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Fast-tracking of the proposed India-Bangladesh Free Trade Agreement (FTA) is likely to feature prominently on Bangladesh Prime Minister Sheikh Hasina’s agenda at the meeting with her Indian counterpart Narendra Modi in New Delhi on Tuesday as Dhaka may see Least Developed Country benefits end by 2026 and possibly lose duty-free, quota-free benefits extended to it by Delhi under the South Asia Free Trade Agreement (SAFTA).
Hasina, who arrived in New Delhi on Monday on a four-day official visit, is also likely to discuss issues such as energy security, defence and military cooperation, water-sharing, connectivity, joint production of Covid-19 vaccines and the blue economy, in her meeting with Modi, a source tracking the matter said.
Securing market access
“In the proposed India-Bangladesh FTA, Dhaka will try to include all benefits it gets as a LDC under SAFTA, including duty-free quota-free access. This will ensure that when it graduates out of its LDC status in 2026 it will continue to get the SAFTA benefits and not lose out on market access,” the official said.
The UN General Assembly, last year, took note of the endorsement by the Economic and Social Council of the recommendation that Bangladesh, Lao Republic and Nepal, be graduated out of LDC category. It, however, decided to give a five-year preparatory period, till November 2026, to the countries for graduation taking into account the disruptions caused by the Covid-19 pandemic.
In a Secretary-level meeting in March this year, India and Bangladesh decided to finalise a joint study on the proposed FTA, which would actually be a broader Comprehensive Economic Partnership Agreement including goods, services, investments and other related areas.
Key trade partner
New Delhi is interested in deepening trade and investment ties with Bangladesh as the neighbouring country is now India’s biggest trade partner in South Asia. Bangladesh has become the fourth largest export destination for India with growth of over 66 per cent to $16.5 billion in 2021-22 from $ 9.69 billion in 2020-21.
“Getting into a trade pact with Bangladesh will also help India counter the growing influence of China in the country,” the source added.
During Hasina’s visit, Dhaka and Delhi will likely sign a number of MoUs in the areas of defence, water management, railway modernisation, judiciary, science and technology, and information and broadcasting.
Bangladesh is an important partner under India’s “Neighbourhood First” policy. Cooperation extends in multiple fields including security, trade and commerce, power and energy, transport and connectivity, science and technology, defence, rivers and maritime affairs.
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