FTA may boost India’s exports to Bangladesh by $10 billion in five years

Source: The post is based on the article “FTA may boost India’s exports to Bangladesh by $10 billion in five years” published in Business Standard on 9th September 2022

What is the News?

According to a study, India’s exports to Bangladesh may increase by an additional $10 billion in a time span of five years if both countries sign a free trade agreement (FTA).

What is the current bilateral trade between India and Bangladesh?

The bilateral trade between India and Bangladesh has been growing significantly over the past few years. Currently, India enjoys the second-largest trade surplus with Bangladesh after the US. 

Bangladesh became India’s fourth-largest export destination in FY22 jumping five places in two years.

How does an FTA between India and Bangladesh help both countries? 

India: India’s exports to Bangladesh may increase by an additional $10 billion in a time span of five years if both countries sign a free trade agreement(FTA).

– India’s largest increase in exports to Bangladesh will be observed for motor vehicles, cotton, man-made filaments, iron and steel, plastic goods, paper and paper products.

Bangladesh: For Bangladesh, the potential of additional exports to India could range from $3 billion to $5 billion in a time span of 10 years if the FTA is signed.

– Bangladesh export gains could occur in broad categories such as textile and apparel goods, containers of iron/steel, plain woven fabrics of cotton, plastic products, leather bags, footwear, and processed foods such as biscuits among others.

Note: Bangladesh is on track to graduate from The Least Developed Country(LDC) status to developing country by 2026.

– After this, Bangladesh will no longer be eligible to continue to put high tariffs and will have to provide duty-free quota-free market access to India under the existing (South Asian Free Trade Area) SAFTA commitments.