Indo-Bangladesh Dialogue

on

Trade, Investment and Connectivity

First meeting

Delhi, January 18-19, 2005

Highlights and Summary of Discussions

India Internatonal Centre, Delhi
and
Centre for Policy Dialogue, Dhaka

Summary abstract of Indo-Bangladesh Track II Dialogue. January 2005

The first meeting of the second phase of Indo-Bangladesh Track II Dialogue was held at the India International Centre (IIC) New Delhi on January 18 and 19, 2005. (The list of participants is attached at annexure I). Former Prime Minister Shri I.K.Gujral inaugurated the meeting.

Welcoming Shri I.K.Gujral and the delegates on behalf of the India International Centre and the President of the IIC, Dr Kapila Vatsyayan, Chairperson of the Asia Project and Life Trustee of IIC, recalled the earlier Dialogue from 1995 to 2001. She was confident that the continuing dialogue would promote, encourage, deepen and enrich the relationship between the two countries. Dr Vatsyayan said that the first series of Dialogues had provided useful inputs, helping intellectuals in both sides to work towards a more balanced relationship. Dr Vatsyayan said that the process of Dialogue by the civil society could establish an environment of mutual understanding and search for solutions by respective governments.

Referring to the Dialogue, Shri I.K.Gujral recalled his own association with the earlier dialogues process. Shri Gujral said that the understanding of issues during his association with the Tract II process had contributed significantly to the resolution of the Ganga water issue between India and Bangladesh.

Complimenting the people of Bangladesh and their satisfactory economic progress, Shri Gujral said that the idea of a SAARC Chamber of Commerce had been initiated by businessmen from Bangladesh. He expressed his conviction that as in the past, the Dialogue would help promote Indo-Bangladesh relationships in economic, social and political fields and would regenerate the atmosphere of cooperation in the whole of SAARC.

Prof Rehman Sobhan, the Co-convenor from Bangladesh, recalled the initiation of Phase I of the Indo-Bangladesh Dialogue which commenced in 1995. He considered unique the autonomy of the Dialogue which commenced in 1995. He considered unique the autonomy of the Dialogue process and the inclusion of people of diverse political and intellectual persuasion. Prof Sobhan recalled that many of those involved in Phase I of the Dialogue from both countries eventually came to hold important positions in Government. He recalled the identity of views from both sides on the need to open up market access of Bangladeshi products to India. Many aspects of the issues have not yet been resolved and have now been subsumed under bilateral discussions on Free Trade Agreement as also on SAFTA under the umbrella of SAARC.

Prof Sobhan said that important developments have taken place on investment and the recent move by TATAs to invest to Bangladesh was of great significance. He also recalled how the Track II Dialogue had influenced Track I in resolution of the Ganga water issue. However, there were second generation issues on the 54 common rivers which will need to be addressed soberly and constructively.

Prof Sobhan felt that the new generation of issues was a spill-over from old issues with new dimensions added. He recognized that even though there was often agreement at the level of Track II, this was not always reflected in policy making. Hence the need was felt for greater association of Track I with the Track II Dialogue process.

Shri Deb Mukharji, the Indian Co-Convenor, said that the process of the Dialogue between the civil societies and the two countries as taking place at different levels and fora. The issues to be addressed may appear the same but their complexion and contents would vary over time as fresh facets emerge requiring immediate and renewed attention.

Shri Mukharji said that the representatives of the government were present in the Indian team and though they were not present as spokes-persons of the government, their presence would enable better sharing of ideas.

Shri Mukharji said while it was understandable that the participants from each country would primarily reflect their own concerns, this must be matched with the understanding that this was not a zero sum game. The purpose of the Dialogue would be achieved with a commitment to mutual welfare.

Referring to economic issues, Shri Mukharji said that not only the free movement of goods but increased collaboration in our economic endeavour would boost investments. On the question of transit, while one must respect the Bangladesh view on time required for arriving at a conclusion, a movement would be greatly beneficial to the states of India to the Northeast.

On the question of water resources, Shri Mukharji said that India’s right to usage of water passing through its territory was not absolute. At the same time 300 million Indians were dependent on some of these rivers and Bangladesh could not expect the flows to be permanently constant. In his view, a viable and sustainable long term solution could only lie in a holistic approach involving all countries of the region.

Shri Mukharji said that there were mutual concerns on security issues and the terrain may make it difficult to determine actual ground situations. However, greater transparency could lead to greater mutual conference. The question of trans border movements of people was another issue with the potential for adverse effect on Indo-Bangladesh relations. It was necessary to have a vision of the future even as we discussed the problems of the day.

Mr. Alan Rosling spoke about Tatas present involvement with Bangladesh. Referring to the proposed investment in Bangladesh, Mr. Rosling said that these were substantial and the project was a major and complex one. For Tatas, it was the largest proposed investment while for Bangladesh it was 20 times larger than any investment made so far. The proposals included a two million tonne steel plant, a power project of 1000 mega watts and a million tonne fertilizer plant. The total investment depends on the technology used but is likely to be 1.5 to 2 billion dollars. Government of India would have to permit the necessary investment under RBI rules. There would have to be approval for export of Indian iron ore and the import of power. Cooperation of the Government of Bangladesh would be required and gas was a key issue.
In his intervention Mr Farooq Sobhan said that the proposed investments by TATA in Bangladesh was a major development and could lead to investment from other parties as well. Mr Sobhan felt that major projects of this nature could not be separated from the overall nature of Indo-Bangladesh relationship. He hoped that there would be no abrupt downswing in relations to make life more complicated and difficult. He expressed his personal conviction that good business relationship between India and Bangladesh could have beneficial impact on overall relationship. There was need to create vital economic interests which would bind the two countries.

Mr Manzur Elahi said that until the seventies the generation of Bangladesh had been imbibed with an anti India feeling which was neutralized by the liberation war and the support received from India. After liberation, some poor quality goods went from India to Bangladesh and there was a swing away from India in the late seventies and early eighties to the western world where quality was assured even if prices were high. As an instance he mentioned English Bedford trucks which then dominated the market. However, today 95% of the transport is controlled by Indian trucks. Mr Elahi said that business community had no prejudices but wanted value for money. Presently total exports from India, including financial exports probably amounted to 5 billion dollars. Politicians often vitiated the atmosphere and the media could play a better role.

Mr George Verghese said that a holistic view needed to be taken on Indo-Bangladesh relations. At times we were led by emotions and there were misconceptions. In this context, he referred to the misunderstanding about the proposed river linking project in India and asserted that any action on Himalayan rivers would only be in consultation with our partners in Nepal, Bhutan and Bangladesh. He felt that water was a huge emotional issue in Bangladesh, but in a sense, based on a non-issue. He referred to the land boundary question and said that existing issue could be resolved in a week if there was a will.

Referring to the maritime boundary question he said that pending resolution, development of resources could proceed on the basis of sharing. On the question of influx on people, he felt that more funding in investments would be more effective. He felt that trade facilities were quite inadequate along the border and the situation at the border posts at Petrapol and Benapol was quite inadequate. Mr Verghese regretted that there was as yet no Motor Vehicle Agreement between India and Bangladesh.

Mr Verghese said that a first rate deep water port at the head of the Bay would be worth many times more than the investments. Expressing happiness at the trilateral agreement on the export of gas from Mynamar to India from Bangladesh he endorsed the suggestion for hydro-electric connectivity from Nepal and Bhutan into Bangaldesh.

Mr Ziaur Rahman Khan referred to the misconception that existed and felt that as the larger country India had to make a greater effort. He welcomed the proposed substantial investments from India in Bangladesh.

