Editorial Today – Nailing the neighbourly dividend

Issue It is about India Bangladesh relations.

Background One of the worst periods in India-Bangladesh relations was between 2001 and 2006.

Cross Border Trade between India and Bangladesh It is alleged that despite duty-free access, Bangladeshi exporters face high non-tariff barriers in the form of bureaucratic and customs bottlenecks.

How to increase cross border trade? ‘Border Haats’, or markets across the India-Bangladesh border, were a successful solution to increase legal business on the borders.

Challenges in increasing cross border trade Both the countries are predominantly agricultural countries.

Contention between the two countries Cattle Trade and Teesta agreement.

Power and connectivity between the two countries Power and connectivity.

Conclusion

Issue

• It is about India Bangladesh relations

Background

• One of the worst periods in India-Bangladesh relations was between 2001 and 2006.
• Only minor protocols or agreements were signed during that time and there was a surge in insurgency activities in the Northeast with the United Liberation Front of Asom and the Nationalist Socialist Council of Nagaland, among other outfits, crossing the border for training.
• From 2009 onwards, as cross-border issues were addressed, bilateral relationship improved and progress was made in some key areas.

Cross Border Trade between India and Bangladesh

• Bangladesh imported products worth $5.82 billion from India in the last fiscal year. India also exports goods estimated more than $5 billion through informal channels, making the volume of official and non-official trade approximately the same. Informal trade is mostly due to corruption and inadequate border infrastructure.
• Bangladesh’s exports to India were only at $527 million with almost 20 per cent being ready-made garments. Other items include jute products, agro processed and non-processed foods, and light engineering products.
• It is alleged that despite duty-free access, Bangladeshi exporters face high non-tariff barriers in the form of bureaucratic and customs bottlenecks, delays due to manual clearance, visa problems, lack of banking services and warehouse facilities at the border.

How to increase cross border trade?

• ‘Border Haats’, or markets across the India-Bangladesh border, were a successful solution to increase legal business on the borders. Recently, Bangladesh and India have agreed to set up six more haats along their borders.
• A border haat is already functioning in Meghalaya and one new opened in Tripura.
• Both countries had decided to open consulate office in each other country and through this trade could be increased.

Challenges in increasing cross border trade

• According to some experts both the countries are predominantly agricultural countries but the product grown on both side of the border are similar like rice, jute, etc because of same climatic condition. Thus there is very less scope of increase in agricultural trade between the two countries.

Contention between the two countries

Cattle trade

• In India, the number of cows is three times more than what is needed to produce the volume of milk consumed nationally, and eating beef is a religious stigma in many places. These surplus cows are mostly donated to temples where they are tied to fences, die from dehydration and the remains sold to leather merchants. Exporting such cows to Bangladesh, which tantamount to making gains from sunk capital, is still prohibited, leading to cattle smuggling.
• Smuggling leads to border killing of Bangladeshis by the Indian Border Security Force.

Teesta agreement

• Teesta river originates in Sikkim, flows through North Bengal and joins Brahmaputra in Bangladesh.
• Bangladesh wants 50 percent water of this river which is opposed by west Bengal government.
• The Teesta water-sharing agreement had been stalled due to the West Bengal elections.
• As election is over, it is the time to have an agreement.
• India had also undertaken the Tipaimukh project on the Barak river. According to Bangladesh if built, the dam will adversely affect nearly 40,000 people in Bangladesh. Thus with resistance from Bangladesh and Manipur, the project has been temporarily deferred.

Power and connectivity between the two countries

Power

• Government-to-government power trade is 1,300 MW from India to Bangladesh. India’s state-run Bharat Heavy Electricals Limited (BHEL) is building the Rampal coal-fired power plant in Bangladesh despite environmental concerns that the Sundarbans is situated only 14 km away from the proposed site.
• In the private sector, Reliance Power has won approval to set up a 750 MW LNG-based power plant and an LNG terminal in Bangladesh, paving the way for $1.3 billion investment, and Adani Group is set to sell 3,000 MW power to Bangladesh.
• India and Bangladesh cemented their bilateral ties with theIndia exporting 100 megawatts (MW) of power from Tripura and Bangladesh exporting 10 gbps (gigabits per second) of Internet bandwidth. The import of Internet bandwidth will help India strengthen telecom services and connectivity in the underdeveloped and sparsely connected north-eastern region.

Connectivity

• On connectivity, the focus has been on road, rail, rivers, sea, transmission lines, petroleum pipelines, and digital links that would give India access to the Northeast and to Southeast Asia through Bangladesh.
• The BBIN (Bangladesh-Bhutan-India-Nepal) Motor Vehicles Agreement allows vehicles to enter each other’s territory and does away with trans-shipment of goods from one country’s truck to another at the border, a time consuming and costly process. But the four nations are yet to finalise the operational protocol.
• Bangladesh-India coastal shipping (movement of cargo and passengers mainly by sea along a coast, without crossing an ocean) began in March this year, and trains are set to run from Kolkata to Agartala, a project to be completed by 2017.
• (Coastal shipping increases trade between neighbouring countries as ships don’t need to cross ocean and thus travel time decreases. Moreover for this small ships are used as they need to move through coastal areas; these ships can enter into least developed ports where bigger ships cannot enter)
• Trucks carrying Indian goods reached Tripura from Ashuganj port, making the long cherished idea of transhipment into reality.

Conclusion

• While progress has been made since PM’s visit, greater issues are still at bay. The time is ripe to build on the successes and resolve the remaining issues.