BANGLADESH’S export earnings from India are set to hit four-year low in the outgoing FY 2013-14, reported an English daily on Monday. The total export to India in the FY14 would be lowest in four years. It is no doubt very depressing while the industry insiders expect a supportable trade balance with the big neighbour. Bangladesh, on several occasions, called India to reduce trade barriers and urged to import more from the country. But no significant achievement has been done due to unwillingness from the Indian side.
The available Bangladesh Bank data show that the country’s trade gap with India swelled to $ 2.59 billion in the first half of the current FY as the country’s export to India was only $182.48 million against import of $2.78 billion during the period. According to EPB data, the garment export increased slightly to $84.47 million in July-May in the FY14 against around $67 million during the same period of FY 13, but the decline in jute, fish and fruit exports pulled down the overall export figure in the FY14.
Considering the year on year legal international trade flows of Bangladesh, India is the second largest source of imports coming into Bangladesh after China. The amount of smuggled goods from India into Bangladesh is also substantial. Experts presume, it may not be far behind in value compared to the legal trade flow from India into Bangladesh. The yearly legal import flow from India to Bangladesh is more than ten times of the legal export flow to India from Bangladesh on average. Besides, smuggling of goods from India to Bangladesh carries almost the same type of imbalance compared to the value of smuggled goods from Bangladesh to India. That is on both the counts, the balance goes in favour of India.
The four major bottlenecks hindering the trade facilitation between Bangladesh and India are identified as inadequate infrastructures, lack of adequate customs and port facilities, non-tariff barriers and cumbersome documentation procedures of export. As per Bangladesh official view, the products made here continued to face non-tariff barriers while entering into India despite repeated assurance by the Indian authorities over the years.
Unfortunately, Bangladesh is yet to get full benefits of duty-free access to India. In the context of Indian private sector investment in Bangladesh, Indian firms are opening their outlets in Bangladesh or setting up new plants almost entirely of their own. They do not care to contact with local business community, least to take local counterpart to set up new business under joint venture schemes. Moreover, while Indian manufacturers produce goods here, they do not export them to India. They are selling the goods in local market and exporting abroad taking away both the market benefits and profits.
Experiences suggest, Indians in the past often used trade protocols as diplomatic weapons to exert influence over Bangladesh. With the change of guards in Delhi, we would expect India would evolve a more equitable trade policies so that both the countries benefit as trade partners.
