Commerce and Industry Minister Kamal Nath said on Wednesday a South Asia Free Trade Agreement plus a bilateral free trade agreement between India and Bangladesh could counter Bangladesh's mounting trade deficit with India.
Bangladesh's trade deficit with India is above $1 million, with India's exports to Bangladesh amounting to $1.6 billion and its imports totalling $59.26 million in the fiscal year 2004-05.
Citing the example of the India-Sri Lanka FTA, Nath said the balance of trade, which was 15:1 in India's favour, has come down to 4:1 following the signing of the FTA.
Nath was speaking at a luncheon meeting with Bangladesh Prime Minister Begum Khaleda Zia, organised by Federation of Indian Chambers of Commerce and Industry, Confederation of Indian Industry and Associated Chambers of Commerce and Industry of India.
He said non-tariff barriers which Bangladesh held responsible for the trade deficit existed by default and not by design and that the Indian government felt the need to correct them.
"We will urge our friends in India to facilitate preferential duty-free access of Bangladeshi exports to India," said Khaleda Zia. "We also look forward to dismantling of various non-tariff trade barriers," she said.
Nath said imports from India, which consisted mainly of commodities and raw materials like yarn and chemicals, would add to Bangladesh's own export and manufacturing competitiveness. He made a case for encouraging containerised movement of goods across the borders, resulting in faster movement of goods and leading to greater revenue realisation for the two countries.
Bangladesh's exports to India, Nath said, had grown 68 per cent in 2004-05, surpassing the country's overall exports growth of 14 per cent.
"With the operationalisation of Safta and India's initiative to address the market access issues of Bangladesh textile and clothing sector by offering a tariff rate quota, we are certain that there would be a substantial increase in Bangladesh's exports to India," he added.
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