Indian cabinet okays investment promotion accord with Bangladesh
India has approved signing and ratification of an agreement with Bangladesh for bilateral investment promotion and protection.
The approval came Thursday at a meeting of the Indian cabinet presided over by Prime Minister Manmohan Singh, said Information and Broadcasting Minister Priyaranjan Dasmunsi.
The agreement aims at promoting and protecting the interests of investors of the two neighbouring countries, he said.
"Such agreements increase the comfort level and boost the confidence of the investors by assuring a minimum standard of treatment and non-discrimination in all matters," he told reporters, adding that the agreement is likely to enhance investment flow between India and Bangladesh.
Earlier this year, Minister of State Jairam Ramesh said India has withdrawn the ban on investment flow from Bangladesh but the investment proposals would be judged on a case-by-case basis before giving the clearance.
The ban on investment from Bangladesh and Pakistan had been clamped for security reasons.
The agreement for investment protection and promotion has been a long-standing demand of potential investors in both India and Bangladesh.
The Indian cabinet's approval came at a time when Bangladesh government is considering afresh the $3 billion investment proposal from Indian industrial giant Tata in power, fertiliser and steel projects there.
The Tata proposal has been hanging fire for the last four years as the BNP-led government did not take any decision on it.
A representative of the Indian group recently met the Bangladesh Board of Investment which is giving a fresh look at the proposal.
While announcing the lifting of the ban on investments from Bangladesh, Ramesh made it clear that unless India permits investments from its eastern neighbour, it cannot hope for reciprocal gestures from Bangladesh to Indian investors keen to put their money in Bangladesh.
Indian officials and economic analysts point out that Indian investments in Bangladesh and exporting products manufactured from those facilities to Indian market make economic sense and can go a long way in narrowing the yawning bilateral trade balance to the benefit of Bangladesh.
Bangladesh offers cheaper production cost and easier availability of certain raw materials to make Indian investments there viable to cater not only to domestic market but to some other South Asian countries.