1 / 23

Economic Synergies Between Bangladesh and North East India

Economic Synergies Between Bangladesh and North East India. Dr. Atiur Rahman Professor, Department of Development Studies, University of Dhaka & Chairman, Shamunnay E-mail: atiur@sdnbd.org. 13 March 2009 Guwahati, India. North East India (NEI).

yen
Download Presentation

Economic Synergies Between Bangladesh and North East India

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Economic Synergies Between Bangladesh and North East India Dr. Atiur Rahman Professor, Department of Development Studies, University of Dhaka & Chairman, Shamunnay E-mail: atiur@sdnbd.org 13 March 2009 Guwahati, India

  2. North East India (NEI) NEI is not only the next door neighbor of BD but also shares a close relationship emanating from: Cultural Emotional and Historical heritage. This region is landlocked and distantly connected with the rest of India only through a narrow Siliguri corridor of 22 km stretch. BD is at the bridgehead point of SAARC and ASEAN.

  3. Key Concerns Connectivity – the key concern. Good prospects for Indian entrepreneurs to invest in Bangladesh NEI does not have any seaport. In fact, all the state capitals are at a distance varying from 1080 km to 1680 km from Kolkata. NEI states have low production base for both manufacturing and agricultural goods. Tourism has a greater potentiality between Bangladesh and NEI states

  4. Border Area of BD and NEI • 1880 km long border is shared with four NEI States namely : • Assam • Meghalaya • Tripura and • Mizoram • Out of total international border of NEI nearly 37% is with Bangladesh. • .

  5. Capital Cities (NEI) and Distance to BD:

  6. Transportation Cost: • Trucking charge (per Kg ): • From Kolkata to Guwahati is Rs 3.00 and • It takes 7-8 days time for transportation. • Per Kg transport charges from different LCS (Local Custom Station) along BD border to Guwahati are – • Sherpur: Rs 0.60 • Tamabil: Rs-0.70 • Agartala: Rs-1.25 • Burimari: Rs-1.0.

  7. Export – Import Situation • Based on a hypothetical calculation the potential size of the export market in NEI may be at around US$700 million. • But in reality the contribution of trade between BD and NEI is meager compared to its potential as the above table showed. • And over the years a clear downward trend of the exported items is also noticeable.

  8. Export – Import situation • Though the number of traded goods between BD and NEI is increasing, the volume and value are still much below the potential trade opportunities. • Almost 12 years ago the highest amount of import was recorded and after that the imported value has been showing a downward movement. • The export from Bangladesh to NEI has never surpassed 10 percentage points of its import from the same region.

  9. Export – Import Gap • As with India, trade with NEI is not at all balanced. • In 1997-98 there was the highest trade gap. And the trade gap has been increasing in recent years.

  10. Informal Trade • Total unofficial trade between BD and India is more than $2000 million per annum • More than 1/3 (over $800 million) of it takes place between BD and NEI. • Informal trade is many times higher than that through formal channel. • This unofficial trade must be bridled in order to boost formal trade and woo investment. Source: Bayes, 2002

  11. Product Concentration Import Items from NEI to BD • Primary goods (minerals and Agricultural products) constitute more than 80% of our total import from NEI . • Coal is at the top of the list.

  12. Product Base • Export from BD to NEI Comprises: • Agricultural commodities • Food Products • Textiles • Cosmetics • Toiletries • Simple Engineering Goods • Jute Products • Imported from NEI to BD Comprises: • Basically Primary Products • -- Minerals and • -- Agricultural Products

  13. Product Base • Informally exported to NEI: • Mymensingh: Wood and Vegetable oil • Sylhet:Hilsha and Dry fish, Winter cloths, Juice, Biscuits, Medicine, Soap, Vegetable oil, Pulses, Fuel, RMG, and Tea • Comilla: Hilsha/ Small/ Dry fish, Garlic, RMG, Mosquito net, Bicycle, Electronics goods, Soyabean oil, Under cloths, Toiletries, Cement, Pluses, Poultry, Feed, Juice, Soap, Battery, Show pieces, Potato, Brass pitcher, Eggs, and Turtle • Khagrachari: Bangla wine and Corrugated tin. • Rangamati: Rice, Garlic, Corrugated tin, Cement, Shallow engine and wooden boats.

