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Thursday, Nov 11, 2004

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Indo-Bangla informal trade cause for concern: FICCI

Richa Mishra

New Delhi , Nov. 10

THE high incidence of informal trade between India and Bangladesh continues to be a cause for concern for trade and industry. The volume of unofficial exports to Bangladesh is reportedly in the range of $350-500 million each year.

According to the FICCI, informal trade between the two countries in commodities includes food items and live animals, apart from consumer goods.

Commodities unofficially imported from Bangladesh are confined to a small band of items, including fabrics and spices. The Border Trade Committee has been examining the issue.

Commenting on the current economic and commercial relations between the two nations, FICCI has said that with implementation of SAFTA, the process of economic integration would be much faster and intensive.

On steps to be taken to address the trade imbalance between the two countries, the chamber said that the export basket of Bangladesh needs to be diversified with identification of new product export potential to India, promoting gas export from Bangladesh to India, and trans-shipment of Indian goods from mainland to the North-East through Bangladesh.

Regarding cross-border gas trade, FICCI stated that according to an estimate, by 2005, the demand-supply gap for natural gas in India would be roughly 10.6 billion cubic metres per annum. This shortfall can be met by importing gas from Bangladesh either through pipelines or in LNG form.

Besides, cross-border gas trade with its resulting development multiplier is a highly promising option for Bangladesh.

On the proposed FTA between the two nations, FICCI said that it was a welcome move.

The chamber suggested that while considering FTA, there should be discussion on external tariff harmonisation so as to avoid problems of highly differential import duties, as in the case of Indo-Nepal Trade Treaty.

Regarding Indo-Bangla trade infrastructure, the chamber voiced some concerns on the physical infrastructure such as roads, rail and ship as well as on non-physical infrastructure like Customs duty and banking procedures.

The existing facilities for transportation by road are quite poor, it added.

"There are no Customs-bonded warehouses facilities at the Petrapole border. Lack of proper truck terminals and inadequate number of warehouses and cold storages at other border points is another area which needs to be addressed."

As far as shipments by rail are concerned, it largely depends on the availability of rakes and hence, was irregular, the chamber said. Further, the cheapest mode of shipment, inland water transport, was highly underutilised.

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