India-Bangladesh Trading relations and CEPA

  • September 7, 2022
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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India-Bangladesh Trading relations and CEPA

Subject : Economy

Section: External Sector

Prime Minister Narendra Modi has said India and Bangladesh will soon commence negotiations on a Bilateral Comprehensive Economic Partnership Agreement (CEPA).

Details:

As Bangladesh prepares to graduate into a developing nation by 2026 — after which it may no longer qualify for trade benefits that it currently enjoys as a least-developed country.

Concept:

Bilateral Comprehensive Economic Partnership Agreement (CEPA):

The CEPA is likely to focus on trade in goods, services, and investment, with a key objective being the reduction of the trade gap between the two countries.

Comprehensive Economic Partnership Agreement (CEPA):

  • A comprehensive economic partnership agreement (CEPA) is a kind of free trade pact that covers negotiation on the trade in services and investment, and other areas of economic partnership.
  • It may even consider negotiation in areas such as trade facilitation and customs cooperation, competition, and IPR.
  • Partnership agreements or cooperation agreements are more comprehensive than Free Trade Agreements.
  • CEPA also looks into the regulatory aspect of trade and encompasses an agreement covering the regulatory issues.
  • India has signed CEPAs with South Korea, UAE and Japan.

Existing frameworks

The current institutional frameworks for trade and investment include:

  • In 2015, the bilateral trade agreement between the two countries was renewed for a period of five years with a provision for auto renewal.
  • Under the provisions of the South Asian Free Trade Area (SAFTA), Bangladesh extends preferential tariffs to Indian exports of products outside the ‘sensitive list’ of 993 items. In 2011, India announced duty-free, quota-free access to Bangladesh for all tariff lines except tobacco and alcohol.
  • An Agreement on Promotion and Protection of Investments has been in force since 2011.
  • To facilitate trade and transit through inland waterways, a Protocol on Inland Waterways Trade and Transit (PIWTT) has been in place since 1972.
    • The protocol allows the movement of goods by barges/ vessels on eight routes between points in India and Bangladesh, as well as between points in India through Bangladesh.
  • Direct sea movement of containerized/ bulk/ dry cargo began after the signing of a Memorandum of Understanding (MoU) on Coastal Shipping in June 2015.
  • MoUs were signed in 2015 on the use of the Chittagong and Mongla Ports for Movement of Goods to and from India.
  • The MoU on Border Haatson the India-Bangladesh border was renewed in April 2017.
    • Currently, four Border Haats — two each in Meghalaya (Kalaichar and Balat) and Tripura (Srinagar and Kamalasagar) — are functional.
    • Work on setting up two more haats on the Tripura-Bangladesh border and four on the Meghalaya-Bangladesh border is under way. The two sides have also decided to identify locations for another six Border Haats.

India-Bangladesh Trading relations:

  • In 2021-22, Bangladesh has emerged as the largest trade partner for India in South Asia and the fourth largest destination for Indian exports worldwide.
  • India is Bangladesh’s second biggest trade partner, and its largest export market in Asia. 
economy India-Bangladesh Trading relations and CEPA