Mani Shankar Aiyar’s visit to Dhaka: Does his call to invest in Northeastern states overlook some ground realities?

Mani Shankar Aiyar’s visit to Dhaka:  Does his call to invest in Northeastern states overlook some ground realities?

Former Indian Union Minister and Congress MP Mani Shankar Aiyar came for a four day visit to Dhaka. He was accompanied by a 21-member delegation of industrial leaders from the northeast. He met the Prime Minister Sheikh Hasina on 13th July.

Aiyar is no stranger to Bangladesh as he was closely involved as a diplomat from the Ministry of External Affairs during the Bangladesh Liberation War of 1971 and soon thereafter. Later he joined politics and when Prime Minister Rajiv Gandhi visited Bangladesh, Aiyar came with him.

Aiyar held as the Union Minister the portfolio of looking after the northeastern states, besides others. The region consists of seven adjacent states — Tripura, Manipur, Nagaland, Mizoram, Arunachal, Meghalaya and Assam. Some areas — Darjeeling, Jalpaiguri and Koch Bihar — may also be considered as part of the group.

At a talk on “Bangladesh-India Relations” on 11th July at BEI auditorium, Aiyar spelt out Indian government plan of infrastructure development in the northeastern states where 50 million people live.

Aiyar said the government allocated Rs 14 lakh crore under the Northeast Industrial and Promotion Policy 2007 for a period of 12 years. The amount is being spent for developing infrastructure and sensitising business communities to invest in the region.

The growth of the economy of the region is half of the economic growth of mainland India. It seems that the purpose of such massive plan is to develop the region into a hub of trade and commerce, so as to eliminate deprivation of basic needs and facilities of people in the region, arguably the main root cause of insurgency.

He invited Bangladesh businesses to invest in the region saying that India had withdrawn all restrictions on Bangladeshi investments two years ago. The growth of the region would rise to 9 percent, from the current 4 per cent, with huge Indian public investments.

According to the diplomat -turned politician, the prosperity of the northeast Indian region and Bangladesh is inter-linked. He said Bangladesh could reduce the widening trade gap that favours India by transit fees and remittance from northeast India. Trade gap was worth nearly $3.5 billion in fiscal 2009-10.

He was an eloquent speaker and sold very well the potential attractiveness of investment from Bangladesh private sector in the region. It was a tantalizing offer no business person could ignore.

While there are merits in the proposition of Aiyar, I would propose to widen the offer of Aiyar to include Bangladesh, Bhutan, Nepal and northeastern states of India to create a common economic space. When the region is able to exploit fully its resource endowments, it will be the key to peace and prosperity.

Obstacles to do business in the northeastern states:

I would argue there are many ground realities that pose obstacles in conducting business with northeastern states and some of them deserve mention below:
• Bangladesh’s main exportable products cannot get access to Indian market because they are within India’s sensitive list of goods that number 480 items, which include agricultural and textile products.
• Non-tariff barriers in India, such as testing and certification, technical standards and banking impediments are some of the identifiable non-tariff barriers. For example, quality standard certificate from Bangladesh is not accepted by India, normally Bangladeshis are not allowed to open bank account in northeastern states of India, and import-export number is issued from Kolkata which is at least 1680 km away from Agartala.
• Non-tariff measures are often turned into non-tariff barriers/ technical barriers by India while complying with sanitary and phytosanitary measures.
• Poor logistics for land ports, only certain commodities can pass through land ports, cumbersome customs requirements, manual clearance, excessive inspection as an excuse for security, no customs cooperation or joint inspection, lack of harmonization of standards, lack of warehouse facilities in land ports, and no testing facility nearby in any land port.
• Business people from Bangladesh complain of visa restrictions that make them difficult to travel to promote trade with India.

Furthermore, broader questions arise. First the northeastern region is “a problem child” of India. It has been the most enduring theatre of separatist guerrilla war and the Bodos, the Karbis, the Dimasas and the Rabhas all joined the Assam movement to expel “foreigners” and “ Bangladeshi infiltrators” to restore their rights.

Given the scenario, whether Bangladeshi investment will be perceived as “economic exploitation” by the insurgents in the region.

The other question is how does the offer of businesses to northeastern states reconcile with the fact that India is fencing Assam-Meghalaya border of 557 kilometres sealing off the border with Bangladesh? Does the fencing show confidence and trust on Bangladesh nationals?

Joint Communique and its implementation:

The visit of Bangladesh Prime Minister to India in January this year ushered in a new era of opportunity in bilateral relations. The Joint Communique of 51 paragraphs released after the visit has put in place a comprehensive framework of cooperation in all possible areas.

While India gives top priority to transit facilities through Bangladesh to northeastern India and denial of sanctuary for Indian insurgents in Bangladesh, Bangladesh’s top priority rests on water sharing with common rivers (54 rives flow to Bangladesh from India), demarcation of land border, and duty-free access to India’s market of Bangladesh products

But nothing concrete has become evident for Bangladesh public. People expected that the Teests Water Sharing Agreement would be concluded and no Bangladeshi national would be killed because it was agreed in the Communique that respective border guards would “exercise restraint” to prevent loss of lives but as of mid July, 101 Bangladeshi nationals are killed by BSF. Furthermore nothing tangible occurred with regard to the implementation of the 1974 Bangldesh-India Border Agreement.

Paragraph 33 of the Joint Communique states clearly: “ With a view to encouraging imports from Bangladesh, both countries agreed to address removal of tariff and non-tariff barriers and port restrictions and facilitate movement of containerized cargo by rail and water.” Once India takes non-reciprocal measures for access of Bangladeshi products to its market, I believe private sectors in Bangladesh will be more easily swayed to enter into trade and invest in the northeastern region.

Paragraph 37 states that border hats shall be established on selected areas including on the Meghalayan border. Bangladesh wanted to open the border hat on Bangladesh-Meghalaya border on 14th April (1st day of Bengali Year) but could not be opened. Recently Bangladesh Commerce Minister expressed his disappointment at the delay.

While it is noted that many discussions are taking place at the government-to-government level, public want results on the ground. It seems that the implementation process of the areas agreed at the highest political level has been painfully slow that is disappointing to public in Bangladesh.


It cannot be denied that there exists anti-India sentiments among certain people in Bangladesh because of India’s uncooperative policy in the past toward the country and a positive environment can be created if India begins quickly to implement the promises on water sharing, land boundary and hassle-free access to Indian markets as enumerated in the joint communiqué.

As they say, the proof of the pudding lies in eating. Many Bangladesh people believe that India with its vast resources and more than a trillion dollar -economy would be forthcoming in resolving some of the core bilateral issues.
Regrettably many in Bangladesh take India’s promises with caution because in the past, either the promises were not delivered or were put into cold storage due to the federal-state bureaucratic maze in India,

In the book “ The Jamdani Revolution” (2009), the former India’s Foreign Secretary and High Commissioner to Bangladesh Krishnan Srinivasan writes: “ The political will and attention span have been lacking in New Delhi…In other words the Indian government has tended to allow the hardliners and Hindu chauvinists to set the agenda for its policy towards Bangladesh, when a more rational approach would have been to come to some understandings on Dhaka’s agenda” (p.424).

I hope the mind-set depicted by Srinivasan has changed. The state of Indo-Bangladesh economic relations have to be viewed in the context of their overall relationships. In most cases, there is an interdependence between economic and political relationships and good political relations tend to promote close economic relations.

By Barrister Harun ur Rashid
Former Bangladesh Ambassador of Bangladesh to the UN, Geneva.

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