Bangladesh-India bilateral trade may reach $16 billion a year by unlocking the untapped trade potentials between the two friendly nations, Vikram Kumar Doraiswami said on Sunday.
For increasing exports to India, Bangladesh will need to improve infrastructure, policy measures, standardization and promotional agreements, he suggested.
He was addressing a seminar that Indian High Commission in Dhaka organised for business and economic journalists on Sunday.
“A prosperous and developed Bangladesh is India’s fundamental national interest. We’ll do all we can to support that,” Doraiswami remarked, renewing India’s commitment to Bangladesh’s development support.
He informed that Indian companies have already generated $3.55 billion in FDI to Bangladesh and more are keen on investing here to create a value chain of the Indian manufacturing industry in Bangladesh.
Even though the bilateral trade balance remained largely in favour of India, Bangladesh’s export to its largest neighbour gradually rose from $689.62 million in FY16 to nearly $1.28 billion, the largest in Asia. The bilateral trade gap stood at $4.8 billion in FY20.
However, intraregional trade in the region is barely 5 percent of the region compared to ASEAN nation’s 25 percent, the High Commission’s trade representative Dr Pramish Basal mentioned, citing a World Bank report.
Bangladesh’s export to India could increase by 182 percent and India’s exports to Bangladesh by 126 percent if the countries sign a FTA.
Improving transport connectivity is projected to shoot up exports even further, yielding a 297 percent increase in Bangladesh’s exports to India and a 172 percent increase in India’s exports to Bangladesh.
Seamless connectivity between the two nations has the potential to increase national income by as much as 17 percent in Bangladesh and 8 percent in India, according to the World Bank.
The agreement on the use of Chattogram and Mongla ports are going to be a game changer for Bangladesh because of its geographical location, the Indian envoy said, adding that the ports are Bangladesh’s unique competitive advantage.
Bangladesh is the largest recipient India’s global development fund commitment with $7.86 total loans from New Delhi which is 26 percent of total $30 billion credited extended to 65 countries across the globe.
Indian government’s total concessional credit support to Bangladesh stands at $9.4 billion, including $1.6 billion loan for Rampal power plant.
The tendering process of the four credit lines extended so far is competitive in line with procurement laws of the Bangladesh government, the Indian officials informed.
Total disbursement of LoC funds now stands at $852 million as 14 projects out of 43 projects taken under four credit lines have been complete. Eight projects are ongoing and 14 are at tendering stage and another 11 are at the planning or DPP stage.
Indian’s government’s Project Preparatory Facility (PPF)—up to 1 percent of the LoC project value may be utilized for DPP preparation—may help save time and quality of DPP formulation, which has been identified as the major obstacle to LoC projects implementation by the Indian officials.
“In the long term, Bangladesh can be the driver of long term sub-regional inter-connectivity. Then, Bangladesh will be the business hub of Indian northern part, Nepal, Bhutan and Myanmar. In that perspective, it will be a game changer,” he commented.
Defending the trade deficit, Doraiswami said Bangladesh is actually getting benefitted from the imports from India as it basically imports primary industrial raw materials and machinery from India.
Apart from being competitive, he also suggested that Bangladesh promote and showcase its exportable goods to large cities of India Mumbai and Chennai other than New Delhi and Kolkata only.