  14. Potential Products

  15. Barriers to bilateral trade • Inadequate infrastructural facilities • LCS of both the sides are not at all trade friendly. Don’t have any warehouse or storage facility. • Absence of electricity, telecommunication links, weighbridge, parking lot, cold storage and accommodation facility • Riverine: The route is few and not fully utilized. • --Narayangonj, Bhairab, Ashugonj, Baghabari,Sherput-all need better facilities. • Rail: Most of the rail lines are still snapped. • -- Rail is the least utilized transport facility.

  16. Barriers to bilateral trade • Permit and License, Pre-Shipment Inspection: • The average time taking for issuance of the IEC (Import Export Code) number is 10-30 days • There is no office at all the state capitals of NEI for PSI • Changing H.S. Code: • In case of Fruits juice the Indian customs authority has changed the H.S. Code of the product from 2009.80 to 2202.90 • Which has a 20% higher duty from the earlier H.S. Code. • In fact, Bangladesh has been exporting the same product to 43 different countries under the same H.S. Code of 2009.80.

  17. Barriers to bilateral trade • Inadequate Banking Right& High L/C margin provision: • No direct corresponding relationship of the bank of NEI and BD. • Sometimes it takes 20-40 days to reach a L/C • High Tariff, Para-Tariff , Non-Tariff Barrier and Others charge: • India imposed high tariff on some Bangladeshi goods, which have good prospects to export to Northeast Region. • RMG and CI sheet are the two examples of it. • It is reported that tariff value on CI Sheet is about US$ 590/MT whereas the export value is simply US$ 450/MT.

  18. Barriers to bilateral trade • Non-tariff and Para-tariff barriers: • --Antidumping Duty • -- Sales Tax • -- Health Test Report • -- ISI Certification requirement • -- Retail price marking • -- Lab Test Report etc. • India imposed • --16% CUD (Countervailing Duty) for agro products and cosmetics • -- 4% SAD (Special Additional Duties) for Agro products, ceramics • and cosmetics • -- 16% Additional Duty for ceramics • -- 15% surcharge for dry cell battery.

  19. Strategies for Cooperation • Negotiations needed: • Reducing/ removing CUD and SAD under bilateral or regional trade agreements. • Expanding the list of commodities receiving concessions by India in the next route of SAPTA concessions. • Tariff reduction on potential export products on bilateral basis • Product standards and tests can be harmonized between two countries for facilitating trade.

  20. Strategies for Cooperation • LCS which have emerged as important export routes will have to be developed. These are: • Akhaura, Bibirbazar, Juri and Sheola. • Roads need to be developed: Construction/ Widening/ Straightening • Bharkhar to Akhaura ( 30 Kms) and alternative route Sultanpur ( Brahmanbaria) and Akhaura • Phultali to Batuli( Juri) and alternative route connecting Kulaura and Phultali via Gazipur • Sheola bridge to sheola LCS including the culvert on the road • Comilla to Bibirbazar

  21. Strategies for Cooperation • Facilities need to be provided/ reopened: • Using the facilities of Chittagong Port • Air link between Dhaka and Guwahati • Both BD and India should issue multiple entry visa for one year to business persons. • Bangladesh should open a visa office in Guwahati in addition to the one now existing in Agartala. • Easing the restriction for banks in NEI in dealing foreign currency • Direct bus service from Sylhet to Guwahati and Shillong

  22. Strategies for Cooperation • Facilities need to be provided/ reopened: • Setting up of Port Health office in every state of NEI > presently it is only in Kolkata • Signing Multi-modal transport Agreement and declaration of Ashuganj as Port-of-Call • Restoration of Agartala-Akhaura and Shahbazpur-Mohisashan rail link • Movement of vehicles up to transshipment point • Bridge over Ragnachera • Consulate Office at Sylhet

  23. Strategies for Cooperation • Bangladesh can adopt policies which can encourage investment from Indian companies. • It is required to create goodwill between the two countries by bridging the trust deficit. • For that matter, there should be a regular consultation between economic ministries of both countries. • Encourage track –II diplomacy to remove ‘mindset’ barrier. • Explore the potential for greater energy cooperation (particularly electricity) between the two countries.

More Related