Dr Raja Mohan said that the primary problem was that people did not think large enough, he said that integration was a global trend and it was the responsibility of the governments to encourage this. There could be substantial opportunity costs in not integrating rapidly.

Dr Raja Mohan felt that some immediate political issues needed to be resolved. But efforts should be made to delink economic and security aspects as far as possible. It was also important to de-politicise technical issues. There was excessive political over-load on issues such as water and trade. In his view it was inevitable that logic would lead to a much larger economic integration in the eastern part of the sub continent.

Mr Tofail Ahmed spoke about India’s involvement in the liberation war of Bangladesh. Mr Ahmed mentioned that reductions in the tariff structure in Bangladesh led to greater Indian exports.

Prof S.D.Muni said that Bangladesh has a critical role in the development of the North East of India. The question was whether it will be a helpful or a hindering factor. His visits to Bangladesh gave an impression that there were people who thought that the North East could be kept as a preserve or hostage. Such attitude would not help either side.

Initiating the discussion on trade Prof I.N.Mukherjee gave the historical background to Indo-Bangladesh trade. The first Indo-Bangladesh trade agreement was signed on the 28th of March 1972 and was subsequently revised. The current agreement dated the 4th October 1980 has been extended for successive periods of three years. The bi-lateral trade Agreement provided MFN but not for tariff concessions which was included under SAPTA which became effective from December 1995. Prof Mukherjee recalled that Bangladesh has been requesting unilateral tariff concessions. During his first visit to Bangladesh in June 1999, Prime Minister Vajpayee, had announced that a group of experts should meet to discuss this issue along with restoration of multi-modal communication links and frame-work for border trade. Subsequently, as a gesture of good will, India offered 100% tariff concession on 16 product groups.

Prof Mukherjee listed the non tariff barriers as felt mutually by Bangladesh and India with regard to their respective exports. He suggested that if the NTBs were in the nature of regulating requirements then measures should be designed to facilitate mutual trade. However, if they were non- compatible with WTO requirements, they should be removed.

Prof Mukherjee felt that free trade agreement based on negative list approach could be helpful. The FTA with Sri Lanka has proved to be successful.

Mr Subodh Bhargava said that huge potential in trade remained untapped. In his view, in the global context bi-lateral trade gaps was only one of the areas of concern whereas global positioning may be an important issue. This was where neigbours should worked together to see how opportunities could be created through bi-lateral trade and understanding.

Mr Bharagava said that certain negative mindsets sometimes did not permit forward movement. There was need to have adequate mechanism for the resolution of disputes. This had been successfully done in India’s relation with Nepal and Sri Lanka. Also important was a Dialogue between industry and industry. This would, for instance, have helped if Vanaspati manufacturers in Nepal and India had a dialogue.

Mr Bhargava said that though neighbouring countries may have a perception of a huge market called India, the fact was that these exports primarily affected small neighbouring markets and provoked reactions. Structures should be created to handle the ground reality of the effect of exports to neigbouring districts. Mr Bharagava mentioned that such an approach could lead for instance to a Bengal economic community. The action was therefore necessary at different planes. One was to address the local areas with local solutions followed by a regional approach and, lastly, bi-lateral national approach.

Mr Mustafizur Rahman said that bi-lateral deficit was not the most important issue. In the case of imports from India many inputs go into export oriented products to regions with which Bangladesh has had substantial trade surplus. Mr Rahman dwelt on the relations of zero tariff access and the importance of value addition so that the target LDC would be the beneficiary. Mr Rahman dwelt on the current state of discussions of SAFTA and FTA. He indicated that final decisions on these was yet to be taken.

Ambassador Rezaul Karim gave a broad picture of the past India-Bangladesh relations. He hoped that some of the existing issues would be resolved so that an atmosphere of understanding and cooperation would be created.

Mr Muchkund Dubey said that he would address one specific point on whether it was advantageous for Bangladesh and India to defer consideration of bi-lateral FTA until some shape emerged out of the current negotiations of SAFTA.

He felt that SAFTA as it has emerged from Islamabad was fundamentally flawed. There is no provision for exclusion of NTBs and this was to be discussed only from four or five years. Again, SAFTA would become operational only 12 years down the line. Thus all the opportunities for bringing our economies together would be lost. SAFTA was also highly predicated on political relations between India and Pakistan.

Shri Dubey said that deeper integration of the economies would be integral part of the bi-lateral Free Trade Agreement. Giving the experience of Sri Lanka he said that once they saw the advantages emerging from the FTA they were seriously considering comprehensive agreement including all elements of deeper integration including free flow of service.

Mr Farooq Sobhan endorsed Mr Dubey’s views and said that there should be rapid movement towards the FTA rather than waiting for the outcome of SAFTA. While there may not be at the outset any unilateral gesture by India, the FTAs with Sri Lanka and Nepal which had been successful, could be considered as the models. Mr Sobhan said that India’s FTA with ASEAN would come into force before the SAFTA. This would imply that ASEAN LDCs will enjoy duty free access to the Indian market ahead of Bangladesh. This has immense importance for Bangladesh with regard to ready made garments. Mr Sobhan said that bi-lateral FTA was also being advocated by Pakistan.

Mr Sobhan complimented Sri Lanka and Nepal for their unilateral declaration that nationals of SAARC countries would get visas on arrivals. This should be emulated by Bangladesh and India.

Mr Sobhan advocated direct air link between Dhaka and Guwahati. According to him, about 100 thousand Indian professionals were working in Bangladesh today in all sectors, mostly without work permits.

Mr Ravi Bhoothalingam underlined the importance of tourism and said that its multiplier effect was four-five times higher than compared to manufacturing.

Ms Neelam Deo, Jt Secretary, Ministry of External Affairs, spoke about the experience of FTA between India and Sri Lanka. She said that in less than two years of its initiation the imbalance of Sri Lanka’s trade with India was reduced from 1:15 to 1:5, even before India had opened up import of ready made garments or tea. The Sri Lanka Government had proposed a comprehensive economic patnership agreement. This was a reflection of both the success of the FTA and the dynamism of Sri Lanka leadership.

Mr Jayant Madhab spoke that from the point of view of the North East, rapid economic development of Bangladesh was important. Many years had been lost because of the Farrakka issue. There were now further issues, including immigration. This was a dominating factor in the North East but, unfortunately, Bangladesh Government did not admit its existence.

Mr Madhab said that the other problem was about linkages. The bus route from Agartala to Dhaka was welcome but other routes need to be opened up. It would be most useful if linkages could be developed with Chittagong port. Mr Madhab suggested the setting up of Bangladesh Consulate in Shillong or Guwhati as also a direct flight between Dhaka and Guwahati.

Mr Thapar said that transit trade from the Indian heartland to the North East could, according to one estimate, add Rs 1000 crores in annual revenue of Bangladesh which will also lead to upgradation of the whole system or providing an opportunity for investment in Bangladesh. He said that problem was that at any given time only past problems were being tackled. This by the time the Cabinet decides for the movement of 200 trucks from Benapol the number would rise to 1000 trucks. He rejected the argument about the low volume of traffic in some sectors and said that if the facilities were provided then movement would increase rapidly. Mr Thapar estimated that in the next twenty years movement of goods to the North East could be 30 million tonnes. If 20 million tonnes could move through Bangladesh this would be several times the annual freight handling of Bangladesh railways. This, in turn, would bring huge investments and employment opportunities.

Mr Thapar said that much of the smuggling takes place not because people are wicked but because trade facilitation is impossible.

