Logistics constraints a major barrier

Logistical constraint is the biggest barrier to expanding trade between Bangladesh and India, said Vikram Kumar Doraiswami, the high commissioner of India to Bangladesh, recently.

Both countries conduct most of the bilateral trade through one point, the Benapole-Petrapole border, and this essentially creates vested interests.

"As a result, the cost of trade remains high," Doraiswami said at a discussion on "50 years of Bangladesh-India Partnership: Towards a Journey in Next 50 Years".

The event was jointly organised by the Centre for Policy Dialogue and the New Delhi-based Research and Information System for Developing Countries at a hotel in Dhaka on Wednesday.

"There is a clear necessity to look at the trade relationship in a way that benefits both countries, but for that to happen, we need to look at what the critical issues are. There are fundamental problems in business discourse," he added.

India's exports to Bangladesh in FY2018-19 stood at $9.21 billion while imports amounted to $1.04 billion.

Various experts say that Bangladesh's exports to India could be much higher if the country's infrastructure is improved, local businesses diversify their products, and a well-functioning standardisation system is put in place.

Doraiswami went on to say that India wants more border checkpoints to be functional and is ready to help in this regard through grant-based projects.

He also suggested increasing the use of railways for trade as it is a very cost-effective mode of transportation.

When the ongoing coronavirus pandemic forced both countries to shut their connecting land borders last year, a lot of trade was conducted through the railway. Bilateral trade increased 130 per cent at the time.

"But now, the situation is different due to a lack of logistics," Doraiswami said.

About 26 per cent of India's exports to Bangladesh is cotton, a key raw material for the garment industry. Apparels are Bangladesh's main exports to international markets, including India.

"We should act fast to improve the logistics for land, rail and river ways. We are more than ready to spend money on grant-based projects to develop inland container depots and other related infrastructure to make trade easy and cost-efficient," Doraiswami added.

The envoy thinks Bangladesh has good potential to export food items, leather goods, and a number of other products to India.

"But this is not happening," he said, stressing on the need for a common standardisation of food quality.

He suggested improving the payments system, citing examples that many Bangladeshis who travel to India for medical treatment use the grey market to make payments.

"This problem could be addressed by simplifying the payments system," Doraiswami said.