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India strengthens trade ties with Bangladesh.
Feb 19, 2024

These ties not only promote economic growth, but also overall development between the two nations. The Ministry of External Affairs (MEA), Government of India made these remarks in a press release published recently.

The trajectory of Indo-Bangladesh bilateral relationship shows how the two countries have accrued mutual benefits due to close ties. Consequently, Indo-Bangladesh ties have become a matter of significant importance in Bangladeshi domestic politics.

Initiatives for trade facilitation

The MEA said India has taken steps to facilitate trade with Bangladesh by improving infrastructure at border points and easing customs procedures.

Agreements like the Agartala-Akhaura rail link and the Petrapole-Benapole Integrated Check Post aim to facilitate the seamless movement of goods and people within the sub-region.

India provides duty-free access to a wide range of Bangladeshi products, including textiles and garments. New Delhi extends preferential treatment to Bangladesh through various trade agreements, fostering economic ties and benefiting both nations.

Both countries grant each other’s merchant vessels the most favoured nation treatment when entering, leaving, or staying at their ports, similar to how they treat vessels under the flag of any third country.

These agreements allow Bangladeshi exporters Duty-Free and Quota-Free (DFQF) access to 100 per cent tariff lines, except for alcohol and tobacco products which fosters economic cooperation and strengthens bilateral ties.

Boost in Bangladesh’s exports to India

Bangladesh is India’s biggest trade partner in South Asia. Conversely, India is the second biggest trade partner of Bangladesh. The bilateral trade between India and Bangladesh has steadily grown over the last decade.

In 2021-22, the trade volume reached $18.2 billion, compared to $10.8 billion in 2020-21.

Exports of Bangladesh have tripled over the last decade, crossing $1 billion in 2018-19. These trade relations play a crucial role in enhancing economic cooperation and fostering stronger ties between the two neighboring countries.

Over the last 26 years, the exports of Bangladesh to India have increased at an annualised rate of 12.1 per cent, reaching $1.72 billion in 2021. India is the second-largest import source for Bangladesh, trailing only behind China.

Dhaka’s exports to India reached a total of $1,990 million in 2021-22, whereas imports from India amounted to $13.69 billion in the same period.

Currency settlement

India and Bangladesh have taken a significant step by agreeing to settle payments for their international trade partly in Indian rupee (INR). This move can reduce pressure on Bangladeshi dollar reserves and enhance trade efficiency.

Initially, trade settlements will occur in INR, with a later transition to Tk once the two Indian banks establish nostro accounts with Bangladesh's EBL and Sonali Bank. Sonali Bank and Eastern Bank Ltd will establish Rupee Nostro accounts with India's ICICI Bank and SBI.

Once this system starts functioning smoothly, other banks from both countries will be allowed to participate in this process. These interactions have paved the way for joint ventures, investment, and technology transfer.

In summary, the trade dynamics between India and Bangladesh continue to evolve, benefiting both nations and fostering economic progress. India’s conciliatory trade relations with Bangladesh have been instrumental in fostering economic cooperation and strengthening bilateral ties.

businesspostbd.com

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