Trade Between India and Bangladesh: Performance and Prospects

Abstract

In recent past years the performance of the trade between India and Bangladesh has good experience. India and Bangladesh is the largest trading partner in the South Asia. These two are the main player in the south Asia and also have an important role in the South Asian Association for Regional Cooperation (SAARC). India being the largest member country and Bangladesh is third largest economy in the South Asia. It is only in recent past that political initiatives of confidence building measures began to shape their areas of mutual economic cooperation. Now the bilateral trade among between these economies has been recognized as the most reliable and the agreeable instrument of India–Bangladesh. India has adopted the process of liberalization process, openness, transparency and globalization focuses on trade liberal in 1991  while Bangladesh change its economy according to the WTO framework in 1982. Trend of commodity composition of India’s trade to Bangladesh can be estimated by trade intensity indices during the period of 2001 to 2013. Trade intensity indices would be useful to investigate the pattern of India’ export to and import from Bangladesh. India’s export flow is higher than expected while the India’s import intensity index having the value varies from 0.69 to 1.42. Bangladesh import more than export, from India at less cost and India is large economies by economic size having bilateral surplus in trade performance with smaller Bangladesh ones. Foreign direct investment and foreign remittances received by Bangladesh could contribute to reduce the deficit balance of trade.