Business leaders see a new era of bilateral trade relations

Kazi Zahidul Hasan  :
Bangladesh and India on Tuesday launched bilateral trade transactions in India rupee (INR) in a bid to reduce their dependency on the US dollar and promote regional businesses.
Initially, trade transactions between the two countries have started in Indian rupee alongside the usual transaction method in US dollar, but later this benefit will be available in Bangladesh currency (taka), officials said.

From Bangladesh side trade and transactions with India will be done by its Eastern Bank and Sonali Bank Ltd, while from Indian side operations will be done by State Bank of India and ICICI Bank, said Abdur Rouf Talukdar, Governor General of Bangladesh’s central Bank.
Reserve Bank of India has allowed banks from 18 countries to trade in rupees including Germany, Russia, Singapore, Sri Lanka, the United Kingdom, Myanmar, Oman and others; Bangladesh become 19th country to trade with India in rupees.

Bangladeshi business leaders said that the move will usher in a new era of bilateral trade relations between the two friendly neighbours and help boost Indo-Bangla trade.
“We are very happy that both countries have agreed to use Indian rupee in trade transaction. India is a major trade partner of  Bangladesh and the country imports a huge quantity of goods from India. So, the move will help ease pressure on the dollar denominated foreign reserve to some extent,” said Matlub Hossain, chairman of Nitol-Niloy Group, and the President of India-Bangladesh Chamber of Commerce & Industries.
He said this initiative will give some relief to the country’s importers as now on they can open letters of credit (LCs) to buy goods from the neighbouring country in rupee. As a result, the use of the dollar will decrease significantly.

In the last financial year 2021-22, Bangladesh imported goods worth $13.69 billion from India (18.10 per cent of the country’s total import) whereas it exported goods worth $1.99 billion to India.
Commenting on the issue, Mohammad Hatem, Executive President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) said, “The initiative taken by Bangladesh and India will mark a new horizon in the diplomatic and trade ties between the two countries. The country’s apparel exporters welcome this initiative.”
He said, “Transactions in taka and rupee will make trade easy for both countries and help traders to save the loss from the currency exchange (Taka-Rupee-Dollar). At the same time, the dependence on the dollar in import-export trade will also decrease.”

Hatem further noted that the new trading system will also ease pressure of the country’s foreign exchange reserves. “Trade transactions in taka and rupee, apart from the dollar will reduce pressure on dollar reserves and cut the cost of trade.”

The BKMEA leader further said the move will also boost regional trade and reduce cost of business.
Earlier, the new system of Indo-Bangla trade transactions was launched at an event at Hotel Le Méridien Dhaka.
Bangladesh Bank Governor Adbur Rouf Talukder, Senior Commerce Secretary Tapan Kanti Ghosh, Indian High Commissioner in Dhaka Pranay Verma were present, among others, at the event.
Bangladesh Bank and High Commission of India in Dhaka organised the programme.

Two export LCs from Bangladesh’s two businesses– Tamim Agro and Shahjahan Mia– involving a total of 28 million Indian rupee and two import LCs involving 12 million Indian rupee by Nita Company and Abdul Matlub Ahmad were handed over by four participating banks-EBL and Sonali Bank of Bangladesh and India’s State Bank of India and ICICI Bank at the event.
UNB adds: Indian High Commissioner to Bangladesh Pranay Verma described Tuesday’s launch of rupee trading as a “very important beginning” amid the US dollar crisis.
“It will provide speed, efficiency, and convenience to the business community of both sides,” the envoy said.

“It will reduce transaction cost, and transaction time for settlement of trade. It will make our trade more competitive which also creates new incentives for Bangladesh exporters to promote exports to India. So overall it’s an initiative where we are providing new options to the business community.
“We are actually increasing the ease of doing business, reducing the cost of doing business. Overall I think we are creating a comfort of dealing with our own currencies and minimizing the reliance on other currencies. This is a very important beginning,” he said.