India-Bangla Trade Set For CEPA Boost

Why in News?

India and Bangladesh will soon begin negotiations on a Bilateral Comprehensive Economic Partnership Agreement, Prime Minister Narendra Modi announced after meeting with the visiting Prime Minister of Bangladesh (CEPA).

Regarding India’s CEPA accords

India has signed CEPAs with South Korea and Japan, and the one with UAE is anticipated to increase bilateral trade in goods to USD 100 billion within five years and trade in services to USD 15 billion, resulting in greater social and economic opportunities for both countries.
CEPAs are similar to free trade pacts, but these cooperation agreements are more comprehensive than Free Trade Agreements.
CEPA typically encompasses negotiations pertaining to the trade in services and investments, as well as other areas of economic partnership.
It may even consider negotiating trade facilitation and customs cooperation, competition, and Intellectual Property Rights.
It examines the regulatory aspect of trade and includes an agreement addressing regulatory issues.

OBJECTIVE OF CEPA

The CEPA is likely to emphasise trade in goods, services, and investments, with the reduction of the trade gap between the two countries as its primary objective.
As Bangladesh prepares to graduate into a developing nation by 2026 — after which it may no longer be eligible for the trade benefits it currently enjoys as a least-developed nation — it is eager to conclude the CEPA within a year.

EXISTING FRAMEWORK

During Prime Minister Modi’s June 2015 visit to Bangladesh, the bilateral trade agreement between the two countries was automatically renewed for an additional five years.
Under the terms of the South Asian Free Trade Area (SAFTA), Bangladesh grants preferential tariffs to Indian exports of products that are not on the 993-item “sensitive list.” In 2011, India announced duty-free and quota-free access to Bangladesh for all tariff lines with the exception of tobacco and alcoholic beverages.
Since 2011, the Agreement on Promotion and Protection of Investments has been in effect. During the visit of the Indian Finance Minister to Bangladesh in October 2017, the agreement’s Joint Interpretative Notes were signed.
A Protocol on Inland Waterways Trade and Transit (PIWTT) has been in effect to facilitate trade and transit on inland waterways since 1972.
During Modi’s visit to Bangladesh in 2015, the PIWTT was also renewed for a period of five years with an automatic renewal clause.
The protocol permits the transport of goods by barges/vessels on eight routes between India and Bangladesh, as well as between India and Bangladesh via Bangladesh.
Since June 2015, when a Memorandum of Understanding (MoU) on Coastal Shipping was signed, direct sea movement of containerized/ bulk/ dry cargo has begun. This has decreased the shipping time between India and Bangladesh from 30 to 40 days to 7 to 10 days and has the potential to become a cost-effective mode of transport for the business communities on both sides.
In 2015, MoUs concerning the use of the Chittagong and Mongla Ports for Movement of Goods to and from India were signed.
The India-Bangladesh Border Haats Memorandum of Understanding was renewed in April 2017 during Prime Minister Hasina’s visit to India.
Currently, four Border Haats are operational, two in Meghalaya (Kalaichar and Balat) and two in Tripura (Srinagar and Kamalasagar).
Work is underway to construct two additional haats on the Tripura-Bangladesh border and four on the Meghalaya-Bangladesh border.
The two sides have also agreed to determine the locations of six additional Border Haats.

RELATIONSHIP BETWEEN BANGLADESH AND INDIA

The relationship between India and Bangladesh is based on two pillars of Indian diplomacy:
- the Community First Policy
- the Act East Strategy
The spirit of friendship, mutual understanding, and mutual respect that emerged during Bangladesh’s liberation continues to permeate numerous aspects of this relationship.

Trade

India’s largest South Asian trading partner is Bangladesh, while India is Bangladesh’s second largest trading partner.
Over the past decade, bilateral trade between India and Bangladesh has steadily increased, reaching $10.17 billion in fiscal year 2020-21.
Bangladesh exported $1.28 billion to India and imported $8.6 billion from India during this time period.
The majority of Bangladesh’s exports to India consist of ready-to-wear garments.
Under the South Asian Free Trade Agreement, India offered duty-free and quota-free entry to Bangladeshi goods in 2011. (SAFTA).
However, Bangladesh will no longer be eligible for this benefit once it is no longer considered a Least Developed Country (LDC). The United Nations has approved Bangladesh’s graduation from LDC status by 2026.
India and Bangladesh are considering signing a Comprehensive Economic Partnership Agreement as a result (CEPA).

Connectivity

The India-Bangladesh Friendship Bridge 1 (also known as the Feni Bridge) has been constructed, linking the port of Chittagong in Bangladesh to Tripura.
In July of 2019, a cargo ship carrying goods from Bhutan to Bangladesh set sail under the flag of Assam. Along the Brahmaputra River and the Indo-Bangladesh Protocol Route, the ship sailed.
This was the first time an Indian waterway served as a transit route for cargo between two nations.
In June 2015, the Bangladesh-Bhutan-India-Nepal (BBIN) Motor Vehicles Agreement (MVA) was signed to enhance subregional connectivity.
India, Bangladesh, and Nepal signed a Memorandum of Understanding for BBIN implementation in March 2022.

Cooperation in the Energy Sector

The energy cooperation between the two sides has also been very positive.
Since 2013, the Indian state of Tripura has supplied Bangladesh with 160 MW of electricity in addition to the 500 MW received from West Bengal.
In September 2018, the Indian and Bangladeshi prime ministers inaugurated the construction of a friendship pipeline project via video conferencing.
The India-Bangladesh Friendship Pipeline Project will connect Siliguri in West Bengal, India to Parbatipur in the Dinajpur district of Bangladesh along 130 kilometres.

Aid from India During the COVID-19 Epidemic

India provided Bangladesh with 100,000 anti-malarial hydroxychloroquine tablets and 50,000 surgical gloves. It also provided Bangladesh with thirty thousand COVID-19 test kits.
Through the SAARC framework, India provided assistance to neighbouring countries, including Bangladesh. It trained the medical staffs of member countries and helped establish the SAARC COVID-19 emergency fund.
In January 2021, India provided 2 million doses of Made-in-India Covid-19 vaccines to Bangladesh as part of the Vaccine Maitri initiative.
Prior to her four-day visit, the prime minister of Bangladesh, Sheikh Hasina, urged India to be more generous in river water sharing.