Bangladesh boom fuels Indian exports

Source: Live mint

Relevance: The article explains the benefits of Bangladesh’s economic growth for India.

Synopsis: The rapid Economic growth of Bangladesh has many advantages for India.

Background

• Bangladesh jumped four places to become India’s fifth-largest export destination in the year 2021.
• While India’s exports to many of its traditional markets shrank because of the pandemic, its exports to Bangladesh reported an increase.
• Exports to Bangladesh grew 11% in the previous fiscal year even as India’s overall exports contracted 7% because of the pandemic, according to government data.
• While the US ($51.6 billion) remained India’s top export destination, China ($21.2 billion) became the second-biggest export market, surpassing the United Arab Emirates ($16.7 billion).
• However, Bangladesh overtook other countries such as Singapore ($8.7 billion), the UK ($8.2 billion), Germany ($8.1 billion), and the Netherlands ($6.5 billion) to reach the 5th position. 
• In FY21, India’s top export items to Bangladesh were cotton and cotton yarn ($1.5 billion), electricity ($517 million), fuel ($496 million), rice ($354 million), and corn ($328 million).

What are the Potential benefits for India owing to the rise of Bangladesh?

An expert from Centre for Policy Research, said the rise of Bangladesh as a sub-regional economic power is unambiguously good for India.

• Export Market: its growing middle-class provides a big market for Indian agriculture and manufactured goods, as well as for services. For instance,
  • Bangladesh depends heavily on its ready made garments sector, as it accounts for 45% of its manufacturing GDP and 85% of its exports. Whereas, India has for several years been a major supplier of cotton and cotton fabric for Bangladesh’s ready made garment industry.
• Medical Tourism: Bangladesh is already the biggest source of medical tourism to India.
• Source of FDI: Significantly, its increasingly ambitious private sector can be a major source of foreign direct investment in India’s North-East, and India’s northeastern states.

India should also pay special attention to help Bangladeshi firms access India’s vast market.