Trade gap with India: BD needs to look for alternative ways

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UNB, Dhaka :
As Bangladesh’s export to India remains below the expectation despite having duty-free access, business leaders and economists here say Bangladesh needs to look for alternative ways for closing the trade gap with its important neighbour.
Proper market analysis, producing products by analysing India’s demand with competitive price, removal of non-tariff barriers, encouraging joint ventures (JVs) and the idea of re-export could help boost Bangladesh’s export to India, said industrialists.
“We’ll encourage big Indian companies to have partners in Bangladesh,” special adviser to India Bangladesh Chamber of Commerce and Industry (IBCCI) Abdul Matlub Ahmed told UNB.
He said, the Indian big companies could produce products here through joint ventures, and the products could be exported to India and elsewhere in the world availing of duty-free advantage apart from addressing Bangladesh’s domestic demand.
Director General of the Bangladesh Institute of Development Studies (BIDS) Dr Mustafa K Mujeri said Bangladesh needs to improve investment climate to allure Indian companies. “Or else, the Indian companies won’t feel encouraged to come here.”
Asked how Bangladesh’s export to India could be increased, the economist said there are some non-tariff barriers that need to be removed.
Meanwhile, he added, Bangladesh needs to concentrate on the prospective products that have adequate demand in the Indian market. “We need to develop new products in line with the market demands.”
Matlub Ahmed, however, said having some non-tariff barriers to a big country like India are usual and Indian assured them of removing those once Bangladesh specifically mentions about the barriers.
Bangladesh and India offer natural markets for each other’s exports and have advantages of reduced transaction costs and quicker delivery due to geographical proximity and common language.
“Bangladesh’s export, at one stage, surged to $700 million following duty-free entry granted by the Indian government,” said Matlub, also founder President of the trade body IBCCI.
He, however, said the export to India started declining as Bangladesh mostly produces products which are almost available in India. “Brand image is a big thing in India and we don’t have such brand products,” Matlub added.
In November 2011, India had announced duty and quota free access for all Bangladeshi products, except for 25 alcoholic and drug items. The two-way trade between Bangladesh and India stood at $6.6 billion in 2013-14 with India’s exports at $6.1 billion and imports from Bangladesh at $462 million, according to Confederation of Indian Industry (CII).
The volume of trade between the two countries was $5.34 billion in fiscal 2012-13, according to data from the Indian High Commission in Dhaka. Bangladesh’s exports to India were at $563 million in fiscal 2012-13, leaving Bangladesh’s trade deficit at $4.2 billion.
Five year ago, the trade volume was only $2.7 billion five years ago. However, the trade imbalance remains heavily in favour of India as Bangladesh’s exports to India remains insignificant.
Skewed trade could be redressed with greater investment participation of Indian companies in Bangladesh through going into joint venture investment, trade insiders say.
Director General of Confederation of Indian Industry Chandrajit Banerjee said that Bangladesh-India trade could double to $10 billion by 2018 provided trading irritants like non-tariff barriers and infrastructure related issues are resolved.
The CII thinks improving the investment climate by developing single window clearance for new business proposals; repatriation of profits, setting up economic zone in Bangladesh outside EPZ with all the needed infrastructure facilities; upgrading the tax holiday system and improved transport connectivity will further strengthen the economic partnership between the two countries.
Foreign Minister AH Mahmood Ali said there is a bright prospect of expanding trade with India due to geographical proximity and connectivity.