India Intelligence Report

   Indo-Bangla Business Ties


Six task forces of Indian and Bangladesh business leaders have agreed to influence their respective governments to allow containerized movement of cargo through road, rail and inland waterways to boost bilateral trade and investment. They also agreed to demand Dhaka-Kolkata passenger train service.

The Federation of Bangladesh Chamber of Commerce and Industry (FBCCI) and Federation of Indian Chambers of Commerce and Industry (FICCI) have been working to create a charter of recommendations on six areas of cooperation and will present the ideas to a commerce minister-level meeting scheduled in Kolkata on June 20. Both groups say that bilateral trade will double in one year if 30-40% of the recommendations are accepted and implemented.

The task forces were formed after FBCCI and FICCI signed a memorandum of understanding (MoU) during Prime Minister Khaleda Zia's lackluster visit to India. They decided to focus on bilateral trade, raising Indian investments in Bangladesh, trade related infrastructure, removal of trade disputes, non-tariff barriers (NTB), and encouraging interaction between Bangladesh-Indian Commerce and Industry Chambers.

The task force on Trade agreed on a list of 16 Bangladeshi products that can be allowed in India without custom levies. The items are fish and fish products, edible oil, automotive battery, ceramic products, cosmetics and toiletries, electrical copper wire, jute and jute products, melamine, leather and leather products, pharmaceuticals and footwear.

The task force on raising Indian investments in Bangladesh recommended several measures such as finalization of the Investment Protection and Promotion Treaty, single window clearance for new investment proposals in Bangladesh, setting up of industrial parks for Indian investments in Bangladesh, and rationalization of tax holidays.

The task force on infrastructure recommended that the Governments reach bilateral transport agreements to facilitate the movement of vehicles for carrying goods and passengers. It also recommended improved infrastructure facilities such as warehousing, cargo handling equipment, parking, customs and immigration facilities, weigh bridges, and better telephone connectivity at land customs stations (LCS) on both sides of the border.

It is not clear whether they agreed on Bangladesh providing transiting facility for Indian trucks to reach the North Eastern states. This was a key issue between the two nations and an agreement with Bangladesh will cut down running time greatly and also enhance India’s mainland access to the North Eastern states.

To improve inland water transportation, the task force recommended that the Petrapole - Benapole Land Customs Stations work 24X7 and new LCS be opened between Bangladesh and all neighboring Northeast Indian States—a new one with Mizoram was recommended. The task force proposed the extension of the Protocol on Inland Water Transport (IWT) till an improved version is available by a joint study by India and Bangladesh.

The task force on trade disputes recommended an appellate body with 3 members from each country for resolution of trade disputes with various mechanisms. It also recommended mutual recognition of accreditation agencies, allowing Northeast Indian banks to transact business directly with Bangladeshi banks, and recognizing that FBCCI and FICCI to be the nodal points for resolving the NTBs.

Overall, the recommendations of the task forces are very encouraging to better bilateral relationship which should not be at the low level that it is in. By focusing on trade, investments, and economic relationship, the countries can build political capital and learn to trust each other to solve more contentious border and water sharing issues.