Mr Shyamal Ghosh said that telecom was being progressively recognized as an important infrastructure which catalyses and facilitates growth. A study indicated that a rupee invested in telecom had a velocity of three. There has been a revolution in PCOs in India and 90% of our villages had been covered. This has been possible because of wireless.

It was important now to bridge the digital divide. Mr Ghosh gave an account of the development of regulations in India and Bangladesh in the telecom sector and the approach is to rural telecommunications. In this context he referred to the Centre for Development of Telematics, CDOT set up in the late 80s which was a path breaker for rural telephones.

In his valedictory session Mr George Verghese summed up the proceedings of the two-day meetings (Annex 2).

In his valedictory address Mr Pranab Mukherjee, Defence Minister said that while there may be divergence of views, it was essential for neighbours to work together for mutual benefit. He said that the Track II exercise had an important role in looking on issues dispassionately and trying to influence governments.

Mr Mukherjee felt that there was also need for much greater interaction between Parliamentarians of the two countries. He said that the best way to increase investment and expand commercial relations was through the private sector. In this regard there should be more frequent exchanges between the respective Chambers of Commerce. He expressed the view that given the size of the Indian economy, duty free access to some items from Bangladesh could not make a major difference.

Annexure I

Indo-Bangladesh Dialogue - January 18-19, 2005

List of Indian Participants:

Dr. Shankar Acharya
Honorary Professor
Indian Council for Research in International Economic Relations

Shri S. K. Arora, IFS (Retd.)
Convenor, Foreign Affairs Committee, BJP

Shri Subodh Bhargava
Past President
CII (Confederation of Indian Industries)

Shri Ravi Bhoothalingam
Industrialist

Shri Bharat Bhushan
Journalist

Dr. Sanjay Bhardwaj
Associate Professor
Jawaharlal Nehru University
(Rapporteur)

Shri Dipak Chatterjee
Formerly Commerce Secretary, Government of India

Shri Chandrasekhar Dasgupta
Formerly Indian High Commissioner to Bangladesh

Professor Muchkund Dubey
Formerly Foreign Secretary and India’s High Commissioner to Bangladesh; Chairman, Council for Social Development

Smt. Neelam Deo
Joint Secretary
Ministry of External Affairs
Government of India

Shri Shyamal Ghosh
Formerly Secretary, Department of Telecommunications

Shri Eric Gonsalves
Formerly Secretary, Ministry of External Affairs and Ambassador (Retd.)

Shri Sujit Gupta
Advisor to the Chairman, Lazard India Ltd.

Shri Manzer Hussain
Tatasons

Shri I. P. Khosla
Formerly Secretary, Ministry of External
Affairs and Ambassador (Retd.)

Shri Jayanta Madhab
Chief Economic Adviser to the
Chief Minister of Assam

Shri P. K. Malik
Senior Fellow, Asian Institute of Transport Development

Shri Ajit Mozoomdar

Professor S. D. Muni
School of International Studies
Jawaharlal Nehru University

Shri Deb Mukharji
Convenor, Indo-Bangladesh Dialogue; Formerly Indian High Commissioner to Bangladesh

Professor Indra Nath Mukherji
Professor of South Asian Studies
School of International Studies, JNU

Professor C. Raja Mohan
South Asian Studies Division
School of International Studies
Jawaharlal Nehru University

Shri Alan Rosling
Director, Tatasons

Shri Taranjit Singh Sandhu
Director (BSM),Ministry of External Affairs

Shri P. C. Sen
Director, India International Centre

Shri Sushanta Sen
Deputy Director-General, CII

Professor K. C. Sivaramakrishnan
Chairman, Centre for Policy Research

Shri Sukaran Singh
Tatasons

Shri K. L. Thapar
Director, Asian Institute of Transport Development

Shri V. Thulasidas
Chairman and Managing Director, Air India

Dr. Kapila Vatsyayan
Life Trustee and former President
India International Centre

Shri B. G. Verghese
Journalist; Visiting Professor, Centre for Policy Research

Shri N. N. Vohra
Former Director, India International Centre; and
Special Representative of the Government of India for the J & K Dialogue

Shri I. K. Gujral
Former Prime Minister of India (who inaugurated the seminar)

Shri Pranab Mukherjee, Defence Minister
(who delivered the valedictory address)

Indo-Bangladesh Dialogue - 18-19 January, 2005
List of Bangladesh participants

Professor Rehman Sobhan
Chairman
Centre for Policy Dialogue

2. Ambassador Rezaul Karim
Adviser on Foreign Policy to the Prime Minister

3. Mr. Tofail Ahmed
Former Minister for Commerce and Industry
Government of Bangladesh

4. Mr. Kazi Zafarullah
Member of Parliament and
Former Chairman, Privatisation Board

5. Mr. Farooq Sobhan
President
Bangladesh Enterprise Institute and
Former Foreign Secretary

6. Professor Mustafizur Rahman
Research Director
Centre for Policy Dialogue

7. Professor Rounaq Jahan
Adjunct Professor
Southern Asian Institute
Columbia University

8. Mr. Manzur Elahi
Chairman, Apex Group of Industries and
Former Member, Advisory Council, Caretaker Government

9. Barrister Ziaur Rahman Khan
Member of Parliament and
Chairman, Foreign Affairs Committee, Jatyo Sangshad

10. Mr. Masud Bin Momen
Acting High Commissioner of Bangladesh in India


Indo-Bangladesh Track II Dialogue. India International Centre, New Delhi, January 18-19, 2005. Summation by Mr George Verghese

Annexure 2

Thank you Madam Chairperson, Shri Pranab Mukherji, distinguished participants.

The purpose of my summation is not to tell you what has happened, because you have been at this meeting for the last two days and know what has happened. But the Minister should have some inkling of what transpired here and some of you may not have been present throughout. I think on the whole we agreed that it was a very constructive and useful occasion and it was conducted in an atmosphere of great cordiality and understanding. I think something very useful has come out of it. We divided the conference into four sessions. One was the general introductory session where Mr. Gujral was present. We spoke about the wider perspective or relationships between Bangladesh and India within which trade and cooperation, the theme of our present discussions, as well as communications, trade and transit and investments should take place. I will lump some of these together in short hand so that we can get the flavour of what happened.

Mr. Gujral recalled his own participation in earlier Track II discussions between Bangladesh and India since 1995. He spoke about its great value both as far as the government was concerned and to himself personally because people in Track I who were out of government were transposed back into government. They found their experience of Track II, what they learnt there, most useful. He specifically referred to the water question which was one of the major issues under discussion in that period of 1994 and 1995. When he came to office as Foreign Minister and Prime Minister it was possible to resolve it because he and his counterparts on the Bangladesh side had opportunity of discussing this in an informal Track II framework and out of that came the Ganges water treaty. He attributed the smooth sailing of the treaty to this background. He said this is what he looks forward to in all Track II dialogues that are going on, whether with regard to trade, investment, migration or insurgency and other issues which were taken up earlier. In the earlier dialogue we had talked about economic and trade cooperation from which we had then gone on to political and security issues to water issues and social and cultural issues. Here in this first round we had confined ourselves to the economic side and other issues will follow in subsequent rounds. So this has really been the economic round.

Prof Rehman Sobhan, our co-Chairman who was a participant in the earlier rounds, also endorsed the value of these Track II discussions and cited the examples both on the Bangladesh side and Indian side and how there had been an interchange between the personalities taking part in Track II becoming major players in Track I. Finance Minister, Deputy Chairman Planning Commission and so on and therefore could advance the courses that they had argued at the track 2 level. So this became in a sense what was called a one and a half track and that has been very useful and Mr. Deb Mukharji also endorsed the same point as the Indian co-Chairman.

