Challenges of doing business with India

Julia Alam :
A week after Bangladesh Prime Minister Sheikh Hasina ended her visit to Delhi, I had a long conversation with Dr. Zaidi Satter, one of the senior-most economists and prominent international trade researcher and analyst. We discussed not only the recent growth in Bangladesh’s exports to India, also various barriers in bilateral trades and issues such as BJP’s trade policies. We talked on issues like Bangladesh’s potential imports of Russian oils through India. A critical issue like balanced economic diplomacy with two Asian biggies- China and India- also came up in our conversation.
Although Bangladesh’s exports to India had increased to 2 billion dollars in the last fiscal year, Bangladesh’s share in India’s huge market still amount just one out of two hundred percentages.
“Two billion dollars is almost nothing compared to the huge market of India,” he admitted and said, “It can be increased by many more percentages if political, bureaucratic and psychological barriers are cleared and geographical borders become trade-friendly.
Why India itself showed interest in providing direct transit facility to Bangladesh to transport her exports and imports to and from Nepal and Bhutan? I am very much curious about. Dr. Zaidi Sattar however sounds very liberal and international here, arguing that transit facility should be given to each other by both the countries, “India should provide transit facility to Bangladesh, Bhutan and Nepal and Bangladesh should reciprocate that by giving transit facility India to link her North-East states with mainland.”
The economist also thinks that the political borders marked in 1947 cannot be economic barriers. “Politics is politics but economic transactions, trade connections should now be much easier. In this modern age, door-to-door travel facility is needed as we can ride on bus from Dhaka and get off in Kolkata.”
Dr. Zaidi Sattar said, the issue of free trade has been discussed much in the last three decades, but intra-regional trade among South Asian countries remains very little. He reiterated that between India and Bangladesh trade and political relations, a set mindset always plays and trust deficit prevails there. Bureaucracy is another big hurdle here. Facing so many troubles in customs, Bangladeshi businessmen say that doing business with even Brazil is easier than that with bordering India.
Dr. Zaidi Sattar mentioned that India in fact went for trade liberalization in the 1990s but after BJP came to power, pace of trade liberalization rather slowed down. Since 2015-16 India again started raising tariffs and eventually they are now a bit more inward looking or conservative.
In bilateral trade, nearly one-fifths of Bangladesh’s entire imports come from India now, whereas India’s imports from Bangladesh amounted two billion dollars last year. Imports from Bangladesh share even less than 0.5 percent of India’s spending for importing goods from across the world.
In fact, imported garments were listed in sensitive list of zero tariff market access that Bangladesh received from India under SAFTA-South Asia Free Trade Agreement. That clause kept huge Indian market blocked for the Bangladeshi garment exporters. When India exclusively excluded Bangladeshi garments from it list of sensitive imports, shipments of Bangladeshi garments started increasing sharply and that mainly helped entire export earnings from India to almost be doubled just in a year to two billion dollars.
The apparel market in India is huge but strong competition is also there within as India’s apparel manufacturing industry is also big. They are significant exporter of apparels also but Bangladesh has proven more competitive strength by raising garment exports to India.
Dr. Zaidi Sattar opines that Bangladesh’s trade deficit with India is not a big problem as he argues that nearly four-fifths of imports from that country are utilized in industries thus in productive sector. He also argues that when a country exports more manufactured goods it has to import more. He cited that China is the world’s largest exporter with exports amounting more than three trillion dollars. On the other hand China is also the number two importer in the world importing over two trillion dollars worth of goods.
However, the economic cooperation in South Asia should not be limited in trade of goods only, regional trades in services should also be encouraged and facilitated. Energy, electric power fuels can be traded now. If joint efforts are there in exploiting natural resources, water resources, both India and Bangladesh can mutually be benefited, he said. He, however, says that as India is heavily dependent on imported fuels Bangladesh-India energy cooperation may not be strong and lucrative in the long run. “Now India is importing oil from Russia bypassing western embargos so cheap in Russia oils can be re-exported to Bangladesh where such arrangement with India can help Bangladesh in getting cheap Russian oils bypassing sanction,” he said. “As India can pay by Ruble, Bangladesh can then pay India by dollar or India Rupees in a temporary arrangement.”
Zaidi Sattar says, the 18th and the 19th centuries belonged to British Empire, the 20th century belonged to America and the 21st century is for Asia. “By 2050, China, Japan and India will be listed as three of the world’s top five economies so the biggest market of the world in the 21st century will be Asia, so Bangladesh must now turn to Asia, he said.
Bangladesh has to be competitive to take economic benefits of this century. So, diplomatic expertise should also be exercised in maintaining good relations with India and China.

(The writer is a Business Journalist).