India’s Contribution To Bangladesh’s Economic Development: A Trade Perspective

ABSTRACT

India has played a critical role in fostering Bangladesh’s economic growth with the help of trade, investments, and regional collaboration, India has been instrumental in supporting Bangladesh's economic development. India's contributions to Bangladesh's economic growth and advancement have included financing infrastructure projects, allowing Bangladeshi commodities to enter Indian markets, and encouraging regional economic integration. In addition to their wider effects on the economic stability and prosperity of South Asia, this study examines the importance of India's trade policies and investment initiatives in bolstering bilateral commercial relations. With significant room for expansion, the study emphasizes how a win-win collaboration can open up new avenues for growth and strengthen regional collaboration. To ensure long-term peace, economic advancement, and prosperity in the South Asian area, this partnership must be strengthened.

INTRODUCTION

India has contributed significantly to Bangladesh's economic growth, especially in the trade sector. One of the most important aspects of the two nations' robust economic connection over the last few decades has been commerce. There is a long history of cultural, economic, and physical relations between Bangladesh and India. These connections have become stronger over the last few decades, especially in the areas of trade and economic cooperation. India has played a crucial role in Bangladesh's economic development, since the country's economy is among the fastest-growing in South Asia. This article examines India's role in Bangladesh's economic growth, emphasizing the two nations' trading contacts, difficulties, and bonds at different levels. In along with many other parallels, India and Bangladesh have a shared history, language, and culture. The strong bilateral relations were indicative of a broad partnership that goes well beyond an economic partnership and is founded on equality, sovereignty, trust, and understanding. As an example for bilateral ties in the region and beyond, the cooperation has grown, developed, and reinforced. India's role in the development of Bangladesh's economy may be examined in a number of ways, from encouraging investments and commerce to building infrastructure and fostering regional collaboration.

KEY COMMERCIAL, TRADE, AND ECONOMIC ASPECTS BETWEEN BANGLADESH AND INDIA

1. To attend the 6th Indian Ocean Conference, which was hosted by the India Foundation, External Affairs Minister travelled to Dhaka on May 11–12, 2023. While there, he paid Prime Minister Sheikh Hasina a visit. Prime Minister Sheikh Hasina attended the G20 Summit in India from September 8–10, 2023. Aside from the summit, the two prime ministers met. The two nations signed three Memorandums of Understanding during this visit in the fields of agricultural research, cultural interaction, and digital payment systems. 

2. On November 1, 2023, the two prime ministers virtually closed three development cooperation projects in Bangladesh that were supported by India. The projects include the Unit II of Maitree Super Thermal Power Plant, the Khulna-Mongla Port rail connection, and the Akhaura-Agartala cross-border rail link. 

3. The recently appointed foreign minister of Bangladesh visited India on official business during February 7–9, 2024. This was his first formal bilateral trip outside after taking over as Bangladesh's foreign minister in January 2024. He visited with the Hon. Smt. Droupadi Murmu, the President of India, and met one-on-one with the Ministers of Commerce and Industries, External Affairs Minister, and NSA.

4. India and Bangladesh now have five pre-1965 train connections that have been restored. The sixth renovated rail line, which opened the door for increased sub-regional connection, was the Haldibari (India)–Chilahati (Bangladesh) link. Petrapole (India)-Benapole (Bangladesh), Gede (India)-Darshana (Bangladesh), Singhabad (India)-Rohanpur (Bangladesh), and Radhikapur (India)-Birol (Bangladesh) are the other four open rail connections between India and Bangladesh. The Maitri Express, which has been running between Kolkata and Dhaka since 2008; the Bandhan Express, which has been running between Kolkata and Khulna since 2017; and the Mitali Express, which has been running between New Jalpaiguri and Dhaka from June 2022, are the three railway trains that currently run between the two nations.