Following the initial comments, there were discussions on economic and trade relations with focus on Free Trade Area. Mr. Alan Rosling of Tatas spoke about the investment proposals that are under consideration. The Tatas have proposed upto one and a half to three billion dollars in three projects in a package consisting of 2 million tonnes steel plant a 1000mw power station (gas fired or coal fired I am not sure) and one million tonne urea plant, for sale in Bangladesh and re-export of surplus to India and elsewhere.. He did underline the fact that these were early days. One should not assume that this had happened but this was happening and it had been very warmly welcomed in Bangladesh both at the popular level. The government had been exceedingly cordial and open and anxious to facilitate this process. He hoped that preliminary feasibility studies that were under way would be concluded by the middle of 2005 and would harden into agreements in the latter part of this year. An MOU had been signed for an agreement in principle for the investment. It was be an indicator of what Indo-Bangladesh economic relations could be. This would be Bangladesh’s largest FDI if it comes through and from the Tata point of view, their largest single foreign investment anywhere.

Farooq Sobhan then spoke of various other collaborative arrangements and joint ventures taking place. He referred to the Lafarge cement plant of two million tones capacity, with limestone coming from Meghalaya, with which he had been closely associated. Other projects were in the pipeline. He referred to the interest of Essar and Thapars and the ground work having been done.

In the general discussion that followed references were made to a wide spectrum of issues in the whole rubric of Indo Bangladesh relationships, not merely in terms of economic aspects. There were references to misconceptions of various kinds that needed to be set aside and cleared so that there was a climate of goodwill rather than mistrust and suspicion. This question of mind-set and image came up constantly and there was recognition for the need of transparency on both sides. There was acknowledgment that there could be general problems that democratic countries have at various times. There was the need for political will to ensure that commitments are carried through and problems resolved.. As somebody said, there was the “last mile” problem. We would come very close to an agreement and leave it there. That final gap needs to be stitched together. There were reference to the land and maritime boundary questions. Bits and pieces had been left over and needed to be put out of the way. These were fairly easily soluble and hopefully something would be done fairly soon. be done fairly soon.

There was also need for trade facilitation, a motor vehicles agreement and standardization. It was necessary to act concurrently rather than sequentially. There has been this trilateral gas pipeline agreement in principle between Myanmar, Bangladesh and India which is being linked in a sense to possibilities of power transmission across India to Bangladesh from Nepal and Bhutan. We should not adopt an hostage theory, “unless you do this and we will not do the other”. The other view is that we should not link these things too closely but put them all on the table so that we can get on with the job of opening up and securing the benefits which would create a win win situation for all of us.

It was also emphasised that the size of the Indian market was of great advantage to Bangladesh and its technological growth was something from which Bangladesh could benefit from in terms of mutual cooperation. This worked both ways. On the issue of investment it was felt that this would have a multiplier effect in terms of investment and employment and so forth. Both sides agreed that the prosperity of each country was vital to each other. We could not afford to say, “well, if we are in disagreement so be it” and keep one another at arms length. That won’t do. For India certainly, economic development in Bangladesh and job creation there by investment, by opening up by increasing trade, would be the best investment we could make to deal with the population flows which are sometimes worrying us in terms of migration so that this border fencing is the answer. We need to invest in the future.

Many speakers spoke about Bangladesh’s centrality to the integration of the North East with the Indian heartland and speakers from Bangladesh also saw this as a great opportunity to invest in the North East and to increase its trade there because of the comparative advantage that it had. It was pointed out that it could not be any kind of monopoly. But in the natural course of things with the economies opening up and free trade and SAFTA coming into being, this would be logical and this would happen. There were also misconceptions as our colleagues from Bangladesh pointed out, that may be earlier there was a feeling that Indian goods were not of good quality but these were soon dispelled. It was said that for instance in the case of trucks in Bangladesh, Indian trucks have about a 90 per cent share. Likewise Indian health and educational services are availed of by people in Bangladesh.

Turning more specifically to the session on trade and economic relations it was pointed out that it may surprise many that Bangladesh is India’s sixth largest trading partner. It was said if you add the informal trade and various other things then the total trade was very much larger, the benefits on both sides are considerable and Bangladesh is India’s largest trading partner. There was a paper with specific details from Prof. I.N. Mukherjee. Mr. Subodh Bhargava also spoke about these trading issues. We had a paper from Prof. Rahman from Bangladesh and they raised specific issues pertaining to existing and emerging trade regimes and opportunities. It was pointed out that Bangladesh followed the liberalisation path earlier than India and went much farther and much deeper and therefore India took advantage of that and built a huge trade surplus. This was a question that came up time and again and it was pointed out by the Indians that this was not wholly to the disadvantage of Bangladesh because much of this was re-exported. For instance in the ready-made garments field, Bangladesh’s largest export of five billion dollars, much of it in terms of raw material and intermediates comes from India. But even so the point was emphasized, and some of our Bangladesh colleagues also made the point, that one should not take too exaggerated a view of that because the overall trade surplus of Bangladesh mattered more than the specific adverse balance with a particular country and, therefore, this needs to be seen in perspective.

There was also the question raised of Bangladesh getting duty free access into the Indian markets and promises made earlier not being completely or satisfactorily fulfilled. But on the other side it was pointed out that the quantum of export capability that Bangladesh had may not add up to more than a hundred or two hundred million dollars of exports as against adverse trade balance of a billion and a half US dollars. So this should not hold up the larger relationship to hostage. It was pointed out that there would be merit in duty-free access because the goodwill it would generate. This should not be discounted and it would be a base for enhancing exports to India and building a future for India. Ultimately this called for promotion greater investments by India in Bangladesh and joint ventures and so on and this would be the means by which the trade gap could be narrowed in the future.

The potential for expanding trade in services was emphasised by many speakers, whether in the field of transport or elsewhere. We had a hard look at the SAFTA package under the SAARC rubric and the possibilities held out by bilateral free trade agreement. Bangladeshi colleagues felt that perhaps preference should be given to SAFTA whereas the Indian colleagues felt that perhaps on balance bilateral deal may be preferable because that would move faster and could go deeper in terms of concessions made. I don’t think it was said either or, but one should not be held hostage to the other. References were made to the various aspects of SAFTA: question of rules of origin, revenue loss from tariff reduction, need for a good dispute settlement mechanism, the problem of non tariff barriers, trade facilitation, testing facilities and so forth. In a fast globalising world it was important to move fast that was the message that came through. While Bangladesh, as I said, appeared to move faster under SAFTA the Indian side thought may be the bilateral FTA would work well and cited examples our FTA with Sri Lanka and Nepal. There was reference to what you call the new geography of trade and said that a bilateral FTA would stimulate investment and transit and enable SAARC LDCs to keep pace with the ASEAN LDCs which are coming into this area through the Indo-ASEAN Free Trade Agreement.

The question of Bangladesh trade and investment possibilities in the North East was again referred to. There was call for visa liberalisation and the need to improve rather poor communication links of the North-East with Bangladesh. The importance of the tourist trade was emphasised and it was said that its role in employment magnification is something that should not be lost sight of. Far quicker, and more evenly dispersed than in terms of manufactures, it promoted tremendous amount of goodwill. This was, therefore, something which we should quickly get off the ground. But at the end of the day everyone agreed that while these were good ideas and were moving forward at different speeds, the important thing was that agreement should not merely be reached but should be implemented. For the North-East to open up it would be useful to have consular offices in Guwahati to speed up the whole process of visas.

