Once dubbed as a prime example of Henry Kissinger’s “bottomless basket case”, Bangladesh is set to become India’s fourth-largest export destination in FY 22, outpacing USA, UAE and China.
According to disaggregated data available till October, during the first seven months of FY22, exports to Bangladesh grew 81 per cent over the same period in the preceding year to $7.7 billion.
Bangladesh jumped from the ninth rank in 2019-20 to 5th position last year with an annualised growth of 10.83% to $9.09 billion.
The major items exported to Bangladesh by India during the April-October 2021 period include cotton ($2.1 billion), cereals ($1.3 billion), electricity and fuel ($0.6 billion), vehicle parts ($0.5 billion) and machinery and mechanical appliances ($0.4 billion).
Federation of Indian Export Organizations (FIEO) director general & CEO Ajay Sahai said one of the reasons for increased export to Bangladesh is relatively fewer disruptions in movement of goods to the country compared to other export destinations in the US and Europe due to Covid restrictions. “A combination of three factors helped in rising exports to Bangladesh – diplomatic efforts, logistics in terms of rail and waterways, and demand for agricultural items,” he said.
In 2020 while India’s economy tanked by almost 8%, Bangladesh’s GDP grew by 3.8%. According to the government data, exports to Bangladesh grew 11% in the previous fiscal year even as India’s overall exports contracted 7% because of the pandemic.
Underlining the fast-growing bilateral trade relationship, India and Bangladesh are set to undertake a joint study on the prospects of the comprehensive economic partnership agreement (CEPA).
In an interview with the Dhaka Tribune, Indian High Commissioner to Bangladesh Vikram Doraiswami said that CEPA would be a “win-win” situation for both countries.
In a joint statement after the virtual summit between Prime Minister Narendra Modi and his Bangladesh counterpart Sheikh Hasina, both sides emphasised the need to address issues of non-tariff barriers and trade facilitation. They include port restrictions, procedural bottlenecks and quarantine restrictions.
According to several analysts, at present, Dhaka ranks ahead of its neighbours in terms of development. The country displays a stable civilian government and has benefited from good relations with India, its big neighbour.