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Brutal trade imbalance with Dhaka cause for concern, says India

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SummaryAdmitting that the country has a ‘brutal trade imbalance’ with Bangladesh, India on Monday said it is a cause of concern that needs to be addressed by encouraging investments in the neighbouring nation, leading to increased production of goods that can be re-exported back to New Delhi.

Admitting that the country has a ‘brutal trade imbalance’ with Bangladesh, India on Monday said it is a cause of concern that needs to be addressed by encouraging investments in the neighbouring nation, leading to increased production of goods that can be re-exported back to New Delhi.

“It is not acceptable to India at all that we enjoy such a brutal one-sided trade surplus with Bangladesh. We are not here to compete with you in any sector, but to encourage business, create jobs and re-export products to India where there is a huge market for these goods,” said commerce secretary S R Rao at the inauguration of the “India Show” in Dhaka, emphasising that India’s trade with Bangladesh is based on asymmetry and non-reciprocity. India’s merchandise trade with Bangladesh stood at $4.4 billion in 2011-12 with exports touching $3.8 billion and imports $0.6 billion.

Bilateral trade has the potential to touch $12 billion in the next two years. India’s exports to Bangladesh include cotton, cereals, nuclear reactors, boilers and machinery, while imports comprise edible fruit and nuts, fish, apparel and textiles.

In fact, Bangladesh’s exports to India have increased 10-fold in the last 10 years.

As part of efforts to deepen trade ties, India slashed its sensitive list under the South Asian Free Trade Agreement (Safta) for less developed countries and granted duty-free access to Bangladesh.

“By investing in Bangladesh, Indian companies can also have access to Western markets like EU and the US where Bangaldesh enjoys zero duty especially for textiles,” Rao added.

He said New Delhi is hopeful of finalising the Cotton Purchase Agreement with Dhaka soon and is discussing the para-tariff and non-tariff barriers with its neighbour.

The potential areas of investments by Indian firms in Bangladesh include automobiles, manufacturing, textiles, tourism, food processing and energy and companies like CEAT and Marico have already announced their plans to do so. NTPC is building a 1,320-MW coal fired power plant in southwest Bangladesh.

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