On the question of investments it was pointed out that out of about 344 million dollars worth of FDIs received by Bangladesh in the last ten years only 71 had come from India. So the potential was very large. It was pointed out that there were many small and medium Indian investments in hotels, laundry, readymade garments, banking services, construction, education in Bangladesh and these were playing a very useful role. But there is a great deal of scope for more. Again it was pointed out that unless FDI in Bangladesh over all increased one could not expect that Indian FDI would be very large by itself. This would be in keeping with the general trend of FDIs as far as Bangladesh is concerned. Prospects were seen by Bangladesh colleagues for Indian investments in automobile components, jewellery, IT, health services, educational services and so forth.

It was also agreed that while macro trade was important micro trade and micro infrastructure development to stimulate border trade and investment between districts on either side of the border is important and there was scope of cooperation in technology transfers, IT and health care.

Then we came on this morning to transport and communications and transit and we had a very interesting paper from Mr. K.L. Thapar who brought out vividly the discontinuities and disconnects in the post partition regional communication network which was totally disrupted. Land, water, road, rail routes and air and port facilities needed to be revived. In the absence of this there were very high transaction costs that led to smuggling and delays and loss of investment and jobs in consequence. The Jamuna bridge in Bangaldesh and Chittagong port could both be the basis for new transport corridors and a big port hub serving the whole region. The question of inter-modal transport was emphasised and it was also said that instead of thinking incrementally we should have a long term perspective of 25 years so that we plan for tomorrow rather than for yesterday as we seem to be doing. It was also pointed out that the technical issues that we have on several of these matters should not be held hostage to somewhat fragile political environments that develop from time to time because there are vested interests who want the status quo and do a lot of rent seeking out of that. This was something that needs to be broken. Reference was made in this context to the Benapol-Petrapol border and the pathetic state particularly on the Indian side in letting trucks go through.

Then we again came back to the question of possibilities in the North- East. I think there were slight differences of viewers of where that could lead to. The possibilities were there but in an open market the comparative advantages could play their part and certainly Bangladesh could have a high stake and a high opportunity for investment and trade in that region.

Then Mr. Shyamal Ghosh spoke about the communication sector and the telecom revolution that has been there with the globalised village and the world which we live in and he said here very rapid developments and technological changes were taking place. Both Bangladesh and India had experimented with various things and had different experiences and it would be extremely useful for both sides to share and learn from each others experience. The question of bridging the digital divide for rural telephone expansion, interconnections, the development of HRD for personnel, issues of convergence, broad band optic fibre links, distance education, e-governance and e-commerce and so on were a very fast and very rapidly growing sector and calls for a good deal of skilled personnel. These were areas where cooperation would be very valuable and very useful.

In conclusion we came back to the same point that we must move from talk talk to implementation and from agreements to the substance. There was a feeling that may be we should set up task forces of this group on both sides to define what emerge as doable propositions. These task forces should then lobby with their respective governments to generate the political will among the political leadership as well as the governments so that there is a clear mission statement and the objective of reaching these goals within a time frame. Politicians need to be sensitised on the emerging opportunities and the opportunity cost of delaying matters and if need be NGOs and civil society should be summoned to assist this process. So it was on that very positive note that we concluded and we felt that we had now reached a stage where we have outlined the possibilities and prospects and we need to move on to its implementation and set up our own mechanisms in doing that and pushing this forward so that we can interact with governments in a more purposeful manner.

Indo-Bangladesh Dialogue

on

Trade, Investment and Connectivity

Second meeting

Dhaka, August 6-7 2005

HIGHLIGHTS
AND
RECOMMENDATIONS

Centre for Policy Dialogue, Dhaka
And
India International Centre, Delhi

Session I: Investment Cooperation

Keynote Presentations
In the session on 'Investment Cooperation' keynote paper was presented by Mr. Mahmudur Rahman, Executive Chairman, Board of Investment (BOI) and Advisor of Ministry of Energy and Mineral Resources. In his presentation on "Prospect of Indian Investment in Bangladesh" following issues were highlighted:

• Investment friendly business environment: According to Mr. Rahman, business climate in Bangladesh is highly favourable for investment since the economy has persistently maintained a considerable level of GDP growth (5 percent) over the past decade, and has achieved a robust growth in manufacturing and export sector. Notwithstanding various negative apprehensions regarding post-MFA scenario, export of RMG has maintained its expansion in the recent months. Country's human development indicators are impressive compared to other South Asian countries; gender gap is not only better than other South Asian countries but it is the least among the Muslim majority countries. Business costs in comparison to other South Asian countries are lower in almost all elements.
• Recent Investment Trend: Mr. Rahman mentioned that market oriented industrial policy has been consistently supported by successive governments. Following a highly liberalized FDI regime with better incentive package, investment has increased substantially and more importantly it has originated from diversified source countries.
• Poor Indian Investment: Mr. Rahman pointed out that despite having a favourable business environment, Indian investment remains very low in Bangladesh and India does not figure among the top ten investors of Bangladesh. The level of implementation of Indian FDI is lower (24 per cent) than the average level of implementation of FDI proposals (35 per cent) and much lower than the implementation for domestic investment projects (85 per cent).
• Opportunities for Indian Investors: Mr. Rahman viewed that Bangladesh is being chosen by Indian investors because of having economic compatibility between the two countries, market access, and comparative advantages. Indian investors may outsource their capital in a number of potential manufacturing sectors such as textile, pharmaceuticals, agro-­processing, ceramics, IT, leather and leather goods, steel, frozen food and service sectors such as health care, hospitality, education, infrastructure etc.
• The Indian perspective on “Cooperation and Quick Clearances” for investment in Bangladesh was presented by Mr. Sujit Gupta, Advisor, Lazard who was earlier Resident Director of Tata Group at Delhi.  Mr. Gupta agreed with the major views of Mr. Rahman for attracting Indian investment into Bangladesh.  According to Mr. Gupta, Bangladesh can offer major advantages in its natural resources, large complementary market and cultural affinity.  On its part, leading Indian industries having attained experience and global presence in Information Technology, Pharmaceuticals, Light Engineering will be looking for investment opportunities in Bangladesh.  Indian investment could also enter Bangladesh in the Infrastructure Sector such as in, Telecom, Roads, Refineries and Power Plants which all have long gestation periods and therefore need long term commitment from the investor and Government and other agencies of the host country.  Such private sector led initiatives would have greater impact as Confidence Building Measures with multiplier effect on small and medium industries.  The Government of Bangladesh and business leaders will need to make greater marketing efforts to attract Indian investments.  Whilst there is recognition of Government of Bangladesh’s role as a facilitator with a liberal FDI policy – 100% foreign ownership, full repatriation of profits, privatization initiatives and single window clearances, it was necessary for civil society on both sides to take positive steps to change the negative socio-political perspectives on both sides. Mr. Gupta said after investment had been made with due clearance by the Board of Investment it was important for visas to be issued to the investing party to avoid any adverse impression being created.
• For the time being there is a need to prioritize four areas of investment which included infrastructure, agriculture, textile and information technology. Bilateral as well as unilateral initiatives by the Chambers of Commerce and Industry of both the countries in this regard would facilitate this process.
• Mr. S Manzer Hussain, Resident Director of Tata Group in Dhaka, briefed the dialogue on the current state of negotiation of their US$2.5 billion venture in steel, fertilizer and power sector. He maintained that Bangladesh government has very professionally handled their investment proposals, even better than that they expect in developed countries. Instead of utilizing gas for power generation plants, Tata has proposed to utilize coal as an alternative source of energy. Tata's investment according to Mr. Hussain, would be a 'win-win' deal between Bangladesh and India.

