INDIA BANGLADESH ECONOMIC AND BILATERAL COOPERATION: THE PROSPECTS AND STEPS FOR BANGLADESH TO REAP MAXIMUM BENEFITS

S Introduction 1. India Bangladesh relationship has always been the most discussed issue since the independence of Bangladesh. From the day of signing Treaty of Friendship and Peace in 1972, it was decided that Indo-Bangladesh relations would be guided by principles of democracy, neutrality and opposition to colonialism and racism. All these signaled a long-term friendly relationship between the two next-door neighbours. But in reality, the trade, border relations, water sharing and other security issues are evident towards uneven inter-state relations. 2. India has been considering Bangladesh as a client state not caring the wellbeing of its neighbour. Bangladesh also has failed to reap the benefit of real friendly relationship with its big neighbour. In such circumstances the Bangladeshi present Prime minister visit to India in 2010 seems to have opened up a new dawn in the India Bangladesh relationship. 3. Given an account of the present state of India Bangladesh economic and bilateral cooperation, this paper will analyze the likely development in these fields in view of Bangladeshi Prime Ministers recent visit to India. Finally, the paper will attempt to suggest steps for Bangladesh to reap maximum benefits from India Bangladesh bilateral cooperation. Aim 4. The aim of this paper is to analyze the development of India Bangladesh relationship in the fields of economic and bilateral cooperation, and suggest steps for Bangladesh to reap maximum benefits there from. Present State of India Bangladesh Economic and Bilateral Cooperation 5. Bilateral Trade. While Bangladesh imports from India doubled in the last 4 years (3274 million), its exports to India grew by 7 times in corresponding period (358 million). The informal trade is estimated to be at least double these numbers. And, the smuggling of contraband items from India goes unnoticed. It is quite evident; there is a huge trade imbalance between these two countries, 6. River Water Sharing. India and Bangladesh share 54 common rivers and have an agreement on the sharing of waters of river Ganga during lean season (01January to 31 May). Signed on 12 December 1996, the Ganga Waters Treaty is based on the principles of equity, fairness and no harm to either side. But there remains dissatisfaction in the Bangladeshi side as regards getting the due share of river waters. 7. Border Management and Border Relations.The killings of Bangladesh nationals and skirmishes in the border have created bitterness between the peoples of the two countries.

8. Security Issues. India claims Bangladesh for knowingly or unknowingly harbouring the Indian indigenous terrorists or insurgents. Bangladesh also similarly blames India for providing shelter to the criminals inside India. 9. Transit and Port Facilities. India wants transit through Bangladesh to connect her northeastern states availing the port facilities. Bangladesh also wants land connectivity with Nepal and Bhutan for her economic freeing. But these issues still remain unresolved and debatable. 10. Land and Maritime Boundaries. Some of the land and maritime boundaries between India and Bangladesh have not yet been settled due to uneasy bilateral relations. Impact of Prime Ministers Recent Visit to India on the Relationship . 11. Prime Minister Sheikh Hasina's visit to India from January 10-13,2010 has opened up a whole new vista. The main outcome of the visit has been the expression of Bangladesh's unambiguous commitment to stop insurgency abetting activities carried out using her land against India. Another important development during the visit has been expression of Bangladesh's willingness to allow her ports for use by neighbouring countries. 12. Economic Cooperation. a. Both countries would address removal of tariff and non-tariff barriers and port restrictions and facilitate movement of containerized cargo by rail and water. b. The border "haats" shall be established on a pilot basis at selected areas, including on the Meghalaya border, to allow trade in specified produces and products. c. The trucks for movement from Bhutan and Nepal will be allowed to enter about 200 meters into Zero Point at Banglabandh at BanglabandhPhulbari land customs station. d. Land customs stations at Sabroom-Ramgarh and Demagiri-Thegamukh would be to operational. e. Investments, including joint investment and joint ventures, shall be encouraged by both countries. 13. Bilateral Cooperation. a. River Waters Sharing and Related Issues. Sharing of the Teesta waters would be concluded expeditiously. India would support to dredge rivers for flood control, navigation and access to ports. India would not take steps on the Tipaimukh project. b. Border Management and Border Relations.The respective border guarding forces would exercise restraint and hold regular meetings to curtail illegal cross border activities and prevent loss of lives. c. Security Issues. Both countries would actively cooperate on security issues. Three agreements were signed on Mutual Legal Assistance 2

