items in India. Now, Bangladesh expects India to remove non-tariff barriers (NTBs) as it views NTBs as the major obstacles to its export growth to India. Some of these barriers are: laboratory test for every consignment of food products, cosmetics, and leather and textile products; delay in getting test results; imposition of state tax; packaging requirement, anti-dumping and countervailing duties; inadequate infrastructure facilities such as warehousing, trans-shipment yard, parking yard and; connecting roads at land customs stations of India.
To facilitate and to remove bottlenecks in trade between two countries, agreements and MoUs relating trade were signed between Bangladesh and India during this recent visit of Indian Premier (6-7 June, 2015) like: Bilateral Trade Agreement; renewal of Protocol on Inland Water Transit and Trade; Bilateral Cooperation Agreement between Bangladesh Standards and Testing Institution (BSTI) and Bureau of Indian Standards (BIS) on cooperation in the field of standardization; Memorandum of Understanding on Indian Special Economic Zone in Bangladesh etc.
We can now expect and want to believe that the extent of NTBs will be reduced further which will facilitate reduction of trade imbalance between the two countries.
Trade facilitation between India and Bangladesh is vital and chamber to chamber (C2C) contact should be strengthened under the broader aspect of trade and investment. In another meeting with Hon’ble Prime Minister of India, the representatives of chamber bodies of Bangladesh also called for withdrawing Countervailing Duty (CVD) on RMG products and expected India should buy more garments from Bangladesh. They have also requested India for 50 acres of land to set up a warehouse to increase export of readymade garments (RMG) from Bangladesh. We think India shall consider these requests to boost up Bangladeshi trade. Forming a Joint Private Sector Working Group on trade was also proposed by the business community of Bangladesh. We think this move would further ease Indian investment to Bangladesh and boost Bangladesh exports to the neighboring country.
Special Economic Zone:
Bangladesh Government has already passed the new Bangladesh Economic Zones Act 2010 accordingly, which has definitely opened up a new window and will allow the private sector both local and foreign to own, develop and manage economic zones and establish infrastructure and services for the companies there. The Bangladesh Economic Zone Authority (BEZA) has already been established and necessary recruitment is also under process.
As per the MoU signed on June 06, 2015 (during the visit of Hon’ble Prime Minister of India in Bangladesh) between Bangladesh and India on the special economic zone, Bangladesh offered Special economic Zones (SEZs) to Indian companies in Mongla and Bheramara to bring balance in trade between the two countries. We hope this would significantly increase Indian investment in Bangladesh.
Line of Credit (LoC):
Addressing in a joint press conference, the Indian Premier announced a fresh $2 billion line of credit for Bangladesh and promised quick implementation of the earlier line of credit of $800 million and the full disbursement of $200 million in the sectors like: railway, power & energy, health & nutrition, education, ICT, water transport etc.
Climate change issue:
As climate change is critical to LDCs like Bangladesh, India should assist in conservation, mitigation and management efforts and support Bangladesh at international platforms on the issue of rising sea levels under the broader aspect of this MoU. Under the MoU, we can jointly move forward with the project naming, “India Endowment for Climate Change of SAARC”.
Through the visit of Indian premier, we hope that sub-regional cooperation and connectivity will be enhanced and commitment to the betterment of bilateral ties with India would be accelerated. This visit would also facilitate to move forward and open the horizon for existing unresolved issues soon.