Syed Jamaluddin

THE visiting high powered Indian business delegation on July 20 last urged the government of Bangladesh to increase connectivity between the two countries to enhance bilateral and regional trade. This was stated in the seminar held in a local hotel. The members of the delegation said Bangladesh and India can boost both value and volume of trade through border trade, eco-tourism and aviation business. The leader of the delegation said we need people-to-people, business-to-business, cultural and road connectivity between the two countries to achieve the benefits. He urged the political leaders of both the countries to remove barriers to cementing bilateral trade relationship. The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) and the Federation of Indian Chambers of Commerce and Industry (FICCI) jointly organised the seminar. In this connection, a 50-member business delegation was on a visit to Bangladesh to explore bilateral business potential.

As the chief guest at the inaugural session, the Bangladesh commerce minister termed political barrier the main obstacle to developing bilateral trade between the two countries. He said trade was used as a political weapon in the past. He asked the Indian side to remove non-tariff barriers from Bangladesh exports so that then trade gap was narrowed.

In the working session of the seminar, the Indian businessmen showed interest to invest in leather, agro-products and readymade garment sectors of Bangladesh. The Secretary General of the FICCI mentioned that businessmen should take advantage of the prevailing comfortable political situation in both Bangladesh and India. They should convert this comfort into opportunity. According to him, the only possible option to reduce the trade gap would be to allow greater Indian investment in Bangladesh and the re-export of their products and services to India. This idea, however, is not new. It was floated long ago but the response from the Indian side was not encouraging. This time the proposal is coming from the Indian side. The Indian businessmen are probably waiting for free trade agreement between the two counties so that they can export their machinery and other products to Bangladesh and buy the products of Indian ventures free of duty.

During the meeting, the Indian side argued that reduction in tariff level on both sides, creating transit facility for promoting trade, maintaining and developing infrastructure, simplifying pre-shipment inspection and testing facilities were needed to increase trade. The Bangladesh side pointed out that Bangladesh's economy showed resilience, despite global recession because of its robust RMG exports and positive remittance flow.

The government has recently formed a core group comprising the representatives from ministries of foreign affairs,commerce,communications and national board of revenue to recommend the ways and means to eliminate the critical barriers to trade with India. In an interministerial meeting, the ministry of commerce presented a list of non-tariff and para-tariff barriers imposed by India in recent times. The Indian customs authority asked for laboratory test for each and every consignment of food products,cosmetics,leather and textile products. The samples are sent to the laboratories located far from land customs stations through normal mail, which delays the clearance of consignments. The Indian authorities have recently imposed 18 per cent value added tax (VAT) on apparels of Bangladesh origin, defying SAFTA agreement. Sanitary import permit has been made mandatory for Indian import of food, toiletries and cosmetics from Bangladesh. They have imposed 18 per cent extra duty on cement imports. Packaging requirements has been specified for food items, with maximum retail price, standard unit, month and year pf packaging inscribed on the packets. Lack of warehousing, transshipment yard, parking yard and connecting roads at land customs stations of India also hinders exports from Bangladesh. In fact, all negative factors are effectively discouraging exports from Bangladesh. They are most reluctant to accept our exports. These matters have been brought to the notice of the Indian authorities at different levels but without any response. In the seminar, the FBCCI president mentioned about some of the non-tariff barriers and said that multiple hurdles have to be crossed.

During the seminar, the Indian high commissioner mentioned that every year 25,000 Bangladeshis enter into India with visa and they do not return. They are not aware where they are staying. Bangladesh government has brushed aside the Indian high commissioner's claim. Bangladesh has not received any official communication from the government of India in this regard. In this context, the result of a survey of Indian nationals staying in Bangladesh may be cited. According to this survey, about 0.5 million (5.0 lakh) Indians are staying in Bangladesh illegally. They are working in different establishments and sending money home through hundi. The Indians are working in NGOs, garments, textile, IT and many other places. Most of them came on tourist visas and then stayed back through illegal means. Information about illegal staying of Indians in Bangladesh is available with the ministry of home affairs of Bangladesh.

Our Prime Minister is interested to reopen cross-border railways for stronger connectivity between Bangladesh and India. She also sought Indian cooperation so that Bangladesh can transact trade through Banglabandh and Burimari land routes. She made these remarks when the visiting business delegation from India called on her. As the Indian business delegation requested the Prime Minister for setting up special economic zones in the bordering areas for Indian investment, she said there are such zones in Comilla, Feni and Syedpur and the Indian businessmen could invest in those places as these are close to the border regions.

During the seminar, the Indian businessmen deliberately or otherwise bypassed the issue of tariff and non-tariff barriers and hammered on the need for increasing physical connectivity, meaning transit or transshipment and signing of a bilateral trade agreement to promote trade and economic cooperation. But signing of a free trade agreement is not so easy. We have to protect the interest of our limited number of industries as against the vast industrial empire of India. The matter has to be carefully studied. When India asks for something, we must consider it with a grain of salt.

This time India has also asked for the use of Chittagong port for shipment of their goods. The Indian request can not be considered as an isolated demand. India has to tell us what they are going to offer in return for transit and use of Chittagong port. There must be reciprocal benefit for Bangladesh for offering transit and use of Chittagong port. The Bangladesh side, for example, may request the Indian authorities to return the south Talpatty island and settle the maritime boundary in exchange for the two Indian proposals mentioned above. In fact, a package deal is needed with India to settle various issues. The Indian proposal of connectivity can not be taken up in isolation.

Bangladesh-India trade conference has come at a time when the Indian plan to construct the Tipaimukh dam on the Barak river has given rise to public resentment in Bangladesh. Such an issue having political dimension do leave a damaging impact on bilateral trade and economic cooperation. Trade relations can hardly work in isolation. The politicians should try sincerely to remove the irritants to create an environment conducive to Bangladesh-India bilateral trade and economic cooperation.

The writer is an economist and columnist