Encouraging Indian investments into Bangladesh with an objective of re-export to India would not only address the existing trade imbalance but would also increase the investment led trade, Chandrajit Banerjee, Director General, the Confederation of Indian Industries told Senior Journalist, Jayashankar Menon.
In an exclusive interaction, Banerjee discusses a gamut of issues between India and Bangladesh to Senior Journalist, Jayashankar Menon. Excerpt:
JM: The CII has said that India-Bangladesh trade could double to $10 billion by 2018, how realistic is this aspiration?
CB: At present India-Bangladesh trade is pegged at $6.6 billion. The trade has more than doubled the value of $2.7 billion five years ago. The CII feels that encouraging Indian investments into Bangladesh with an objective of re-export to India would not only address the existing trade imbalance but would also increase the investment led trade. Also, addressing Non Tariff Barriers and the infrastructure bottlenecks could double the bilateral trade to $10 billion.
JM: How do we tackle the issues of non-tariff barriers at the same time getting infrastructure related issues redressed?
CB: The CII has suggested addressing Non-tariff barriers (NTBs) such as harmonization and classification issues and non-recognition of Technical Standards to grow trade. Infrastructure bottlenecks related to power, ports, energy, and telecommunication also should be alleviated. Improving the investment climate by developing single window clearance for new business proposals, repatriation of profits, setting an Industrial Park for India in Bangladesh outside EPZ with all the needed infrastructure facilities, upgrading the tax holiday system and improved transport connectivity will further strengthen the economic partnership between the two countries.
JM: How Sushma Swaraj’s visit to Dhaka has helped boosting trade and investment between India and Bangladesh?
CB: The first foreign visit of Sushma Swaraj since taking over as the External Affairs Minister of India to Bangladesh was successful in boosting and further intensifying trade and investment between the two countries. The visit focused on infrastructure development, relaxed visa regime, Dhaka-Shillong-Guwahati bus service and allowing import of 100 MW electricity from India which augurs well for closer people to people contact and connectivity thereby reinforcing closer ties between the two neighbours.
JM: The two-way trade between India and Bangladesh was pegged at $6.6 billion in 2013-14, with India’s exports standing at $6.1 billion and imports from Bangladesh at $462 million. What will be the figure for the current fiscal?
CB: The bilateral trade for the year 2014-15 may touch $7 billion as we see a surge in exports of cotton, sugar, cereals and more.
JM: There is a trade imbalance in favour of India and decline in Bangladesh exports to India. How the two countries can tackle this issue?
CB: As I said earlier, the trade imbalance can be addressed by encouraging more Indian investments into Bangladesh and by addressing Non-Tariff Barriers and infrastructural impediments.
JM: Do you think that there will be more investment by Indian firms in Bangladesh in the coming days?
CB: Indian companies are spreading their wings and are investing overseas in their quest to become global multinationals. Indian companies are increasingly looking at Bangladesh as a major investment destination. A large number of Indian firms from both public and private sector have been working on different turnkey projects in Bangladesh in sectors such as power, transmission lines, telecom, textiles, chemicals and pharmaceutical, glass, plastics and engineering.
JM: So far, Indian investments in Bangladesh stand at $2.5 billion as of 2013. Do you think there will be a major boost in the coming years?
CB: Indian Investments have seen a surge in the recent past with Indian investment from $ 1.2 billion in the year 2012 to $ 2.5 billion in 2013. Major Indian companies such as Godrej, Bharti Airtel, Tata Motors, Sun Pharmaceuticals, Asian Paints, Marico, CEAT, Venky’s Hatcheries, Forbes Marshall had invested in Bangladesh in the recent past.
To further promote economic cooperation, the CII feels that an investment route must be targeted to increase trade. Indian industry is keen to undertake investments in Bangladesh to leverage its advantages of competitive workforce, natural resources and stable environment. Such investments could be strategized to produce goods for the local Bangladeshi market and third country, including Indian markets, working within the framework of the LDC benefits. For example, garments, textiles, jute, leather, light engineering goods and frozen foods could be sourced from Bangladesh.
JM: What are the potential export products you have identified other than the existing ones to be exported to Bangladesh?
CB: Some of the potential products that could be exported to Bangladesh include bamboo, limestone, horticulture products, spices and vegetables. These could be sourced from North Eastern States of India. In addition to this, there is a huge opportunity in the services sector including ICT, pharmaceuticals, hospital and medical equipment, tourism and professional services.
JM: Has the geographical proximity and common language help improve export fortunes of both the countries?
CB: Bangladesh and India offer natural markets for each other’s exports and have advantages of reduced transaction costs and quicker delivery due to geographical proximity and common language.
JM: What are the other issues that need to be tackled to strengthen trade between two countries?
CB: Some of the important issues faced by Indian companies invested in Bangladesh relates to remittances to India (of Taka earned locally converted to US dollar), harmonization and classification issues, technical standards, availability of land and developing single window clearance for new business proposals.
JM: As Bangladesh has done well in pushing social indices upward, what lesson can India learn from our neighbour?
CB: In spite of Bangladesh’s growth being lower than India, it has done exceptionally well in pushing its social indices upward. India can learn a lot from Bangladesh when it comes to alleviating social menaces such as poverty, reducing child mortality, women empowerment, higher life expectancy and gender equality.
JM: Which are the potential sectors for investment in Bangladesh?
CB: To further promote economic cooperation, the CII feels that an investment route must be targeted to increase trade. Indian industry is keen to undertake investments in Bangladesh to leverage its advantages of competitive workforce, natural resources and stable environment. Some of these potential investments include agro processing, automobiles, textiles (including home textile), Chemicals, plastics, light engineering, ICT, pharmaceuticals, hospital & medical equipment, tourism, professional services and Gems & Jewellery.
JM: What are the major Indian export products that are exported to Bangladesh and vice versa?
CB: Major Indian exports to Bangladesh include cotton, sugar, cereals, vehicles and accessories and major Indian imports from Bangladesh include textile fibres, paper yarn, fish, apparel, mineral fuels, salt and cement.