on Criminal Matters, the Transfer of Sentenced Persons, Combating International Terrorism, Organized Crime and Illicit Drug Trafficking. d. Transit and Port Facilities. Financing of the construction of proposed Akhaura Agartala railway link by India. Ashuganj in Bangladesh and Silghat in India shall be declared ports of call. Bangladesh will allow use of Mongla and Chittagong sea ports for movement of goods to and from India, Nepal and Bhutan through road and rail. e. Land and Maritime Boundaries. All outstanding land boundary issues would be comprehensively addressed keeping in view the spirit of the 1974 Land Boundary Agreement. A Joint Boundary Working Group would be convened to take this process forward. The maritime boundary between India and Bangladesh would be amicably demarcated. f. Energy. Agreement was signed on Cooperation in Power Sector and India would supply to Bangladesh 250 MW electricity from the Indian grid. g. Infrastructural Development. India announced a line of credit of $ 1 billion for a range of projects. India will consider assistance to construct road infrastructure in Dhaka, including flyovers. Bangladesh invited India to construct a flyover across Tin Bigha Corridor for exclusive Indian use. Suggested Steps for Bangladesh to Reap Maximum Benefits from Bilateral Cooperation 14. Strong Diplomacy. The Prime Ministers visit should give a fresh impetus to promoting stronger ties with China, the other member states of Saarc and all the member states of ASEAN, including Myanmar, the only other neighbour, with whom Bangladesh shares a border. 15. 16. Win Win Bilateral Relationship. For the mutual benefit of India and Bangladesh, Bangladesh need to offer each other the facilities, more in deeds than in words, that are of potential benefits for strengthening bilateral economic relations in a win-win situation. 17. Access Routes for Nepal and Bhutan. India has agreed to facilitate improved connectivity through its territory to Bangladesh, Nepal and Bhutan for fast-tracking their trade. It is important to operationalise the access routes to Nepal and Bhutan from Bangladesh and vice versa, as soon as possible. 18. Grid Connectivity. One of the urgent requirements of Bangladesh at the moment is to meet its shortfall in the energy sector. The import of 250MW of power from India will supplement the government's drive to close the gap between supply and demand in the power sector as quickly as possible. 19. Dredging of Rivers. Many of the rivers have silted up due to frequent floods and silt-carrying Himalayan rivers, affecting agriculture, fisheries, inland navigability and transportation of goods and people. Bangladesh should conduct capital dredging of 53 of the most affected waterways and dying rivers as well as remove waste from the rivers surrounding the capital city of Dhaka. India's 3

willingness to provide the dredgers and to do so in the shortest possible time, will provide a major boost to the government's dredging program. 20. Utilization of the $1 Billion Credit Line . Indias offer of one billion US dollars credit line is the largest sum of money India has ever offered as a soft loan to any country. It is meant for overhauling and improving the entire railway infrastructure in Bangladesh. 21. Improvement of Land Customs Stations. Improvement the land customs stations on both sides of the Indo-Bangladesh border would expedite and expand Bangladesh's exports to India, thereby narrowing the huge trade imbalance between the two asymmetric neighbours. As such, it is important for Bangladesh to operational the land customs stations as soon as possible. Conclusions 22. India and Bangladesh have agreed to cooperate closely for the good of the peoples of the two countries. Both the Prime Ministers has agreed on a vision for the future in the pursuit of the common good - bilaterally, regionally and globally. The two Prime Ministers recognized that peace and stability in the region is necessary for development and well-being of the people of their respective countries. 23. If Bangladesh can manage to get the India-Bangladesh relations moving in the right direction, it is quite possible for the country to achieve a GDP growth of 8 to 9 percent in the next two to three years. It is time that a national consensus was forged in support of better relations with India. The key is to close that gap to clear any negative perceptions people may have about agreements with Bangladesh's largest neighbour and regional power.