Abstract: Though trade between India and Bangladesh forms only a small part of the total trade, enhancing bilateral trade is of high importance to both countries. For India, increase in trade with Bangladesh would help to address many concerns of economic isolation of its backward north eastern states and generate new market opportunities for small-scale producers from the impoverished hinterlands of eastern states. For Bangladesh, wider areas of cooperation, investment and allied development opportunities will be thrown open with greater trade openness with India. Moreover, both India and Bangladesh has long-standing commitments toward regional economic cooperation in South Asia, of which their bilateral trade is a significant part. Bilateral economic relation between India and Bangladesh has grown since the latter got independence in 1971, albeit at a slow pace. Ups and downs in the political relations between the two countries have had a strong bearing on development of their economic ties. In recent years, both countries have registered good growth rates and have made significant progress in social development. Bilateral trade has also grown, as a result of open economic policy outlook of both countries. Among South East Asian countries, Bangladesh is the largest trading partner of India, with total bilateral trade crossing US$ 5.5 billion in the year 20122. The two-way trade flow between them was US$ 1.08 billion in year 2002. This puts the annual average growth in trade at about 4.7 percent. The present paper tries to highlight the problems and prospects of border trade for North-East India and Bangladesh as a part of India’s look east policy. Key words: India’s look East Policy, Bilateral trade, South-East Asia, look-East Policy

1. Problems and Prospects of Border Trade between
North East India and Bangladesh
Presented by:
Swarnima Tiwari
Suneeta Dutta

2. COVERING
• General Introduction on Border Trade
• North East India And Bangladesh Border Trade
• Look East Policy
• Problems and prospects
• Conclusion
• Bibliography

3. GENERAL INTRODUCTION ON
BORDER TRADE
• North Eastern India shares land border with
Bangladesh, Bhutan, China and Myanmar and has
agreements of overland trade with these countries
through Land Custom Stations notified under Section
7 of the Customs Act, 1962. While for trading
through LCSs situated on Bangladesh and Bhutan
border, there is a Free Trade Agreement (SAFTA),
Border Trade Agreement have been entered into with
Myanmar.

4. NER-Bangladesh Border Length
State Land border(Km) Riverine Total
Assam 160 103 263
Meghalaya 443 83 443
Tripura 773 - 856
Mizoram 58 260 318
Total 1434 446 1880
(source: NEC)

5. State-wise Distribution of LCSs in NER Dealing NER-
Bangladesh Trade
State Functional Non- functional Total
Assam 5 3 8
Meghalaya 8 2 10
Tripura 0 1 1
Mizoram 7 0 6
Total 20 6 26
Source: Office of the Commissioner of Custom, Shillong

6. NORTH EAST INDIAAND BANGLADESH BORDER
TRADE
• Among all South Asian Countries, Bangladesh is a major
trading partner of India especially in the context of North
Eastern Region of India. 20 Land Custom Stations are
operational with Bangladesh; the functional Land Customs
Stations have been performing well in spites of so many
constraints and have been the potential in boosting the Bi-
lateral trade to a much bigger scale.

7. NER Bangladesh Border Trade: Emerging Pattern
Resource
• Resource industry linkages determine the pattern of India –
Bangladesh border trade taking place through the NER. Some
critical minerals, which are available in the NER but not in
Bangladesh, provide the basis of NER - Bangladesh trade. What
follows is that NER’s exports to Bangladesh are distinctly different
from major export lines from rest of India to Bangladesh.
• The product - wise trade between NER and Bangladesh indicates a
complementarily between the resource availability in the NER and
the demand structure of Bangladesh. Bangladesh lacks mineral
resources like coal and limestone which the country imports from
the NER. In return, the NER imports finished products from
Bangladesh. This provides a firm basis for trade expansion between
the two regions. To summaries, the following are the features of
India - Bangladesh border trade:

8. 1. Exports from NER to Bangladesh dominate NER -
Bangladesh trade.
2. The NER exports to Bangladesh like coal, limestone, stone
chips, boulder, Stone, raw hides, oranges, fresh ginger,
bamboo, dry fish, fresh fruits (citrus) etc. and imports cement,
Hilsa Fish, cotton waste, synthetic drinks, plywood, synthetic
net fabrics, soap, plastic goods, readymade garments, process
food etc.
3. Trade flows through Tripura and Sutarkandi in Assam -
Bangladesh sector is dominated by imports from Bangladesh.

