Wednesday, January 25, 2006

The Indo-Bangla trade barriers

Trade has always been a concern as regards India Bangladesh relations. Huge trade imbalances with India, it is said, assumes both economic and political stings in Bangladesh.


Even though forums like South Asia Enterprise Development Facility remain strongly committed to fostering better cooperation between Bangladesh and India, loopholes stay put.


According to Bangladesh daily Daily Star, "Despite roughly $2 billion exports to Bangladesh every year, India has not made its Petrapole port (India) capable of handling the cargoes. From Kolkata to Petrapole, the road and the bridges are narrow to slow down the movement of vehicles".


India's export to Bangladesh is less than one per cent of its total exports to the world. In 2004, according to available studies, Bangladesh imported $1.7 billion worth of goods from India via official channels.

In the same year, exports from Bangladesh to India amounted to nearly $78 million.

The paper further says that if Bangladesh could raise her exports to India to around $500-600 million per year, it will be in a comfortable situation.


The editorial suggests that to better New Delhi-Dhaka trade relations, land customs need to be upgraded through infrastructural and other facilities, since most of the trade takes place via land routes.


"Three quarters of the total transactions flow through land customs. Therefore, unless land customs are upgraded… the loss of trade might harm Bangladesh more than India."


Mafia and warehouse facilities are among the many issues that Dhaka wants the West Bengal Govt in India to take up.


"On both the sides of the fence, barring Benapole (Dhaka) and Petrapole, the infrastructure is outmoded and under developed. Warehouses and weigh bridges are not available in most of the posts. In fact, out of 40 or so custom posts, 38 are the harbours of smuggling," Daily Times says.


Trade theorists argue that the high tariff levels are the cause of smuggling.


"One fails to grasp as to why illegal outflow from Bangladesh is not taking place on the heels of high tariff barriers in India…Obviously then the question of Bangladesh's capacity to meet demands in the Indian market or the extent of her comparative advantage is a potential concern," the paper says.


Non-tariff barriers are the means of keeping foreign goods out of domestic market, while abiding by the multilateral agreements that the country has signed through the World Trade Organisation.


The paper suggests that from the Indian side, "the non-tariff barriers should be buried to enable Bangladesh to reap home the harvest of open Indian market".


The Federation of Bangladesh Chambers of Commerce and Industry has time and again said that tariff and non-tariff barriers at the Indian border hampers trade between the two nations.


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