Professor Mustafizur Rahman on widening trade gap with India

Published in New Age on Monday, 2 March 2015.

H1 trade gap with India hits all-time high

AKM Zamir Uddin

The country’s trade gap with India in the first half of the current fiscal year recorded its all-time high at $2.65 billion because of soaring imports against lower exports.

The trade gap widened as different non-tariff barriers continued to limit Bangladesh’s exports to the neighbouring country, said economists and experts.

Bangladesh’s imports from India increased to $2.91 billion in July-December of the current FY 2014-2015 whereas exports stood at $257.48 million during the period.

The trade gap in July-December in the FY14 was $2.59 billion with an export figure of $182.48 million and import of $2.78 billion.

The country’s trade gap with India stood at $2.05 billion in the first half of the FY13.

The experts and economists blamed protectionist attitude by India for widening the trade gap amid a lower export from Bangladesh.

They said that Bangladesh exports to India had increased slightly in the first half of the FY15, but it was not satisfactory as the country posted a comparatively lower export figure of $182.48 million in July-December period of the FY14 from $267.26 million during the same period of the FY13.

But, Bangladesh’s imports from India increased significantly in the first half of the last financial year.

The country’s annual trade gap with India recorded its all-time high in the FY14 at $5.57 billion and it was $4.17 billion in the FY13.

According to Export Promotion Bureau data, the country’s readymade garment export earnings from India stood at $72.39 million while its overall RMG export earnings stood at $12.02 billion.

The RMG export earnings from the neighbouring country is not increasing in line with the expectation despite enjoying the duty-free market access as the Indian authorities usually impose non-tariff barriers on the products, said a BB official.

Former finance adviser to interim government AB Mirza Azizul Islam told New Age on Sunday that the trade deficit of Bangladesh against India was still high as different non-tariff barriers continued to limit Bangladesh’s exports to the neighbouring country.

The businesspeople have long been raising their concern in this connection but the India’s government is yet to mitigate the problem, he said.

The Bangladesh government should take step to continue discussion with New Delhi with a view to removing the non-tariff barrierd, Aziz said.

Besides, the country’s industrial sector is also facing a production crisis due to the ongoing political unrest in the recent months and that might have played a role in widening the trade deficit between the two countries, he said.

‘It is a natural phenomenon that Bangladesh usually faces a deficit with the neighbouring country considering the volume of India’s economy. But, the size of the deficit has been increasing continuously for year after year which is not acceptable’, Aziz said.

Centre for Policy Dialogue executive director Mustafizur Rahman told New Age that the country should take initiative to diversify its export items to increase its export volume.

‘The export earnings from India increased in the first half of the FY15 which was a good example for us. But, we have more scope to increase the export items to the country by diversifying our export items which will help decrease the trade gap of Bangladesh,’ he said.

Besides, the government should develop more the standard certification of the country’s export items to increase its business with the different countries, Mustafiz said.