5. There are five bus lines that connect the cities of Kolkata, Agartala, and Guwahati in Bangladesh with Dhaka and then to Khulna. India and Bangladesh have an Inland Waterways commerce and Transit Protocol (PIWTT) that has been in effect since 1972 to facilitate commerce and transit between the two nations using inland waterways. PIWTT allows commodities to be transported for inter-country trade and to pass across Bangladeshi and Indian river systems on barges or vessels. PIWTT routes have also been used for cruise services between the two nations. 

6. The agreement for the use of the ports of Chittagong and Mongla has been operationalized by both nations as of 2023. This will make it possible for India to use these Bangladeshi ports to transport goods between the Northeast and the Indian mainland. This will drastically cut down on transportation time and expense. 

7. Bangladesh is India's top trading partner in South Asia, and India is Bangladesh's second-largest trading partner in Asia. About USD 2 billion worth of Bangladeshi exports were sent to India in FY 2023–2024, making it the country's top export destination in Asia. According to reports, the entire bilateral trade in FY 2023–2024 was over USD 17.3 billion. 

8. Collaboration in the energy and electricity sectors has emerged as a key tenet of India-Bangladesh ties. Currently, 1160 MW of electricity are imported by Bangladesh from India. An institutional framework is offered by the Joint Working Group (JWG)/Joint Steering Committee (JSC) on Power to encourage bilateral collaboration in cross-border electricity trade. Electricity is now being supplied to the Bangladeshi grid by the Maitree Super Thermal Power Plant. 

9. In March 2023, both prime ministers officially opened the India-Bangladesh Friendship Pipeline, which would transport high-speed diesel from India into Bangladesh. Additionally, ONGC Videsh Limited (OVL) is involved in offshore oil exploration through a partnership with Oil India Limited. 

10. Bangladesh is currently India's biggest development partner. India has given Bangladesh four Lines of Credit (LOC) totalling approximately US $10 billion during the past decades to expand infrastructure in a number of areas, such as ports, roads, railroads, and shipping. Apart from LOCs, the Indian government has also been giving Bangladesh grant support for a number of infrastructure projects, such as building the India-Bangladesh Friendship Pipeline, dredging Bangladesh's inland waterways, and building the Akhaura-Agartala rail link. 

BILATERAL TRADE RELATIONS

India is one of the biggest trading partners of Bangladesh. Due to India's close proximity, strong economic policies, and common regional interests, the commercial connection has expanded dramatically. Over time, the amount of trade between Bangladesh and India has increased rapidly. India is Bangladesh's biggest trading partner, and both nations gain from bilateral alliances and trade agreements. Data from India's Ministry of Commerce and Industry shows that bilateral commerce between Bangladesh and India has topped USD 10 billion, demonstrating the close economic relations between the two countries.

1. Exports and Imports

India exports a variety of goods to Bangladesh, such as cotton, machinery, agricultural products, and petroleum products. Bangladesh exports clothing, textiles, jute goods, and seafood to India in exchange. Several important accords, such the South Asian Free Trade Area (SAFTA) and the India-Bangladesh Trade Agreement (IBTA), assist this trade cooperation by improving trade flows and streamlining customs. Bangladesh exports leather goods, jute products, and ready-made garments (RMG) to India, 
 

Whereas its main imports from India are cotton, machinery, cars, and chemicals. 

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                                                Source: CMIE (Centre for Monitoring India)

    2. Infrastructure Development and Connectivity

India has also made investments in vital infrastructure projects to aid in Bangladesh's economic growth. Indian businesses have been building bridges, railroads, and roadways to help trade between the two nations go more smoothly. For example, India can supply petroleum products to Bangladesh through the 2020-opened India-Bangladesh Friendship Pipeline, which promotes bilateral ties and ensures Bangladesh's energy security. In order to lower logistical costs and trade time, India has made investments to improve road, rail, and canal connectivity as part of the India-Bangladesh cross-border connectivity projects. Initiatives like the Bandhan Express and Maitree Express trains are prime examples of this dedication between the two nations. These programs increase Bangladesh's export potential by facilitating its access to the Indian market.

