FTA 'can push India export by 8%'

A World Bank research says bilateral free trade agreement (FTA) can push Bangladesh's export to India by nearly 8 percent and it will jump up to 11 percent if the deal comes with improved connectivity.

One of the experts, however, disagreed with the first option at a dialogue in Dhaka on Thursday, but suggested improved connectivity between the two neighbours for better businesses.

Sanjay Kathuria, the World Bank's Lead Economist for Bangladesh, presented the research paper in which he said they started looking into the possibilities of economic growth in 2010 when Prime Minister Sheikh Hasina visited New Delhi.

He said bilateral trade between India and Bangladesh comprise only 4 to 5 percent of the total regional trade. "There is huge scope to increase the trade," he said terming bilateral trade deficit 'a political concept, not an economic construct.'

India is the third largest trading partner of Bangladesh and second largest source of imports.

He said the trade relationship needed to be seen in a 'much wider' angle. "The relationship is very much below potential, it can be changed."

Kathuria said under the bilateral FTA, Bangladesh's export will grow nearly 8 percent while India's export will grow only 0.12 percent. But with connectivity included in the deal, Bangladesh's export will grow by 11 percent while India's export will rise only 0.21 percent.

Speaking at the dialogue, Gowher Rizvi, International Affairs Adviser to the Prime Minister, suggested further study on the issue before drawing any conclusion.

"We need to look at how we can make ourselves more attractive for investors," he said, "We cannot expect that they (businessmen) will invest out of charity."

Referring to a recent visit of Indian business team he said they asked us for 'transparent policy framework' for investments.

Khondaker Golam Moazzem, Senior Research Fellow of Centre for Policy Dialogue, differed with the suggestions of bilateral FTA proposal, but agreed for strong connectivity.

He made the argument based on the current state of cooperation between the two countries.

"A rigorous analysis is needed before reaching any final conclusion," he said

Bangladesh should consider, according to him, the possible impact and implication of an FTA with India not only on export and import, but also on its production, employment, and revenue loss.

Moazzem said it was important to understand the possible implication 'if Bangladesh needs to sign bilateral FTA in the future with other important trading partners like China.'

He said since Bangladesh was currently enjoying duty-free market access to the Indian market for all products except 25 items under the SAFTA accord, it would be interested to increase its export further under this facility.

"I think this market access facility along with better connectivity and less non-tariff barriers would be a favourable option for Bangladesh to enhance its export to India."

News Source: