India-Bangladesh Commit to Deepen Bilateral Economic Ties

Posted by Written by Guest Post by Pathik Hasan Reading Time: 3 minutes

Bangladesh’s stable economic development is creating new opportunities for India’s northeastern states and work on a CEPA trade agreement is ongoing. The two countries are celebrating 50 years of India-Bangladesh friendship and India’s President Ram Nath Kovind is currently on an official trip to Bangladesh.

2021 marks the golden jubilee of the liberation of Bangladesh and fifty years of India-Bangladesh diplomatic ties. India’s President Ram Nath Kovind is currently on a three-day state visit to Bangladesh from December 15 to 17, 2021; this is his first state visit since the outbreak of the COVID pandemic. 

Speaking on the state of bilateral ties in November, India’s Defense Minister Rajnath Singh affirmed that India Bangladesh relations are going through a golden phase. As Bangladesh attains “developing nation” status (upgrading from “less developed country” status), India has reiterated its commitment to deepen trade and economic ties with Bangladesh as partners rather than competitors. That Bangladesh is India’s biggest trade partner in South Asia, with a volume of over US$10 billion, is testimony to this commitment. In the same pursuit, both countries are working to finalize a Comprehensive Economic Partnership Agreement (CEPA).

Bangladesh’s holistic development is also viewed positively by New Delhi with new opportunities arising along India’s northeast region. Bangladesh and India share a 4096-kilometer-long (2545 miles) international border, the fifth-longest land border in the world, including 262 km (163 mi) in the state of Assam, 856 km (532 mi) in Tripura, 318 km (198 mi) in Mizoram, 443 km (275 mi) in Meghalaya, and 2217 km (1378 mi) in West Bengal.

Economic and commercial partnership between India and Bangladesh

Bangladesh is India’s biggest trade partner in South Asia and India is the second biggest trade partner of Bangladesh. Bilateral trade between India and Bangladesh has grown steadily over the last decade and the exports of Bangladesh have tripled over the last decade to cross US$1 billion in 2018-19. In FY 2019-20, India’s exports to Bangladesh were US$8.2 billion and imports were US$1.26 billion.

A deeper economic and trade engagement becomes all the more relevant, given the success of phenomenal and uninterrupted supply chains during the pandemic. An augmented connectivity infrastructure is imperative to actualize the bilateral trade and investment potential between the two countries. India’s Commerce and Industry Minister Piyush Goyal has recognized five focus areas to bolster bilateral economic ties – technology, connectivity, entrepreneurship, health, and tourism. Bangladesh is also important for aiding India’s connectivity in the Southeast Asian region through Chittagong and Mongla ports.

Both India and Bangladesh are also working towards holding the first meeting of the India Bangladesh CEOs Forum to provide policy level inputs in various areas of trade and investment and also to facilitate exchanges among the business communities of both the countries. Additionally, a bilateral textile industry forum has also been constituted to facilitate cooperation in the textile sector.

India and Bangladesh have signed a Memorandum of Understanding (MoU) for the construction of a high-speed diesel pipeline from Numaligarh in Assam to Parbatipur in Bangladesh, a joint venture between Numaligarh Refinery Limited and Bangladesh Petroleum Corporation. As an indication of goodwill, an initial consignment of 2200 ton of diesel has already been transported from Siliguri in West Bengal to Parbatipur in 50 wagons by the Indian Railways

Furthermore, India-Bangladesh cooperation in the power sector too has become an important aspect in this bilateral relationship. Bangladesh is currently importing 1160 MW of power from India. The Joint Working Group (JWG)/Joint Steering Committee (JSC) on power provides an institutional framework to promote bilateral cooperation in cross border trade of electricity.

How is India aiding Bangladesh as a development partner ?

Presently, Bangladesh remains India’s biggest development partner. Over the past eight years, India has extended three Lines of Credits (LOC) to Bangladesh, amounting to US$8 billion for development of infrastructure in various sectors, including roads, railways, shipping, and ports. Additionally, India has also been providing grant assistance to Bangladesh for various infrastructure projects, including construction of Akhaura-Agartala rail link, dredging of inland waterways in Bangladesh, and construction of India-Bangladesh Friendship Pipeline.

Further, High Impact Community Development Projects (HICDPs) also form an important part of India’s developmental assistance to Bangladesh, with India having funded 68 HICDPs, including construction of, academic buildings, cultural centers, skill development and training institutes, student hostels, and orphanages etc. in Bangladesh. 16 additional HICDPs are being implemented.


About Us

India Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in Delhi and Mumbai. Readers may write to india@dezshira.com for more support on doing business in in India.

We also maintain offices or have alliance partners assisting foreign investors in Indonesia, Singapore, Vietnam, Philippines, Malaysia, Thailand, Italy, Germany, and the United States, in addition to practices in Bangladesh and Russia.

Leave a Reply

Your email address will not be published. Required fields are marked *