Balancing India-Bangladesh trade

We hear of so many attempts by Bangladesh to bring some balance in bilateral trade with India, one of its largest trade partners. To our total dismay we have not yet seen any appreciable positive result so far as Bangladesh is concerned. Unless certain snags can be removed from both the sides the attempts of Bangladesh will remain as futile exercise. The approach of the politicians from both the countries appears to be defective. Failure of progress in negotiation due to hassles created by the bureaucracies of both the countries may be partly true. The fact is that neither the politicians, nor the bureaucracies nor the traders alone can be successful in narrowing the trade gap between India and Bangladesh. Only a good understanding through a friendly approach with mutual trust and confidence among the bureaucrats, politicians and traders can narrow down the huge trade gap between these countries.

India is a vast country and its industrial development is much more advanced and wider as compared to Bangladesh. In addition, it produces a large number of industrial raw materials. Its dependence on export trade is much less than Bangladesh's which concentrates on export-led growth and as such has to encourage trade related investment. Though India does not depend much on exports it produces much larger number of items than Bangladesh which does not have a very big export surplus. Due to steady high economic growth during the last few years consumer market in India is expanding rapidly. This is a clear advantage for Indian industrialists over the Bangladeshi industrialists. Apart from this, the Indian trade and industrial policies are more stable and balanced than Bangladesh. Ready availability of technical hands in adequate numbers is an added advantage. Only cheap unskilled labour cannot make products competitive. Even Indian effort to market its product is much more aggressive than Bangladesh's. Due to extensive experience Indian traders and industrialists are more organised than their Bangladesh counterparts.

In any bilateral trade negotiation we must bear in mind that none of the negotiating countries would normally allow import of items from the other country to create any disturbance for their own domestic industrialists or traders. Sometimes due to some special political or economic advantage some items are allowed and domestic producers of such goods are usually compensated by the respective government.

We are aware of the fact that some of our commodities are competitive in Indian market. Because free import of these items by India may disturb the Indian producers, the Indian government goes for creating tariff, non-tariff and para tariff barriers. Even though Bangladesh is a least developed country of Saarc region, Indian government imposes anti-dumping duties. On the other hand India realises that Bangladesh is a major market for Indian consumer goods because of geographical proximity and cultural affinity. As far as Bangladesh is concerned, because of her policy of export-led growth she may have to try hard (even at the cost of suffering at the initial stage) to divert her trade to other neighbouring countries as early as possible as no substantial growth of its export to India is envisaged in near future.

With the natural desire to become a major power in Asia and a competitor of China India cannot think of developing hostile relation with her closest neighbour Bangladesh. But there is no magic wand to bring balance in trade between India and Bangladesh overnight. Only sincere effort with good understanding supported by planned approach can bring balance in not too distant a future.

People in Bangladesh want good relationship with India. Trade is more effective for developing closer relationship. To attain this both the countries must appreciate clearly each other's points of view, difficulties and benefits. In doing this India must assist Bangladesh in developing closer trade relations with Nepal and Bhutan. It may be pointed out in this regard that as land-locked least developed countries both Bhutan and Nepal deserve special sympathy from India and Bangladesh.

Without waiting any further for Indian goodwill, Bangladesh and Nepal may consider developing air cargo services between them and also similarly Bangladesh and Bhutan. Joint ventures shared by entrepreneurs from India, Nepal, Bhutan (if available) may be set up in Bangladesh.

For very cogent reasons Bangladesh hesitates to allow transit facility to India through its territory. India is trying hard to get the transit facility. India-Myanmar gas deal is facing uncertainty because of Bangladesh's hesitation to allow setting up of India-Myanmar gas pipeline through Bangladesh territory. Thus the issue of transit facility remains a snag for the growth of India-Bangladesh trade.

As it appears Bangladesh may have to opt for difficult and time consuming strategies. However, in that the following steps may be considered:

a) A thorough study of Indian import, export and industrial policies. Indian state trade policies and practices may also be studied carefully.

b) An accurate (as much as possible) estimate about smuggling at the India-Bangladesh border may be made: A list of smugglers' associates can also be made: A list of smugglers' associates can also be made by the ministry of home affairs.

c) If possible Bangladesh may consider creating tariff, non-tariff or para tariff barriers for Indian goods. She should be particularly careful about cheaper low quality Indian goods.

d) Bangladesh may concentrate on developing closer trade links with its neighbours like Thailand, Myanmar, Philippines, Vietnam etc

e) Bangladesh may try hard for diversification of its export trade as quickly as possible

Bangladesh prime minister's recent visit to India though considered by some analysts as being totally unproductive, Bangladesh government sees it as ..perceptible improvement in ties ushering in new phase of friendship." However, no quick development in the growth of trade can be anticipated at this stage. In fact, India has created new impediments to export of some of our commodities to India and it has been reported that India and Myanmar are going to conclude the deal for supply of gas from Myanmar to India bypassing Bangladesh. We may not worry too much about these developments. At this stage we need patience and to continue to press our demands on India. What is actually needed is maximum people to people contacts, and maximum possible economic cooperation. Balance or near balance of trade between the two countries may not be possible within a short time. But it can be achieved in stages. May be within a decade or so.

ABMS Zahur is a retired Joint Secretary.