Bangladesh-India Bilateral Trade: Causes of Imbalance and Measures for Improvement

Abstract

The study underscores the trend, structure and current picture of Bangladesh-India trade. Bangladesh has always been trade deficit with India, and recently it has increased exponentially. Limited export base, backward industries, inadequate infrastructure, appreciation of Bangladesh’s Taka against Indian Rupee, earlier and faster trade liberalization program in Bangladesh compared to India, tariff and non-tariff barriers (NTBs) imposed by the Indian government, huge illegal trade, diversified exports and technologically advanced industrial base of India are identified as the main reasons of this huge trade imbalance. Sound physical, social and economic infrastructure, superior product quality, export diversification, huge domestic and foreign investments, joint ventures in Bangladesh with buy back arrangements, competitive devaluation of the Bangladesh currency against the Indian currency, removal of illegal trade, tariff and NTBs- free entry of Bangladesh’s exports to Indian market, etc. are suggested to improve this trade deficit. Also cordial and productive cooperation between these two nations is crucial to materialize these measures.