Dhaka, October 6:

With Bangladesh reaching out to India’s northeastern region, its trade deficit with India narrowed by around 14 per cent in the last financial year as exports rose sharply. The trade between India and Bangladesh is burgeoning, whatever the state of political ties and the latter’s reservations about allowing India’s Tata group to invest in the country.

Exports to India shot up by 68 per cent, amounting to $241.96 million in fiscal 2005-06. In

the preceding year, they stood at $143.66 million. This was mainly thanks to higher exports to India’s northeastern region, a natural export market for Bangla goods that has taken years to tap because of bureaucratic delays on both sides, said the Daily Star Friday.

A joint study blames the Indian side for this.On the other hand, imports from India dropped by around eight per cent, totalling $1,868 million in the last financial year from $2,025.78 million in FY 2004-05, according to Export Promotion Bureau (EPB) statistics.

This indicates that Bangladesh is veering to other alternative markets for goods that it earlier purchased from India.

The trade deficit with the neighbouring country ballooned to a record $2,003 million in 2003-04. However, it came down to $1,882 million in the following year and $1,626 million in FY 2005-06.

“Exports to the northeastern states of India increased substantially in the last financial year,” Mir Sahabuddin Mohammad, vice-chairman of EPB, told the newspaper.

Explaining, he said the banks in the northeastern India earlier could not open letters of credit for imports from Bangladesh, discouraging the potential importers. But now they can open letters of credit, which is a step forward in facilitating trade between the two countries, he noted.

EPB had organised several exhibitions in India and received a good response from the Indian importers and buyers, observed the EPB vice-chairman, adding there are great demands for Bangladeshi products including toiletries, cosmetics, melamine, fish, leather and ceramics in these Indian states.

Some non-tariff barriers like mandatory testing required by India, inadequate banking facilities and poor infrastructure at the land ports are hindering Bangladesh’s export growth to India, local exporters said.

India deliberately tries to stall import from Bangladesh, as its land customs officials are not informed about the preferential market access given to Dhaka by New Delhi, according to a study jointly carried out by a Bangladeshi and an Indian chamber of commerce.

“It is almost impossible to export products to India if the exporters have to undergo cumbersome and cost-incurring certification procedures,” said the study styled “Enhancing the Trade and Investment between Bangladesh and Northeast India”.

Conducted by Chittagong Chamber of Commerce and Industry (CCCI) and Tripura Chamber of Commerce and Industry (TCCI), the study cites a number of roadblocks in entering the Indian market.

In FY 2005-06, India restricted import of jute products from Bangladesh by pushing up the import duties substantially and by imposing other non-tariff barriers. The action was meant to stem the import of jute products from Bangladesh that rose by more than 500 per cent during April-November period of that fiscal, the study said.

Trade between Bangladesh and northeast India through informal channels is many times higher than that through formal channel. It is widely believed that the total volume of unofficial trade between the two countries is more than $2 billion annually and of that amount over one-third occurs between Bangladesh and northeast India, the newspaper said.

Though routes and channels for formal trade between the two countries are limited, the scope for informal trade is unlimited due to the porous nature of common border.