In light of Prime Minister Sheikh Hasina's visit to India, former finance adviser to caretaker government Dr AB Mirza Azizul Islam talks with the Dhaka Tribune's Asif Showkat Kallol about how important it is to address the current trade gap between Bangladesh and India, the non-tariff barriers that hinder the export of Bangladeshi products to India and the lack of trust that remains between the two neighbours
How is the PM’s visit to India important in terms of the country’s interests?
India is an important neighbour of ours; We share most of our border with it. We are friends with them, but a relationship has two sides – sometimes it is good, sometimes it is bad.
When Prime Minister Sheikh Hasina visits India, our delegates should put emphasis on enhancing cooperation in energy and power sectors. I think the government is thinking about asking more assistance from India for energy. We already import electricity from India in small scale, but the government may consider increasing that amount.
They should also discuss our government’s plan to invest in hydropower projects in Bhutan and the Indian authority’s permission to use their land to bring the hydropower to our country through Indian territory.
Another issue that they should address is the non-tariff barriers that create problems for Bangladeshi traders in exporting their products to India – i.e. lack of cooperation from the customs and product testing authorities, tax structure in different states, etc. The trade gap between the two countries is huge, and it must be addressed during this visit.
The delegates also must address the lack of trust that still remains between the two countries, particularly in major issues like sharing the water of Teesta River, and the killing of innocent Bangladeshi citizens by the Indian Border Security Forces (BSF).
How bad is the trade gap between Bangladesh and India and how do we reduce it? What about the FDI?
India announced duty- and quota-free access to all tariff lines for Bangladeshi products in 2011 except for tobacco and alcohol. However, there are some issues that we need to look into.
Firstly, the bilateral trade has crossed $6 billion mark, but it is heavily leaning towards India. Annually, we import nearly $6 billion worth of products from India, while our export there is barely above $500 million.
Secondly, there are several non-tariff barriers that create problems for the export of our RMG and pharmaceutical products. Our businessmen always complain about these non-tariff barriers at India’s end. Since 2015, only about 7,000 Bangladeshi traders have received five-year multiple-entry visas to India.
The third issue is Indian investment in Bangladesh, which is not in good shape either. The foreign direct investment (FDI) in Bangladesh crossed the $2 billion mark in 2016, India’s share in it is meagre, whereas Indian business entities have invested more than $15 billion across the globe, including developed countries like the UK and countries in the European Union.
We heard news about Indian flagship company Reliance Group wanting to invest in Bangladesh, but that did not happen either. So, during the prime minister’s visit to India, the Bangladeshi representatives should bring this issue to their Indian counterparts’ attention.
What kind of problems are Bangladeshi exporters facing?
For example, in some cases, the India authorities do not accept BSTI’s quality certificates for export items, and re-test the products. Bangladeshi exporters need to get the certificates from South India to export products in West Bengal.
Will the extension of connectivity make the bilateral trade easier?
Connectivity is important for transfer of goods in any trade, and road and water transports are much cheaper than airways.
Physical connectivity is necessary to facilitate trade between Bangladesh and India. However, even if the physical connectivity is there, the difficult customs rules and other non-tariff barriers will create complications. So, ultimately, the bilateral trade will not be easy.
What do you think about transit and transshipment facilities for India?
We gave those facilities to India at much cheaper prices than anywhere else around the world. Several news reports mentioned that the Bangladesh authority did not pay heed to even its own expert committee’s recommendations. So, we have certainly not benefited financially from these deals.
Do we need another line of credit from India?
No, I do not think we do. We still have yet to know how the first Indian line of credit was utilised. The government used some money from the first line of credit in the construction of Padma Bridge. We want proper utilisation of these lines of credit.
We have had two lines of credits from India so far. The government does not need a third line of credit because such loans come with high interest and hard conditions. We have concessional loans worth more than $22 billion from international agencies like the World Bank, International Monetary Fund and Asian Development Bank in the pipeline. Those loans have not been disbursed yet only because of our state agencies’ lack of capacities to meet their conditions. Concessional loans have low annual interest [around 0.5%] and longer grace periods. Why, then, should we go for Indian or Chinese lines of credit when they have high interest and short grace periods?
In addition, the prices of materials bought for projects under the lines of credits are high because there is no competitive pricing.
In the context of the PM’s India visit, what should Bangladesh’s policy be regarding China?
We should maintain good relationship with both India and China, but we also make sure to gain financially from both these relationships.
We know that China has huge trade surplus. The country has established Asian Infrastructure Investment Bank (AIIB), where we are a member. We signed several deals worth $22 billion with China during Chinese President Xi Jinping’s visit to Bangladesh, but have not followed up on the progress of those deals or our loan from the AIIB. We have to take a look into that.
We should not grant special favours to either India or China in trade deals, but our financial and other interests will be served well in the long run if good bilateral relationship is maintained with both the countries.
Is it necessary for us to sign a defence deal with India?
There is no need for us to sign a defence deal with India. If necessary, we can easily import military equipment from our neighbour without this kind of deal. Local and international experts are of the opinion that in case such a deal is signed, it may not be done on level grounds because India is a superpower. Also, such a step may incite unrest in the country.
What about the Teesta Water Sharing Treaty?
I hope they discuss this treaty during this visit. The Bangladesh delegation should also ensure that the India inter-linkage river project does not affect local rivers.
Do you think the Indian authority is provoking the lack of trust?
Yes, the Indian government is stoking the mistrust as the BSF keeps killing innocent Bangladeshis in border areas. We have raised this issue repeatedly in both local and international forums. On the other hand, the debate over Teesta treaty has not been resolved since it was halted in 2011. They are also building border fences, which is not the sign of a good relationship.