india-to-reassess-it-s-trade-pact-with-the-south-east-asian-neighbor

 

India finds itself at crossroads in its economic relations with Bangladesh. 

 

Amidst Dhaka’s eagerness to join the China-led Regional comprehensive economic partnership(RCEP), India is cautiously reassessing its trade pact with the nation.

 

It lies in the intricate balance between India’s economic interests and geopolitical considerations, with Bangladesh being the key player in South Asia, is currently engaged in talks with the 15-member RCEP bloc, ruminating to join the bloc post-elections being held on January 7.

 

Meanwhile, India having withdrawn from the RCEP in 2019 citing major concerns over trade deficit with China, now reconfigures its trade strategy in the region.

 

The RCEP comprises the 10 Association of South-East Asian Nations(ASEAN), along with Australia, China, Japan, South Korea and New Zealand. In the global strategic landscape, Dhaka potentially aligning itself with this economic alliance raises red flags for New Delhi. 

 

As the two nations initially held on to a bilateral comprehensive economic partnership agreement, India now finds itself reassessing the timeline and feasibility of such an arrangement. Again, the impending specter of Bangladesh joining RCEP injects uncertainty into this equation.

 

The official statement from Indian officials accentuates the looming cautious approach, “Bangladesh has reduced overall imports and is thinking of joining the RCEP. We are cautious about it. We are watching the implications on trade and industry”

 

“Bangladesh is facing a significant constraint on imports, particularly affecting cotton yarn and edible commodities. But we are not urging them to increase their imports” stated another official. 

 

India exported $6.04 billion to Bangladesh from April to October in fiscal year 2023. Whereas, imports amounted to $1.15 billion in the initial seven months of 2023-24 and $2.02 billion in the previous fiscal year.

 

The European Union’s decision to extend preferential access to Bangladesh’s exports assumes added importance, given the suspension of benefits under the Generalized system of preferences for India’s key exports. Notably, while India faces challenges, a Delhi based trade expert highlights that “Any trade agreement with Bangladesh will only benefit them and add to their advantages”