Indian High Commissioner Vikram Doraiswami says Dhaka and New Delhi can create life-changing opportunities for Bangladeshis and Indians who live near Bangladesh. But they need to keep improving connectivity and close a trade deal first. This is the sixth part of his interview series with Adam Pitman, exclusive to Dhaka Tribune.
The high commissioner has the best numbers in town.
If New Delhi and Dhaka continue to improve connectivity, exports from Bangladesh to India increased by 182%. If they sign the proposed Comprehensive Economic Partnership Agreement (CEPA) too, exports from Bangladesh to India will increase by 297%.
Bangladesh's national income will then grow by 17%. Don't scoff. That amount of growth is created by new jobs and income for the people who need it most.
And you don't even have to take the high commissioner's word for it. All these numbers come from the World Bank.
It's time to think about what the India-Bangladesh relationship can do for you and your family.
DT: Whether a trade agreement happens or not, India and Bangladesh have been creating infrastructure for more trade. Road, rail, and maritime connectivity has improved tangibly. Are you aware of any businesses or industries that have profited yet?
Doraiswami: Absolutely! You just have to look at the increase in trade in the last financial year, where annual exports increased from India and from Bangladesh to each other.
This was despite several zero months of trade, during the complete lockdowns from mid-March to early July on both sides. The reason for the sharp increase in trade was the wise decision taken -- on both sides -- to push more trade through the rail route.
The increase in movement of freight by rail year-on-year was 130%, and the net effect on exports of both countries to each other has been an increase of over 10% over the same period.
This has benefited, in particular, the fabric and RMG sectors, but also other sectors like FMCGs, food products, agro commodities, essential medical commodities, such as liquid medical oxygen, and even the automobile sector.
In the current year, we are working to continue to facilitate trade through improved logistic services -- the better handling of trucked cargoes, railway rakes, and riverine barges, and the simplification of regulatory restrictions, and so on.
We’ve seen very positive signs already in the first quarter of the current financial year, including more freight through rail -- although we are now up against the limits imposed by current infrastructure constraints -- and even through riverine cargoes, where Bangladeshi goods are travelling cheaply, and in a relatively environmentally friendly way, to Indian consumers.
Frankly, though, this is nowhere near what is possible.
As the World Bank showed in its March 2021 study on connectivity in South Asia, with improved connectivity, under conditions of a CEPA, Bangladesh's exports to India could rise by 297%, giving Bangladesh a 17% GDP boost in national income.
Even improvements in connectivity, without a CEPA, would give Bangladesh a 182% increase in exports.
So, clearly, poor connectivity and regulatory issues in trade are hurting both sides equally, and preventing Bangladeshi businesses from tapping the Indian market more effectively.
And equally clearly, there is much work that both sides need to do in this regard.
DT: You recently shared that 355 companies from India have registered in Bangladesh. These companies, and more, are projected to invest up to $3.5 billion in the country. Do any of these companies stand out to you as a good model for others thinking about Bangladesh?
Doraiswami: Yes, these are BIDA (Bangladesh Investment Development Authority) statistics. And many of these firms are in Bangladesh for the long haul.
Businesses, even in India, have not been quick enough to recognize that this is a market of nearly 170 million, with rapidly increasing purchasing power and disposable incomes. Aspirational consumers are seeking better products and services.
It is a very exciting time for anyone interested in economic history.
So, I'd say Indian firms that have been here in the automotive sector, and in the FMCG sectors, have been subterranean success stories. I say this because they have been quiet performers, expanding steadily, contributing to a culture of reinvesting profits and expanding distributor networks, while increasing local hiring.
These Indian firms are also the best campaigners for the "Resurgent Bangladesh" brand in India -- a campaign started by five chambers of commerce in Bangladesh.
Take, for instance, Marico, which has been in Bangladesh for around 20 years. It is a leading contributor to corporate social responsibility projects in Bangladesh, where it works with highly regarded civil society organizations.
But most of all, it is seen as an entirely local company. To my mind, this is about the best compliment that any investor could hope to get: that it is seen by the buyers as part of the local ecosystem.
I hope it will be possible for India and Bangladesh to enhance the flow of investment, as this will be the next big driver of our partnership. This is why the CEPA is so important, as it includes a separate chapter on provisions to facilitate investments.
DT: Bangladesh has special economic zones dedicated to investors from South Korea, Japan, China, and India. There are two SEZs for companies from India. Can you explain where they are in terms of their development and what kind of interest they have received from investors?
Doraiswami: The two Indian Economic Zones are planned at Mongla and Mirsarai. Our concessional Lines of Credit will help with the construction of infrastructure at these two Economic Zones.
Currently, negotiations are ongoing to finalize the developer agreement between the Bangladesh Economic Zone Authority (BEZA) and the two Indian companies that have been identified as the developers.
We are hopeful that this process will conclude soon, now that travel-related restrictions are being eased and the developers' representatives can visit to finalize matters.
Once the developer agreement is finalized, we understand the developers are keen to start construction activities at the earliest.
According to the companies that are developing these two zones, there is considerable interest in sectors such as light engineering goods, agro-processing, electronics and IT products, automobile OEM manufacturing, industrial chemicals and RMG-related raw materials.
We have not, however, directly engaged in canvassing with the Indian industry, and other possible investors, as yet, since the priority is to get the developer agreement sorted out first.