    3. Trade in Goods and Services

The trading of commodities and services is where the nation's economic development is most noticeable. Because of the reduced tariffs and preferential treatment that India's "Duty-Free Tariff Preference Scheme" has given Bangladesh, Indian exports to Bangladesh have increased tremendously. Bangladesh's products are more competitive in the Indian market because to this arrangement, which permits them to export clothes and textiles to India with cheap taxes. Bilateral trade has topped $10 billion in recent years and has enormous room to grow. Aside from that, India has helped Bangladesh's services industry grow. In industries including information technology (IT), telecommunications, and pharmaceuticals, Indian businesses have been engaged. Bangladesh's development in these fields has benefited greatly from India's experience in these fields.

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                                                             Source: CMIE (Centre for Monitoring India)

4. India’s Role in Promoting Regional Trade and Cooperation

The development of South Asian regional cooperation has been greatly aided by India's economic policies. India, the region's largest economy, has been a driving factor behind programs like the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), which promotes economic cooperation and trade between both the countries and other South Asian nations. Furthermore, India's participation in regional trade accords such as the Asia-Pacific Trade Agreement (APTA) and SAFTA guarantees Bangladesh's continued integration into larger regional trade networks. By opening up new markets and offering chances for export diversification, this supports Bangladesh's economic expansion.

5. Foreign Direct Investment (FDI)

Bangladesh has received a significant amount of Foreign Direct Investment (FDI) from India. Indian businesses have made investments in Bangladesh's energy, textile, pharmaceutical, and agricultural industries, among other sectors. Bangladesh has gained technology, increased production, and created jobs as a result of this FDI inflow. Additionally, the Indian government has contributed funds to important development initiatives in Bangladesh, including the construction of power plants, the enhancement of transportation systems, and the encouragement of industry. As a result, an atmosphere that is favourable to commerce and economic growth has been established.

KEY CONTRIBUTIONS BY INDIA TO BANGLADESH

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CHALLENGES WHICH INFLUENCE THE TRADE RELATION 

Even with the expanding trade ties, some challenges still exist:

1. There is a trade imbalance since India sells much more to Bangladesh than it imports, and problems including regulatory restrictions and customs delays make trade difficult. 

1. Smuggling and border disputes are two of the main Concerns about informal trade and security still exist. 

2. Even if India and Bangladesh's trade connection has grown, obstacles still need to be addressed. Bangladesh imports more commodities from India than it exports, which is a significant trade deficit. Both nations are dedicated to strengthening their economic relations. In the future, the emphasis will probably be on developing digital trade, strengthening infrastructure, and encouraging more collaboration in industries like manufacturing, energy, and agriculture. 

3. There is potential to further improve trade and investment ties between India and Bangladesh through the recently proposed Comprehensive Economic Partnership Agreement (CEPA), which is now being discussed. 

4. Regional stability is threatened by Bangladesh's growing Islamist forces, financial crises, and intensifying protests. These changes need to be attentively watched by India.

5.  Instability in Bangladesh may impact border security and even trigger a refugee crisis in India. 
    

CONCLUSION

In terms of trade, India has played a significant role in Bangladesh's economic growth. India has helped Bangladesh expand and flourish by funding infrastructure, opening up the Indian market, and encouraging regional economic cooperation. Future growth potential is still substantial as both nations work to strengthen their commercial relations, which will benefit not just Bangladesh but the whole South Asian region. India has encouraged regional economic cooperation and aided in the development and expansion of Bangladesh. Future growth potential is still substantial as both nations work to strengthen their commercial relations, which will benefit not just Bangladesh but the whole South Asian region. India's investments and trade policies have been extremely important in bolstering Bangladesh's economic growth. A mutually beneficial alliance can help India and Bangladesh continue to open up new growth prospects. The stability and prosperity of the South Asian region are enhanced by strengthening this cooperation, which also helps both countries.

REFERENCES 

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ASHISH KONDIBA SARTAPE

PES’s Modern College of Arts, Science & Commerce (Autonomous)

Business Administration campus Shivaji Nagar, Pune.