Sujata Mehta’s visit to Dhaka

Sujata Mehta’s visit to Dhaka

Ms. Sujata Mehta, Indian Ministry of External Affairs Secretary (Multilateral and Economic Relations) will visit Bangladesh from 5 to 7 April.

Ms. Mehta joined the Indian foreign service in 1980. She served in Indian Missions in Moscow, Dhaka and at the UN in New York. She was India’s Ambassador to Spain before returning to Headquarters in July 2013 as Additional Secretary and later Secretary.

It is reported Mehta will be accompanied by Joint Secretary (Development Partnership Administration) Alok Kumar Sinha and Joint Secretary (Bangladesh and Myanmar) Sripriya Ranganathan.

She is expected to discuss the ongoing development partnership and economic cooperation with Bangladesh and she is scheduled to meet different Ministers and hold discussions with Economic Relations Division of Bangladesh.

The visit has provided an opportunity to focus a few issues, among others, of economic cooperation such as

* Review of implementation of projects under Indian supplier’s credit

*How to reduce huge trade deficit of Bangladesh

* Status on second line of credit from India as reportedly requested by Bangladesh Foreign Minister at a meeting in September last year with his Indian counterpart.

After the visit of Bangladesh Prime Minister Sheikh Hasina in 2010 in New Delhi, cooperative efforts are continuing from both sides to implement many programmes in economic, social and infrastructure, especially under the supplier’s credit of $ 1(one) billion loan to Bangladesh by India (out of $200 million was later converted into grant which would be used for construction of Padma Bridge)

Bangladesh has reportedly received only $173.58 million out of the $800 million Indian Line of Credit (LoC) . In the last four-and-a-half years, seven out of fifteen projects were reportedly completed with two more projects nearing completion. There is reportedly “blame game” from both sides for slow process. Bangladesh is not happy at the progress of implementation of the projects while at one stage Indian authorities had reportedly expressed dissatisfaction over the slow rate of implementation of four projects and had urged the Bangladesh government to expedite the implementation.

According to the progress report, the total cost of implementation of these 15 projects is $986.95 million, of which $751.95 million will be allocated from LoC and $235.00 million will be funded by the Government of Bangladesh. However, two projects out of the 15 have been revised and the project costs too have increased. In order to meet the additional cost of the two projects, the total figure of the LoC may exceed $800 million.. In the last LoC Review Meeting held in Dhaka on February 22 this year, the Indian side assured Bangladesh of .extending the ongoing LoC up to $862 million

With regard to trade deficit, during 2013-14, Bangladesh imported goods worth $6.2 billion from India in official channel, while Bangladesh could only export goods worth about $456.63 million (much less than previous years). In addition, unofficial imports from India are reportedly about 1.5 times more than official imports. (Moreover it is reported that in 2013 that Indians in Bangladesh officially repatriated about $5 billion to India and continue to do so)

Researchers in both countries have found that Bangladesh has a potential export market of $2 billion in India. Although India has granted Bangladesh duty-free access to all items except tobacco and liquor, there exist several types of state- duties which come to around 15 per cent and this discourages the Indian importers to buy goods from Bangladesh. Furthermore Bangladeshi exporters often face a serious problem because of the non-acceptance of test certificates issued by Bangladesh Laboratory for certain products like soap, Jamdani saree, RMG and food products. In the absence of testing facilities in the locality, the samples are sent to far away laboratories (even to Chennai) and such lengthy process impedes growth of Bangladesh trade with India.

To reduce the trade gap, many researchers have suggested some steps such as, (a) India should recognise the principle of asymmetry and non-reciprocity in trade with Bangladesh, (b) there should be liberal rules of origin and (c) removal of para-tariff and non-tariff barriers and (d) export quality Bangladeshi products should not be in India’s negative list. This will hardly dent its $450 billion import basket in 2013-14.

Furthermore, joint ventures at the private sectors level for local, regional and global markets, trade complementariness can be developed by vertical specialisation through production sharing, and gradual integration of Bangladesh’s economy with that of northeastern states of India. For improvement of business cooperation, India -Bangladesh may sign an Investment Promotion and Protection Agreement and Double Taxation Avoidance Agreement

With regard to the request made for second line of credit (LoC) support from India by Bangladesh Foreign Minister in September at the joint consultative meeting with his Indian counterpart for developing of infrastructure in the country, .Bangladesh is likely to seek Indian views on it.

Since political and economic relations are inter-dependent , it is hoped that given the state of existing bilateral relations, India would take concrete steps to strengthen further economic cooperation with Bangladesh for the mutual benefit of both countries.

By Barrister Harun ur Rashid

Former Bangladesh Ambassador to the UN, Geneva

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