The story of India-Bangladesh relations has been one of unrealised potential thanks to the inability of both sides to transcend immediate issues and look at the larger picture. This narrative changed after the historic visit of Prime Minister Narendra Modi to Dhaka in 2015 that resulted in the India-Bangladesh Land Boundary Agreement which settled the festering enclaves issue. With the two leaders — Modi and Bangladesh Prime Minister Sheikh Hasina — striking a good rapport, relations between the neighbours changed for the better. This improvement was very much in evidence during Sheikh Hasina’s recent state visit, when Modi broke protocol to receive Hasina at the airport. A host of important deals were signed over the next two days on energy, infrastructure and defence. India also promised a third line of credit of $5 billion, including a $500 million defence deal. With this India has so far committed nearly $10 billion to Bangladesh in the form of credit, aid, and soft finance. All this to ensure a better relationship with the ninth largest importer of Indian goods, its largest trade partner in the region and the key strategic partner in South Asia to promote growth and contain terrorism. In the end, however, the logjam on Teesta grabbed more attention both in India and in Bangladesh. Though it wasn’t on the menu, there were hopes of some headway on Teesta what with West Bengal Chief Minister Mamta Banerjee being invited to join Modi and Hasina in talks. Unfortunately, such hopes were belied, though Modi has promised a solution soon.

Given the shared history and the complex relationship India has with Bangladesh, it needs to work harder to build goodwill with not just the Bangladesh government but also its people. The Hasina government is widely perceived as being too close to India by people in Bangladesh and the common belief is that India is somehow exploiting this to its advantage. Untrue as this may be, the fact is that India has to walk the extra mile to correct this wrong impression. The best tool for doing this is trade. For starters it can hasten work on expanding capacity of the main transmission line for power through the West Bengal border. The 500 MW supply that India began in 2013 was a blessing for Bangladesh. This was supposed to be doubled to 1100 MW but progress has been slow and the supply now stands at just 660 MW.

Overall trade has remained stagnant between FY14 and FY16 with India’s exports falling slightly. Bringing down trade costs will help, as will improved road connectivity and the long discussed rail link. As for FDI from India, despite Bangladesh creating dedicated SEZs, Indian investors have invested just $270 million since 2013-14. For both geo-political and geo-economic reasons, India needs a stable, progessive and economically robust neighbour in Bangladesh. Bangladesh, too, needs to realise that it is a win-win for both if it manages to hitch its economic wagon to India’s growth engine.

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