9. Problems and prospects
Problems:
Need for infrastructure improvement: This is one of the most pressing
issues in India-Bangladesh trade and includes a wide range of issues.
Most important components of infrastructural requirements are betterment
of approach roads, parking space, warehousing facilities, weighing
machines, quarantine and testing facilities and up gradation of office
equipment and facilities. A part of the investments, those related to
governmental offices, equipment and property have to be sourced from
budgetary resources. Massive investments required for the rest have to be
sourced from private investors. Infrastructural development of LCSs can be
met in the short or medium term only by attracting private capital. Build,
Operate and Transfer (BOT) model of procurement of public infrastructure,
as has been successfully implemented in many other areas, has high
potential for speedy delivery in this regard.

10. • Narrow or single lane approach roads
• Poor utilization of existing railway links:
• Absence of/ inadequate Weigh Bridges
• Absence of Central Warehousing Corporation (CWC) Controlled parking
and Warehousing facilities or Inadequate facilities.
• Issues with security at the parking spaces
• Limited banking facilities
• Lack of enabled documentation and processing facilities
• Drug trafficking
• Anti-terror corporations.

11. Prospects:
• Potential for rise in bilateral trade relations between Bangladesh and India is huge
as can be gauged from various indicators. But a large part of that potential still
remains un-explored. Though the large trade deficit that Bangladesh maintains with
India is pointed out by some to warn against possible Indian domination in the face
of increased bilateral trade openness, with a closer look it can be easily seen that the
trade imbalance in terms of volume is a mere reflection of the huge difference in the
relative economic sizes of both countries. Irrespective of the size of opportunities in
absolute terms, both countries can be found to have large amounts of gains in store
from enhanced bilateral trade. Emergence of India as a top export destination for
Bangladesh is one of the facts that support this claim.

12. Conclusions
• Though trade between India and Bangladesh forms only a small part of the total trade,
enhancing bilateral trade is of high importance to both countries. For India, increase in trade
with Bangladesh would help to address many concerns of economic isolation of its backward
north eastern states and generate new market opportunities for small-scale producers from the
impoverished hinterlands of eastern states. For Bangladesh, wider areas of cooperation,
investment and allied development opportunities will be thrown open with greater trade
openness with India. Moreover, both India and Bangladesh has long-standing commitments
toward regional economic cooperation in South Asia, of which their bilateral trade is a
significant part. Bilateral economic relation between India and Bangladesh has grown since
the latter got independence in 1971, albeit at a slow pace. Ups and downs in the political
relations between the two countries have had a strong bearing on development of their
economic ties. In recent years, both countries have registered good growth rates and have
made significant progress in social development. Bilateral trade has also grown, as a result of
open economic policy outlook of both countries. Among South East Asian countries,
Bangladesh is the largest trading partner of India, with total bilateral trade crossing US$ 5.5
billion in the year 20122. The two-way trade flow between them was US$ 1.08 billion in year
2002. This puts the annual average growth in trade at about 4.7 percent.

13. Bibliography
• NEDFI Data Bank Quarterly, 2003, Vol. 2, Issue 1, January.
• IIFT, 1987, Export Potential Survey of North Eastern Region, Indian
Institute of Foreign Trade, New Delhi.
• Economic Survey of India, 2007, Policy Brief, October 2007, Web.27,
December 2012, http://www.oecd.org/economy/surveys/39452196.pdf .
• Kumar, R, “Changing Role Of The Public Sector In The Promotion Of
Foreign Direct Investment”, in ESCAP, Asia-Pacific Development Journal,
vol. 10, No. 2 , December 2003:10,Web.03 January 2013.
http://www.unescap.org/pdd/publications/regcoop/ch1.pdf.
• www.nec.com