The Hindu Business Line : Second meeting of India-Bangladesh task forces

As Bangladesh seeks more trading opportunities in India and market access for its exports, India has conveyed its commitment to keeping open the options of economic cooperation in a bid to foster friendly ties.

The bonhomie between India and Bangladesh that was evident in the early years after the formation of the latter in the mid-1970s is no longer palpable. New Delhi has been trying to engage with Dhaka on the economic front hoping that cooperation in this vital area will help defuse tension on other fronts.

The Federation of Indian Chambers of Commerce and Industry (FICCI) organised the second meeting of the India-Bangladesh Task Forces in Kolkata on June 20 when leaders of the Task Forces from both countries' chambers made their recommendations to the Minister of State for Commerce, Mr Jairam Ramesh.

The first meeting, organised by the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), was held on June 4, in Dhaka.

Plan of action

The six Task Forces discussed a comprehensive plan of action for trade facilitation and said that "one has to search for all possible measures, including some innovative ones, to enhance Bangladesh's exports to India fulfilling the latter's aspirations to increase trade." This is understandable because according to trade figures, during 2005-06 (the latest figures available from the Department of Commerce) India's exports to Bangladesh amounted to $1,632.55 million, while its imports from that country aggregated to $118.76 million, leaving a trade deficit of more than $1.5 billion.

So any suggestion to give a leg-up to exports from Bangladesh is welcome.

Hence the Task Forces zeroed in on several options. They include addressing tariff barriers to trade, promoting joint ventures and foreign direct investment from India, flexible rules of origin for products with 20 per cent Bangladeshi value addition getting duty-free access to the Indian market, institutional arrangement for trade promotion, allowing Bangladeshi businessmen to open foreign currency accounts in India, and easier visa issue to businessmen.

It is also interesting that at the first meeting of task forces on bilateral trade in Dhaka earlier this month, Bangladesh proposed a list of products for duty-free entry into India. They included fish, edible oil (soyabean/palm oil), automotive batteries, ceramic products, cosmetics, soap and toiletries, electrical copper wire and cables, footwear, jute and jute products, leather products, melamine and pharmaceutical products.

Its proposed list of products using raw materials imported from India with minimum 20 per cent value addition by Bangladesh to be exported to India duty-free cover cement with limestone from India, wheat flour (with wheat from India) and fruit juice (with mango/pulp), plastic products (with LDP/SDP/PET from India) and paper (with bamboo/pulp from India).

The task force on non-tariff barriers listed the key NTBs — harmonisation and classification issues, inadequate land Customs infrastructure, testing and certification, technical standards and banking barricades — Bangladeshi exporters encounter in India.

Kaladan project

Even as the second meeting began, Mr Ramesh inspected the infrastructure facilities at the border area land Customs station, Petrapole, and found that connectivity remained a major constraint as the access point to Petrapole is served by too narrow a road.

He said, "We have to develop alternative routes of access to the North-East. That is why the Kaladan project of developing the Settwee port near Myanmar by linking with the Kaladan river to access Mizoram from the mainland without using the Bangladesh corridor is particularly important." He said the Settwee port faces Visakhapatnam in a straight line.

He added that, "once we develop the Kaladan project, the integration of the North-East with East Asia will happen."

Yet another factor favouring the project is that the Myanmar port is 200 km from the nearest Indian border point in Mizoram, while the Kolkata port, now the nearest port for the North- East States, is more than 900 km away.

New initiatives

At the second meeting of the Task Forces, Mr Ramesh unequivocally stated that even as the Commerce Ministry had resolved to bring down the Customs duty on 4,200 Bangladeshi items to zero from the current level of 12-20 per cent in the next three years, he was keen that duty-free access for 16 items, including for five products using raw materials from India with minimum 20 per cent value addition by Bangladesh to be re-exported to India duty-free, considerthe sensitivities of local manufacturers. Mr Ramesh categorically said that the experience with Sri Lanka and Nepal in the case of edible oil and vanaspati had made India cautious in opening up this sector for duty-free entry.

Instead, he suggested that if Bangladesh could grow its own oilseeds and trade with India, the preferential duty entry could be considered.

He told the Bangladeshi entrepreneurs that the Government of India did not believe in raising any non-tariff barriers on the export of Bangladeshi products by demanding stringent technical standards.

India is ready to accept any testing laboratories set up in Bangladesh for its own products as recognised by the Indian government for accreditation.

On the sensitive issue of allowing foreign direct investment (FDI) and opening of bank accounts by Bangladeshi businessmen in India, Mr Ramesh drew the attention of the FBCCI delegates to "some sections" that supported fundamentalist outfits.

He said that as long as this concern was not addressed, FDI flows and opening access to Indian banks for Bangladeshi business people would have to wait.

He said that he was keen on India and Bangladesh jointly approaching the Asian Development Bank for building infrastructure projects for promotion of two-way trade on the lines of the Great Mekong Project connecting some important South-East Asian economies.

This is being done by India, as Mr Ramesh put it, to maintain an atmosphere of mutual cooperation and enduring peace in the sub-continent.

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