Bangladesh thinks that the high Indian tariffs on products of export interest to Bangladesh is one of impediments to Bangladesh's efforts to expand its export to India and has been harping on duty-free entry for a number of its export items into the Indian markets. At the meeting of the Joint Economic Commission in 1993 Bangladesh was reported to have submitted a list of 21 commodities seeking permission from India for duty free entry. The Government of India's response to this request was that Bangladesh should identify from this list those commodities, which could be exported by Bangladesh alone. Other commodities in the list can be considered for exemption after the completion of the SAPTA negotiations.

The former Foreign Secretary of India Mr. Muchkund Dube, in 1980, had made a case for a one-way free trade with Bangladesh. In a recent lecture he reiterated his views. Citing the example of Bangladesh's duty-free export of Jamdani Sari to India, he opined that losing of India's own market on account of duty free trade with Bangladesh was a distant possibility. On the other hand duty free export of Bangladesh to India will create a positive atmosphere in the bilateral economic relations. Very recently Bangladesh has requested India to lift duty on 200 commodities falling under 25 categories.

Joint Venture

If the joint venture with Bangladesh with buy-back arrangement becomes a reality, the present trade-gap between the two countries will definitely be narrowed, apart from this, the industrialisation process in Bangladesh will also get a fillip.

All this, however, is in theory. The reality is, till date, there has been no joint venture between India and Bangladesh with buy-back arrangement. Right from the beginning when Bangladesh became a sovereign state, the Joint Economic Commission identified the areas, like cement, fertilizer plants, etc. where joint venture with buy-back arrangements can be possible, but none of these has been realized. The main reason of this failure has been India's absolute incapability for providing adequate financial resources. On the other hand, China's initiative on this front is noteworthy. China on her own has established some important projects particularly on power generation.

In the decade of the nineties the initiative to build up joint venture was expected to come from non-government sectors. The captains of Industry/investors of India have conferred with their counterparts from Bangladesh number of times with a view to building up joint ventures, and the areas have also been identified, they are : textile mill, pharmaceutical, mini steel plant, chemicals, machine tools, food processing, leather goods and assembling of motor parts. Needless to say none has come up so far. Very recently, they are talking of the possibility of building up 74 joint ventures.

On two relevant issues

1. The border trade between India and Bangladesh plays an important role in the economic relations between the countries. At the time when the rate of growth of trade between the two countries at the government level is not satisfactory, the non-official border trade is on the increase, and its possibility is immense. There is a long stretch of border both on land and water between the two countries. There is considerable similarly on geographic, economic, environmental, social and cultural front on both sides of the border. Consequently, there exists great similarity in the agricultural products, processed goods, food habits, life style and economic conditions. All these factors contribute to the creation of demand and market on both sides of the border – an ideal condition for border trade. In the absence of any government approval on this clandestine trade it has taken the recourse to illegal method which has become a permanent phenomenon. Since goods are of daily necessity it is difficult to check its flow rather the Government machinery is closely interlocked with this illegal trade. We feel, if this illegal trade is given a legal sanction the economic relations between the two countries will improve. A dialogue on this issue should be started without further loss of time. The rules obtaining at the Government level for control of this trade should be simplified in respect of border trade since most of the commodities are meant for human consumption and are not of durable nature. The possibility of border trade is immense due to the reason that the cost of transport of goods produced in the border region will be less in carrying them to the other side of the border than transporting them inside the country. The cross-border transportation is easier on account of existing road and water network on both sides of the border (a legacy of the past).
2. Regarding economic relation between India and Bangladesh there is another issue which is of prime importance – the road transit facilities of carrying goods meant for a third country through the territories of Bangladesh and India. The transport facility that exists now is a legacy of the past, both historical and geographical, but this has remained unused due to political and national reasons. The problem of transit facility can be resolved and extended to road-rail-and water-network. This will boost the economy of both the countries. This resurrection will not result in somebody's gain at other's loss, which is generally spoken of. The geographical situation of these two countries compels such an arrangement, there is no laternative3 to this.

Conclusion

At the present global situation it is absolutely necessary for the countries of South Asia, to build up economic cooperation for the interest of their own economic development and survival. To counter the discriminatory terms and conditions imposed by WTO and World Bank on the developing countries, the South Asian Developing counters must act together on mutually acceptable terms. This is a historical necessity. As for India and Bangladesh the responsibility of India in fostering bilateral economic cooperation with Bangladesh is far greater. After the successful implementation of the Sharing of the Ganga Water Treaty 1996, the mutual distrust is on the wane, and India must come forward with a positive approach to utilize this favourable situation in improving socio-economic conditions of both the nations by strengthening bilateral economic relations. The people of the two nations aspire for this.