India and Bangladesh have decided to start negotiations this year on a bilateral Comprehensive Economic Partnership Agreement—a free trade agreement in goods, services, investments and other related areas—aiming to implement the pact by the time Bangladesh graduates out of its LDC status in 2026.

In their bilateral meeting on Tuesday, Prime Minister Narendra Modi and his Bangladeshi counterpart Sheikh Hasina, who is on a four-day visit to India, also discussed further enhancement of the development partnership, including upgrading railway infrastructure projects, building resilient supply chains between the two countries and across the region, and continuing the close security cooperation, Foreign Secretary Vinay Kwatra said in a media briefing.

MoUs signed

The two countries signed seven MoUs in areas such as water sharing, including sharing of waters of the Kushiyara river; railway infrastructure; training for judicial officers; and science and technology cooperation.

“Our bilateral trade is growing rapidly. Today, India is the largest market in Asia for Bangladesh’s exports. To further accelerate this growth, we will soon start discussions on the Bilateral Comprehensive Economic Partnership Agreement (CEPA),” Modi said in his press statement in the presence of Hasina and delegations from both countries.

Despite the pandemic, bilateral trade between India and Bangladesh has reached an all-time high of 18 billion in the last financial year, Kwatra said.

Economic partnership agreement

“To sustain the momentum, both leaders have directed concerned ministries to commence negotiations on a comprehensive economic partnership agreement this year and complete it in time for Bangladesh’s final graduation from LDC status,” Kwatra pointed out.

Once Bangladesh graduates out of its LDC status, which is estimated to happen in November 2026, it will stand to lose LDC concessions such as the duty-free, quota-free access for goods it enjoys in India under the SAFTA. Dhaka will try to retain the benefits under the India-Bangladesh FTA.

Both leaders also underscored the importance of continuing close security cooperation in the fields of counter terrorism and border management, further enhancing development partnerships, including upgrading railway infrastructure projects and building resilient supply chains.

“We also decided to increase cooperation in sectors such as IT, space, and nuclear energy, which are of interest to our younger generations. We will also continue to cooperate on climate change and on preserving a common heritage like the Sundarbans,” Modi said.

Hasina also met President Droupadi Murmu at Rashtrapati Bhawan on Tuesday.