Open Discussion

• Later the following experts from India and Bangladesh participated in the open discussion:
• Ambassador Deb Mukharji, Former Indian High Commissioner to Bangladesh ­
• Mr. George Verghese, Professor, Centre for Policy Research, India
• Mr. Kazi Zafarullah, MP, and Former Chairman, Privatization Board
• Mr. M Syeduzzaman, Former Finance Minister and Chairman, Bank Asia
• Mr. Latifur Rahman, Former President MCCI and Managing Director, Transcom Group
• Ambassador Farooq Sobhan, Former Foreign Secretary and Chairman, BEl
• Ambassador Rezaul Karim and Member, Advisory Committee of BNP
• Ambassador Faruk Choudhury, Former Foreign Secretary and Member, Advisory Committee, Bangladesh Awami League
• Mr. Sayed Alamgir Farrouk Chowdhury, Former Commerce Secretary
• Dr. Debapriya Bhattacharya, Executive Director, Centre for Policy Dialogue
  
• Major issues that have been discussed in the open session are:
• Building common framework for trade-investment related issues
• Problems of getting work permit and multiple visa in Bangladesh
• Free flow of FDI from India to Bangladesh: Here it was pointed out that there was no restriction for investment up to $300 million, and higher levels of investment were allowed on a case by case basis.
• Low level of implementation of Indian FDI
• Market orientation of Indian FDI
• Exploring complementarities between India and Bangladesh
• Target oriented approach for attracting Indian investment: It was recognized that though the Government of Bangladesh, through the BOI and BEPZA, has in place a policy to attract FDI and give quick approvals for most of the proposals, there is a need to prioritize some sectors and have a target oriented approach especially for attracting investment in those prioritized sectors.
• Negative perception of Bangladeshi investment climate
• Political issues (negative image)
• New areas for investment (for example, space applications and aviation industry)

Recommendations
Following recommendations were proposed during the discussion:

• Government should strengthen FDI promotion efforts by organizing more 'road shows' not only in the traditional places (such as New Delhi, Kolkata and Mumbai) but also in other potential cities of India.
• Need to look actual reasons for low level of implementation of Indian FDI proposal. For example whether Indian proposals are 'underdeveloped' or whether they face disproportionate regulatory impediments.
• Investment issue has to be properly focused in the proposed bilateral free trade agreement. In order to increase bilateral investment, partial-reciprocal complementarities rather than full complementarity needs to be explored. To this end tariff preference under the proposed bilateral trade agreement need to be focused.
• Bangladesh should take target-oriented approach to attract Indian investment. To this end, the creation of an India-Bangladesh Chamber of Commerce and Industry, which does not exist, can play a pro-active role.
• Indian prospective investment in Bangladesh should focus external market oriented industries not only will of domestic market based industries, since various incentives are given for export-oriented FDI and also Bangladesh has preferential market access in developed countries.

Session II: Indo-Bangladesh Trade

Keynote Presentations
The keynote paper in the session on Indo-Bangladesh Trade with Special Reference to Free Trade Agreement was presented by Professor Mustafizur Rahman, Research Director, CPD. The title of the paper was, "Bangladesh-India Trade Relations: Some Suggestions for Operationalising a Bilateral Free Trade Agreement".

The paper stated that establishment of a free trade area between Bangladesh and India has been put on the agenda of joint Working Group in its third meeting held in Dhaka. The paper argued that Bangladesh should seriously consider the proposal from the perspective of a long-­term strategy to deepen bilateral economic cooperation between the two countries and in order to take advantage of the complementarities between the two economies. The paper made the following points:

• SAFTA and Bangladesh-India Bilateral Free Trade Agreement (BFTA) are not mutually exclusive, rather from the medium to long-term perspective the BFTA could strengthen South-Asian cooperation under a regional FTA.
• Key constraints that hindered bilateral trade and economic cooperation between the two countries are more or less known; the proposed BFTA should take these into cognisance and have appropriate mechanisms to address the attendant concerns.
• The author presented a suggested framework of the BFTA and put forward some concrete proposals for operationalising the BFTA, particularly in the area of trade liberalisation plan, rules of origin, trade facilitation and dispute settlement mechanism.
  
  • The agreement should recognise a two-track approach and non-reciprocity, and Bangladesh should be accorded special and differential treatment.
    
  • The suggested BFTA framework came up with the proposal for zero-tariff market access to be given to substantially all products from Bangladesh with a limited list of exclusion, if at all, to be phased-out in four years.
    
  • On her part, Bangladesh will design lists of sensitive products and trade liberalisation schedule to be implemented in the course of ten years keeping in view the followings:
    
    • the imperatives to promote intra-industry trade,
    • taking cognisance of both horizontal and vertical integration based on complementarities and
    • with a goal to attract Indian FDI and joint venture investment in Bangladesh.
• Considering Bangladesh's substantial import from India, the paper called for consideration of possible revenue loss, impact on domestic industries, and trade diversion impact to be factored in whilst scheduling opening up of Bangladesh's market.
• As regards the rules of origin the paper suggested that these should be primarily on the basis of the value addition criteria (25 per cent and 35 per cent for Bangladesh and India respectively).
• Bilateral and SAARC cumulation should be considered in designing the rules of origin with a view to expand intra-regional and intra-BFTA cooperation in the form of inputs sourcing and investment cooperation.
• Trade facilitation measures were identified as a major area where concrete initiatives and interventions were required for operationalising the BFTA. In this regard, suggestions included harmonisation of customs rules, procedures, mutual recognition of standards, testing and certificates, investments in upgrading customs points, establishment of container ports, addressing of anti-dumping and countervailing duties
• Priority to be given to signing of MOUs and motor vehicle agreement, strengthening of standardisation institutions and testing facilities, building of trade related capacities and putting in place trade-facilitating services including banking services.
• For the proposed BFTA to be effective, a good, workable dispute settlement mechanism should be put in place with recourse to both consultation and arbitration.

In the second presentation on "Border Trade, Trade Facilitation and Mini-Growth Triangles", Professor George Verghese of the Centre for Policy Research, New Delhi highlighted the following points:

• Promotion of border trade between India and Bangladesh as a way to reduce informal trade and criminalisation of this trade and also to strengthen economic ties between the two countries. Such border trade could revive neglected communication routes, and stimulate infrastructure development and serve as a bridge for inter-country trade.
• The paper strongly recommended concrete measures towards trade facilitation, including a Motor Vehicles Agreement, and went on to suggest that a survey on both sides would be of use for both the countries. The paper suggested for establishment of sub-regional growth zones in the form of growth quadrangles and mini-growth quadrangles. The paper also argued for establishment of transport corridors to service the needs of India, Bangladesh, Nepal and Bhutan, along with establishment of energy corridors.
• Establish a SAARC energy grid, including mini and sub-regional zones/triangles/quadrangles.
• Cooperation in the area of water transportation was seen as vital in promoting trade and economic cooperation between both countries.
• Establish specific task forces to address the above issues.

Open Discussion

Those who took part in the discussion included the following participants:

• Professor George Verghese, Professor, Centre for Policy Research, New Delhi, India
• Mr. Nilotpal Basu, MP (CPI-M), India
• Dr. Ram Upendra Das, Fellow, Research and Information Systems (RIS), New Delhi, India
• Ambassador Surendra K Arora, Convenor, Foreign Affairs Cell of the BJP, India
• Mr. Sachin Pilot, MP (Congress), India
• Mr. Sadeq Khan, Contribution Editor, Weekly Holiday, and Chairman, Bangladesh Press Institute
• Barrister Anisul Islam Mahmud, Former Foreign Minister and Managing Director, Shasha Denims Ltd
• Ambassador Farooq Sobhan, Former Foreign Secretary, GoB and President, BEI
• Mr. Sayed Alamgir Farrouk Chowdhury, Former Commerce Secretary
• Mr. Latifur Rahman, Former President, Metropolitan Chamber of Commerce and Industry (MCCI) and Managing Director, Transcom Group
• Mr. Shyamal Ghosh, Former Secretary, Department of Telecommunications, Government of India, and Chief Secretary, Tripura.

