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Richa Mishra

"The informal trade is more a consequence of infrastructural bottlenecks than high tariffs. The incidence of informal trade can be reduced by streamlining infrastructure, reducing tariffs and formalising border trade," FICCI said.

New Delhi , Aug. 11

FOR strengthening intra-regional economic cooperation and the development of national economics, there is an urgent need to establish and promote free trade arrangements between India and Bangladesh.

"Considering that the expansion of their domestic markets, through economic integration, is a vital pre-requisite for accelerating their processes of economic development, the need for free trade agreement (FTA) is desired," a Federation of Indian Chambers of Commerce and Industry (FICCI) official said.

Outlining the advantages of having an FTA between India and Bangladesh, FICCI official told Business Line: "it will provide for duty free entry for all goods except those included in a short negotiated negative list. It will also provide for the elimination of all non-tariff barriers in a time-bound framework."

Besides, an assured access to the large Indian market within a long-term contractual framework will enable Bangladesh to create export capacity for even those products in which it has potential competitive advantage, but which currently do not figure in the export basket, the chamber official said. According to her, " such assured access would result in an enlarged flow of foreign private capital for investment towards building export capacity in Bangladesh."

An FTA can provide for measures for deeper integration, such as freeing of trade in services, free flow of investments, trade facilitation, harmonisation and mutual recognition of standard and coordination of macro-economic policies. Besides this, an FTA is likely to improve the over-all competitiveness of the Bangladesh economy through access to the marketing network, skill and technology of Indian manufacturers and trading partners, FICCI said.

There is considerable incidence of informal trade between India and Bangladesh as a consequence of trade restrictions on the free flow of goods. The volume of unofficial exports to Bangladesh is reportedly in the range of $350 million to $500 million every year. The composition of commodities exported unofficially include food items and live animals mainly cattle apart from consumer goods. The commodities unofficially imported from Bangladesh are confined to small band commodities, which include fabrics and spices.

"The informal trade is more a consequence of infrastructural bottlenecks than high tariffs. The incidence of informal trade can be reduced by streamlining infrastructure, reducing tariffs and formalising border trade," FICCI said.

To push for FTA between the two countries Bangladesh-India Chamber of Commerce and Industry (BICCI), which is a joint effort of FICCI and Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), is holding a seminar on FTA between India and Bangladesh on August 12 in Dhaka. The Chamber President, Dr A.C. Muthiah, is leading the FICCI delegation.

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