India’s improved relations with Bangladesh have brought new opportunities for economic development in the region. Chief ministers of Meghalaya and Arunachal Pradesh visiting Dhaka in May this year to attend the Northeast India-Bangladesh Business Conclave has been encouraging. Their visits have highlighted the importance the states of the Northeast (NE) region ascribe in promoting economic ties with Bangladesh. To maximise the benefits there is need for identifying the factors and the issues that might hinder the growth of economic ties. Northeast India-Bangladesh conclave was organised by India Chamber of Commerce in association with India Bangladesh Chamber of Commerce and Industries.
Forty eight delegates from Arunachal Pradesh, Meghalaya, Assam and Tripura had participated in the meeting which provided an opportunity to interact with their Bangladesh counterparts and helped to understand each other’s interests. Bangladesh emphasised on expanding trade relationship. While, Indian delegation stressed on investments, the conclave emphasised on expansion of cooperation in areas of energy, tourism, food processing and education. India and Bangladesh have been working for enhancing economic relationships for past few years. Some of the achievements have been: 1) India allowing zero duty access of all Bangladesh products to its market, a measure aiming to reduce the huge trade gap which Bangladesh used to complain; 2) signing of Bilateral Investment Protection Agreement (BIPA), an arrangement to encourage investments in both the countries. Normally these measures are perceived to be remedial to the trade imbalance that exists between the two countries. But development of the NE region also factored in government of India’s decisions. Bangladesh occupies an important place in the region. The NE shares a long border with the country.
Prior to India’s independence in 1947, East Bengal (now Bangladesh) was the major linkage between NE and greater part of India and also with the world as Chittagong was the nearest access to the sea. Partition of India disrupted the entire communication of the region. Today NE’s only link to the greater part of India is through the Siliguri Corridor, a narrow 25 kilometres stretch in North Bengal. This feature has made the region extremely remote. The remoteness has hit the development of the region. Despite India’s economic success, investors have been reluctant to invest in the Northeast largely due to its distantness. Expanding economic ties with Bangladesh will address many of these problems. Popular argument in support of strengthening economic ties with Bangladesh has been that closer economic ties will be mutually beneficial. Bangladesh needs the Northeast market to sell its products while Northeast needs investments. NE states can capitalise on this and bargain for investments in lieu of opening its markets to Bangladesh. We have to recall that Bangladesh has been maintaining around 6 per cent growth consecutively for the past couple of years. The country is likely to emerge as a middle income country by 2020. Again, geographical proximity also makes Northeast lucrative for Bangladesh to invest in areas like hydel power, an area in which Bangladesh has already expressed its interest since it will have to invest very less in transportation.
Another argument is that importing goods from Bangladesh will be cheaper than products which are brought in to the region from other parts of the country as the cost of transportation will be minimal. This will implicitly impact the lives of the people of the region as the cost of living will come down subsequently. Certainly, arguments above paint a win-win scenario for both the region and Bangladesh. But to earn the benefit of the present opportunity it is important to analyse our preparedness. Increase in trade will pressurise the existing infrastructure, especially, at the land custom stations (LCS). Unfortunately infrastructures at LCS are not always in good shape. Inadequacy of infrastructure at the LCSs has been a major impediment for the growth of bilateral trade. Along with improving the infrastructure, emphasis also should be given to maintaining it. Experience suggests many of LCSs have failed to pickup trade even after establishment of state of the art infrastructure largely due to negligence of maintenance. Besides, upgradation of road and rail communication system is also necessary as quantum of traffic will increase with the advancement of trade. Meanwhile, careful drafting of investment policies can iron out all the hitches that might obstruct investments. Focus should be on helping the local population in gaining maximum advantage. Some of the options could be emphasising on formation of joint ventures with local business houses, fixing job quotes for the local people in the business venture, etc. However, side by side, stress should be given on making the region self-reliant by encouraging development of local industries so that it does not remain as a market either for the neighbouring country or for other parts of the country. Friendly relationships with Bangladesh is important for the Northeast region. A little pragmatic thinking and planning will bring dividends that not only help in keeping up the enthusiasm but will also contribute in boosting ties in the future.
(The author is an Associate Fellow at Observer Research Foundation, New Delhi)
Courtesy: Tribune
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