The discussants were of the opinion that the BFTA proposal should be discussed with due urgency. However, they cautioned that a lot of work needed to be undertaken in parallel with establishment of such a BFTA. It was felt by some that the envisaged revenue loss would be offset by gains in the form of more trade as well as through a switch from informal to formal trade, and that rules of origin should be designed in a manner that promoted bilateral investment. Some of the participants felt that creation of economic interdependence would lead to a reduction of current concerns that in many ways inhibit bilateral relations. Cooperation in services sector was highlighted by many participants as an important element of the envisaged BFTA. Some of the discussants thought that border trade will not be an important factor once a BFTA is operationalised. Participants strongly felt that development of trade supportive infrastructure and undertaking of trade facilitation measures was critically important to promoting cooperation in the area of FDI and services. Opening up of north-eastern market and removal of trade barriers were perceived by participants to be important. Some argued that since most of the fabric from India enters Bangladesh under zero-tariff through bonded warehouse facilities, apparels made from those fabrics should be provided zero-tariff access to the Indian market. Some of the participants from India underscored that it would be difficult for state taxes to be waived under a BFTA as was suggested in the keynote paper. Discussing the BFTA it was also pointed out that Rules of Origin as well as the issue of revenue compensation mechanism had in the past created stumbling blocks in SAPTA and other regional trade agreements.

It was emphasized by several participants that an FTA should be seen as an important building block not only for enhancing trade but also for promoting investment. The phenomenal increase in Sri Lanka’s exports to India after implementation of an FTA and the move towards economic integration was mentioned in this connection. All the participants highlighted the need for change in political mindset and underscored the need to look at Bangladesh-India economic relations from long-term strategic perspective in the context of a win-win scenario.

Recommendations
The participants made the following suggestions:

• Bangladesh and India should get on with the task of negotiating a bilateral Free Trade Agreement.
  The BFTA will be implemented though a two-track process. India will open its markets to Bangladeshi products at a greater pace, according to an agreed time schedule.
• Sequencing and phasing of the BFTA needs to be designed by taking cognisance of overall welfare implications, medium to long-term impact and interest of investment promotion.
• A major objective of the BFTA should be to stimulate intra-regional investment flow.
• Identify real and perceived NTBs and take concrete measures to address these barriers.
• Notice should be taken of the Indian suggestion for reviving negotiations on a border trade agreement.
  Sign a Motor Vehicles Agreement
• Develop trade facilitation measures including signing of MOUs for mutual recognition of certification, testing and standardisation.
  Strengthen the proposed BFTA through cooperation in services sector, particularly in view of India's advantages in ICT and related sectors.
• Undertake survey to identify bottlenecks at customs points and their speedy removal.
• Develop trade supportive infrastructure on both sides of the border including development of facilities at customs points, establishing container ports, and facilitation of movement of goods.
• Set up issue-oriented task forces to come up with concrete recommendations to advance bilateral economic relations.
• Set time bound objectives to deepen Indo-Bangladesh cooperation and push it up the political agenda.

Session IlI A: Cooperation in Transport

Keynote Presentations
There were two presentations on transport issues. One by Dr. M Rahmatullah, Programme Director, CPD on Transport Related Issues and another by Mr. K L Thapar, Director, Asian Institute of Transport Development (AITD), India, on Forging Efficient and Economic Transport Logistics. The papers emphasized on a similar set of issues and the solutions suggested by Dr. Rahmatullah were supported by Mr. Thapar. Following issues were highlighted in the presentations:

• Current transport problems between India and Bangladesh
• Consequence of non-cooperation
• Possible solutions

Current transport problems between India and Bangladesh:

• No inter-country train or truck movements. Goods are required to be transshipped at the border.
• Over the years, due to non cooperation, gaps in infrastructure standards and technologies have widened.
• On the passenger side, bus movement between Dhaka-Kolkata is doing well, but Dhaka-Agartala is a losing concern.
• The IWT protocol is being extended by three months at a time, pending an overall trade and transit agreement. This is inhibiting development of riverine linkages between the two countries.
• Physical facilities on Indian side at Benapole need improvement.

Consequence of non cooperation:

• Assam's tea travels 1400 km to Kolkata port while it could have curtailed 60 per cent of the distance if access to Chittagong port was available.
• Goods from Agartala travel 1645 km to Kolkata, while direct distance would be 350 km if Bangladesh allows through movement.
• Due to non-cooperation India is developing alternative port facilities at Sittwe in Myanmar to provide access to NE India.

Possible solutions:

• Bangladesh should take advantage of its geographical location and make use of the opportunities available for the benefit of both sides.
• Bangladesh should diversify its export and become a major exporter of transport services to India. This would greatly help reducing large trade gap with India.
• Opening up access through Chittagong port could provide incentive to exploit natural resources in NE India, as well as northern Myanmar for mutual benefit.

Concrete proposal are as follows:

• Bangladesh could pickup containers from Kolkata and deliver to NE India and Agartala using its Broad Gauge and Meter Gauge systems with transshipment near Ishardi.
• Bangladesh could provide rail container service between NE India and Chittagong port.
• Bangladesh truck trailers could pick up and deliver containers between Kolkata and NE India/ Agartala.
• Bangladesh truck trailers could also provide container services between NE India/ Agartala and Chittagong port.
• For passenger movement, train service could be started immediately between Dhaka­ Kolkata on 50:50 basis.
• Bangladesh's luxury bus operators could provide passenger service between Kolkata­-Agartala/NE India.
  Nepal and Bhutan's third country trade using Bangladeshi ports should be facilitated.
• Nepal's third country container traffic could move from Raxaul to Mongla by Broad Gauge.
• Bangladesh's truck-trailers could carry Nepal's container traffic from Kakarvita through Fulbari and Banglabandh.
• To facilitate above operations, rail links near Mahisashan and between Akhaura and Agartala shall have to be restored or put in place.
• Container movements should be allowed directly from NW India to Calcutta-Chittagong-Dhaka instead of via Mumbai-Singapore-Chittagong-Dhaka as this could reduce transportation costs to a third.
• All pre-1947 rail and road inter-connections should be restored and opened to traffic.
  
