Bangladesh now India's 4th largest export destination

Gautam Lahiri

18 June, 2021 12:00 AM printer

New Delhi: Bangladesh has surpassed Hong Kong to become India’s fourth-largest export destination in the first three months of the current calendar year.

It climbed four notches to become one of India’s top five export destinations in 2020-21 because of New Delhi’s diplomatic efforts, logistical ease and robust demand for Indian farm produce, a recent report from India's Commerce Ministry has stated.

India’s exports to Bangladesh rose 46 per cent to $3.16 billion in the January-March period, taking it to the fourth position after the US ($15.41 billion), China ($5.92 billion) and UAE ($5.34 billion), according to the latest data from the commerce ministry. Indian merchandise exports to Bangladesh, which saw a 35.14 per cent year-on-year growth to $0.95 billion in January and 17 per cent to $0.94 billion in February witnessed a 93.45 per cent jump in March to $1.26 billion. 

Bangladesh is at the fifth position in the list of India’s top export destinations for FY 21, a jump from the ninth rank in 2019-20, with an annual growth of 10.83 per cent to $9.09 billion. India's top four export destinations in 2020-21 were the US ($51.63 billion), China ($21.2 billion), UAE ($16.68 billion) and Hong Kong ($10.15 billion).

Federation of Indian Export Organisations (FIEO) director general & CEO Ajay Sahai said one of the reasons for a rise in exports to Bangladesh is relatively fewer disruptions in the movement of goods to the country compared to other export destinations in the US and Europe due to Covid-19 restrictions.

“A combination of three factors helped in rising exports to Bangladesh – diplomatic efforts, logistics in terms of rail and waterways, and demand for agricultural items,” he said.

Bangladesh is one of the largest markets for India’s agriculture products. India’s agri exports to Bangladesh recorded the second-highest growth of 95.93 per cent in 2020-21 after Indonesia (102.42 per cent), a government official said on condition of anonymity. 

Major contributors to the increase in exports in 2020-21 are petroleum products and agricultural commodities such as rice (other than basmati), said India Exim Bank’s chief general manager - research & analysis, David Sinate.

Exports also jumped due to a sharp reduction in import duty on rice from 62.5 per cent to 25 per cent by Bangladesh. The movement of goods by rail instead of road has also facilitated trade with reduced transportation costs, he added.

Land customs stations and other border facilities too have been upgraded and there is greater coordination between the two sides. “There has been a conscious effort to ensure the bilateral relationship has a solid underpinning from trade and economic ties. There has been a greater focus on connectivity and easing of trade procedures at the border because of the confidence in the relationship over the past decade,” said one of the sources in the government.

“At the same time, there has been a realisation on the Bangladeshi side that certain goods can be acquired more cheaply from India,” said the source, adding Dhaka had also benefited from concessions under the South Asian Free Trade Area (SAFTA).

According to Sahai, consumption of food items has gone up globally in recent years. “Bangladesh is importing agricultural produce from India in large quantities because of better quality, reasonable rates and logistical advantages,” he added.

“The prime reason for the surge in the exports to Bangladesh is a huge surge in cereal exports,” Mohit Singla, founder chairman, the Trade Promotion Council of India (TPCI) said, adding that freight cost is often a deciding factor for global imports.