India and Bangladesh share a strong bond based on their common history, language, and culture. India was quick to recognize Bangladesh and establish diplomatic relations in 1971, right after its independence. This relationship goes beyond just strategic cooperation; its rooted in equality, trust, and understanding. When it comes to trade, Bangladesh is Indias biggest trading partner in the subcontinent. In return, India is the second-largest export partner for Bangladesh, making up 12% of its total exports. In the fiscal year 2023, the total trade turnover between the two countries reached an impressive $14.22 billion.
This economic collaboration highlights the deep connection and interdependence between India and Bangladesh, showcasing a partnership that extends beyond political ties. Most Bangladeshi products have easy access to Indian markets although this is for now diluted by the difficulty in penetrating the vast but highly competitive Indian market. Indian goods are transshipped through Bangladesh to connect its eastern region with its far-eastern region using Bangladeshi transportation, literally a quid pro quo.
India experienced a remarkable surge in exports to Bangladesh during the fiscal year 2023, showcasing the robust economic partnership between the two nations. The volume of trade encompassed an impressive array of 6,050 different commodities, highlighting the diversity in goods exchanged. Notably, the export figures reached US$ 12.20 billion, emphasizing significant growth compared to the previous fiscal years US$ 16.15 billion. Key contributors to this surge included other commodities valued at US$ 1.17 billion, cotton yarn (US$ 1.02 billion), petroleum products (US$ 816 million), other cereals (US$ 556 million), and cotton fabrics, made-ups, etc. (US$ 541 million). This momentum persisted into the initial months of April-May 2023, with exports reaching US$ 1.67 billion, underscoring the continued strength of the trade relationship.The fiscal year 2023 witnessed an expanding appetite for Bangladeshi goods in India, as reflected in the import statistics. A diverse range of 1,155 commodities was imported from Bangladesh, contributing to a commendable US$ 2.02 billion in imports. This marked a notable increase from the previous years figure of US$ 1.97 billion. Leading items in Indias import basket included RMG cotton (US$ 510 million), cotton fabrics, made-ups, etc. (US$ 153 million), RMG manmade fibers (US$ 142 million), spices (US$ 125 million), and jute (US$ 103 million). The positive trend persisted into April-May 2023, with imports totaling US$ 278 million. This ongoing growth underscores the sustained and expanding economic exchange between India and Bangladesh, affirming the mutual benefit derived from their trade relationship.
Comprehensive Economic Partnership Agreement (CEPA): India and Bangladesh are actively working towards a Comprehensive Economic Partnership Agreement (CEPA) in 2023, aiming to strengthen their economic ties. This agreement is anticipated to significantly boost trade, create job opportunities, and enhance living standards in both nations. The collaboration reflects a commitment to expanding the market for mutual benefit, fostering economic growth and development.
Both nations are actively enhancing infrastructure and connectivity to promote trade. Supported by initiatives, including Japanese funding, these efforts include the development of the Matabari Port in Bangladesh by 2027. The improved infrastructure is expected to facilitate smoother trade flows from India to Bangladesh and onward to Asian markets. Collaborative projects like the “Bay of Bengal Northeast Industrial Value Chain Concept” further underscore the commitment to strengthening economic ties.
In 2023, India and Bangladesh have elevated their economic partnership to a new level through a series of Memoranda of Understanding (MoUs) covering crucial areas. These agreements represent a comprehensive approach, focusing on water management, railway collaboration, scientific research, space technology, broadcasting, and judiciary. This holistic strategy addresses various facets that collectively strengthen the foundation for increased trade and mutual economic benefits between the two nations.
The future of Bangladesh-India trade cooperation holds immense potential for mutual benefit and regional prosperity. The Indo-Pacific, with its economic dynamism and strategic relevance, has become a focal point for foreign policy considerations. Within this framework, the Bay of Bengal region stands out as a vital area for growth and collaboration. The bilateral relations between Bangladesh and India serve as a model for the entire region, showcasing collaborative efforts that span various sectors. As the geopolitical construct of the Indo-Pacific evolves, it is crucial for these smaller regions to develop through inter-country cooperation and a shared vision of the future.
While China plays a significant role in the region, the unique historical and geographical ties between India and Bangladesh create a distinct imperative for collaboration. Despite Chinas economic presence, the strategic importance of India as a neighbor with the longest land border in South Asia cannot be overlooked. This inescapable relationship brings obligations, encouraging a nuanced approach to diplomacy that prioritizes being Bangladesh-friendly.
The potential for a Free Trade Agreement (FTA) adds another layer to the positive trajectory of Bangladesh-India trade. Projections indicate significant growth in bilateral trade if an FTA is established, offering opportunities for both nations to capitalize on their respective strengths. Initiatives like the “Bay of Bengal Northeast Industrial Value Chain Concept” further underscore the commitment to attracting manufacturing and increasing trade.
To conclude, in 2023, the Bangladesh-India trade relations have reached noteworthy milestones, laying the groundwork for unprecedented growth and collaboration. The Comprehensive Economic Partnership Agreement (CEPA) underscores a shared commitment to economic expansion, job creation, and improved living standards. Symbolic projects like the SwadhinataSarak and the Maitree Thermal Power project signify deepening ties and contribute to enhanced connectivity and energy security, vital elements for fostering increased trade. The strategic move towards currency diversification in bilateral trade reflects a proactive approach to facilitate smoother transactions. Initiatives like the expansion of border haats, infrastructure enhancements, and collaborative projects demonstrate a joint vision for robust economic ties and regional development. The series of Memoranda of Understanding (MoUs) covering crucial areas further exemplify the comprehensive nature of this economic partnership, reinforcing the foundation for increased trade and mutual economic benefits. This collective effort, marked by a collaborative spirit, not only navigates challenges but also contributes to the broader prosperity of the region.
– S. M. Saifee Islam is a Research Associate at the KRF Center for Bangladesh and Global Affairs (CBGA).
Published in Daily Observer [Link]