  Open Discussion
  Those who took part in the discussion included:
• Professor Rehman Sobhan, Chairman, Centre for Policy Dialogue (CPD)
• Mr. Syed Manzur Elahi, Former Member, Advisory Council of the Caretaker Government
• Mr. B G Verghese, Professor, Centre for Policy Research
• Mr. S R Siraj, MP, and President, Bangladesh Bus-Truck Owners Association
• Mr. Rustam Ali, Secretary General, Truck Owners Association
• Mr. M A Muhith, Former Finance Minister
• Mr. Nilotpal Basu, MP (CPI-M)
• Mr. Sachin Pilot, MP (Congress)
• Mr. Kazi Zafarullah, MP, Former Chairman, Privatisation Board
• Prof. Jamilur Reza Chaudhury, Vice Chancellor, BRAC University
• Dr. Sreeradha Datta, Associate Fellow, Institute for Defense Studies and Analyses
  
  • Transit or transshipment facilities to India: Earlier initiatives were taken to solve the transport problems between India and Bangladesh in the form of allowing transit to India or allowing transshipment at border and carrying Indian goods by Bangladesh truck between the borders. But these proposals were not supported by Bangladesh Government. Now the question arises whether the recommendation will be supported by the government?
  • There is trade gap of more than $1.5 billion in favour of India. Providing a variety of transport services to India for trade and transit could result in substantial export earnings for Bangladesh and help narrow that gap. Indian investments might be available to upgrade and expand Bangladesh’s transport capacity for this purpose.
  • Bangladesh transport operators' perspective: The proposal is to carry Indian traffic between Kolkata and NE India/ Agartala, where Bangladesh will be the exclusive carrier service provider. This is likely to be quite attractive to Bangladesh transport industry. But the question is whether the Indian transport industry will accept it?
    It was urged by the Bangladesh side that India should accept the proposal since it will reduce the cost of transport. It should not be seen as an opportunity to expand India's transport business. The Indian view was that such a monopoly may not be politically realistic and both sides should share the traffic on an agreed formula.
  • Investment, Trade and Transport Linkages: There is a close link between the three issues discussed so far in the dialogue -- investment, trade and transport. These issues need to be dealt with comprehensively and addressed in tandem.
  • Interaction at the government level: To address the outstanding issues of transport, arrangement should be made to promote interaction between Indian Parliamentary Committee on transport or railway and Bangladesh Parliamentary Committee on transport (communication) and shipping. This issue was discussed, and received strong support in the discussion.
  • Inland Water Transport (IWT) potentiality: IWT is the most cost effective mode of transportation. Although having high potentials, at present the mode has very limited use. IWT should be encouraged to play a constructive role in carrying more traffic between Kolkata and NE India including Agartala. Both countries should look into the problems being faced by this sector.

  Recommendations

• At the moment, Indian traffic between Kolkata and NE India/ Agartala is required to travel a distance of 1400-1600 km. The proposal is to provide door to door services by railways, trucks and luxury buses from Kolkata to NE India/ Agartala. The proposal in the Bangladesh presentation that Bangladesh Railways, Bangladesh trucking industry and luxury bus service industry, should carry Indian traffic between Kolkata and NE India/ Agartala, where Bangladesh will be the exclusive carrier, should be further discussed and refined. This should take into account the suggestion from a commentator from India that opportunities should be provided to both Bangladeshi and Indian transport operators to benefit within an agreed co-operative framework. It was agreed by both sides that it was important to make the issue of transport connectivity between India and Bangladesh more attractive to the Bangladesh transport industry, bringing out the opportunities for profit and growth for them. The solutions presented are expected to boost Bangladesh’s export earnings through opportunities for exporting transport services and diversifying their pattern of external earnings. Secondary Industries in the form of support industries to the transport sector would also develop in Bangladesh thereby bringing further benefit to the economy.
• Use of Bangladesh/Indian territory for trade and movement between Nepal, Bhutan, Bangladesh and India should also be encouraged so that Bangladesh can develop as a transport hub for the entire region.
• It was suggested in the discussion that the Indian and Bangladeshi delegations attending this dialogue will discuss the above issues and recommendations with their respective political leaderships as well as transport industry representatives, and seek to promote a suitable modality that could provide a win-win solution for all sides.
• Investment, Trade and Transport -- these three issues need to be dealt with together and addressed together.
• To promote the transport issues, there needs to be interaction between the Indian Parliamentary Committee on transport or railway and the Bangladesh Parliamentary Committee on transport, communication and shipping.
• IWT offers great possibilities and needs development urgently both for inter-country as well as through traffic. There should be greater Indian and Bangladeshi investment in this sector.

Session IIIB: Cooperation on Telecommunications

Keynote Presentation
In the third session, Mr. Shyamal Ghosh, Former Secretary, Telecommunications, Government of India presented a paper on "Specific Areas of Cooperation between India and Bangladesh in the ICT Sector ". The paper focused on the following issues:

Telecom is an essential infrastructure for voice communication and information technology, particularly internet which is now increasingly being recognised as a public utility. Bangladesh has constraints as far as physical infrastructure for ICT is concerned. The paper argued that bilateral initiatives rather than multilateral ones in ICT sector will be efficient and beneficial to both Bangladesh and India. Sharing of R&D facilities for development of appropriate and relevant technological solutions and sharing of training facilities for development of human resources will benefit both the countries. The paper pointed out that a joint group of content providers or application developers can work together to develop a common language for mutual benefit. He further maintained that entertainment is critical for building up business models for ICT. In order to promote cooperation there is a need for constituting joint ICT Task Force by both the countries.

Open Discussion

Following experts participated in the open discussion:

• Professor Jamilur Reza Chowdhury, Vice Chancellor, BRAC University
• Mr. Habibullah Karim, Software Engineer
• Mr. A M A Muhith, Former Finance Minister, and Economic Adviser, Bangladesh Awami League
  
  • Human resource development in ICT: Indian IT institutions in Bangladesh have failed to produce quality IT professionals and they could not produce the expected output in the IT sector. Bangladesh is producing around 6,000 computer graduates a year but the number is on the decline because of restricted immigration policy of the United States and other countries.
  • Collaboration between IT companies: Collaboration between big Indian and Bangladeshi IT companies will help to develop the sector.
  • Software export: Due to trade barriers, export of software is limited in India.
  • ICT and entertainment: At present Indian Bengali TV channels are seen in Bangladesh while Bangladeshi channels are not seen in India. It was pointed out that there was no official bar on telecast of Bangladeshi channels in India. Access to the Indian market depended on agreements reached with local cable operators. Every effort should be made to encourage private operators from both sides to reach arrangements which would facilitate the broadcast of Bangladesh TV programmes in India.
  • Optic fibre network between Eastern and North Eastern India: The optic fibre network available in the Eastern and North Eastern sectors of India adjoining Bangladesh could be synergised to establish better and direct connectivity between the two countries without going through the traditional international gateway.

Recommendations

• Areas of collaboration need to be explored in the ICT sector between India and Bangladesh as a way of furthering cooperation between the two countries.
• The fibre optic network between Eastern and North Eastern India would facilitate establishing connectivity with some of the rural and urban areas of both the countries and thereby facilitate bridging the gap between the two countries
• Micro-wave links between some of the adjoining trunk exchanges of the two countries could be upgraded to more reliable optical fibre links.
• Bangladesh and India should share experience gained in the ICT sector. Experience sharing in licensing problems and regulatory issues will help to accelerate growth of ICT sector.
• In order to develop skilled human resources in Bangladesh, Indian IT institutions can impart training facilities to Bangladesh. Indian and
• Bangladeshi IT companies can provide internship facilities to IT graduates to develop skilled manpower in the sector.
• A joint technical study should be conducted to develop the ICT infrastructure. Joint initiatives for the development of education and entertainment programmes that could leverage ICT infrastructure could be taken up.
• Bangladesh and India should have a common language code for evolving language content of mutual interest. Setting up a small group of language experts from both the countries could facilitate the process. There is also a need to register the BangIa code.
• Bangladesh and India can develop application software through joint efforts in key sectors of business such as agriculture, textiles and pharmaceuticals. ICT should be used to promote e-governance, and to promote and ensure transparency.
• India can cooperate with Bangladesh in setting up technology parks.
• ICT can be used to alleviate poverty. The Bangladesh experience (e.g., those of the Grameen Phone) can be used in this regard. Besides, NGOs should play an important role to provide connectivity to the rural area to reduce the digital divide.
• Both the countries will encourage extensive telecast of their TV programmes in each other’s territories.

The views and facts stated above are entirely the responsibility of the author and do not reflect the views of this Association in any manner.