6/6/25, 2:38 PM Bangladesh-India Trade Cooperation: Expanding Market for Mutual Benefit - The Geopolitics
S. M. Saifee Islam January 15, 2024
Bangladesh-India Trade Cooperation:
Expanding
SOUTH ASIA Market for Mutual Benefit
I
ndia and Bangladesh share a strong bond based on their common history, language, and culture. India
was quick to recognize Bangladesh and establish diplomatic relations in 1971, right after its
independence. This relationship goes beyond just strategic cooperation; it’s rooted in equality, trust, and
understanding. When it comes to trade, Bangladesh is India’s biggest trading partner in the subcontinent. In return,
India is the second-largest export partner for Bangladesh, making up 12% of its total exports. In the fiscal year 2023,
the total trade turnover between the two countries reached an impressive $14.22 billion. This economic collaboration
highlights the deep connection and interdependence between India and Bangladesh, showcasing a partnership that
extends beyond political ties. Most Bangladeshi products have easy access to Indian markets although this is for
now diluted by the difficulty in penetrating the vast but highly competitive Indian market. Indian goods are
transshipped through Bangladesh to connect its eastern region with its far-eastern region using Bangladeshi
transportation, literally a quid pro quo.
Bangladesh-India Trade Cooperation 2023
India experienced a remarkable surge in exports to Bangladesh during the fiscal year 2023, showcasing the robust
economic partnership between the two nations. The volume of trade encompassed an impressive array of 6,050
different commodities, highlighting the diversity in goods exchanged. Notably, the export figures reached US$ 12.20
billion, emphasizing significant growth compared to the previous fiscal year’s US$ 16.15 billion. Key contributors
to this surge included other commodities valued at US$ 1.17 billion, cotton yarn (US$ 1.02 billion), petroleum
products (US$ 816 million), other cereals (US$ 556 million), and cotton fabrics, made-ups, etc. (US$ 541 million).
This momentum persisted into the initial months of April-May 2023, with exports reaching US$ 1.67 billion,
underscoring the continued strength of the trade relationship.
The fiscal year 2023 witnessed an expanding appetite for Bangladeshi goods in India, as reflected in the import
statistics. A diverse range of 1,155 commodities was imported from Bangladesh, contributing to a commendable
US$ 2.02 billion in imports. This marked a notable increase from the previous year’s figure of US$ 1.97 billion.
Leading items in India’s import basket included RMG cotton (US$ 510 million), cotton fabrics, made-ups, etc. (US$
153 million), RMG manmade fibers (US$ 142 million), spices (US$ 125 million), and jute (US$ 103 million). The
positive trend persisted into April-May 2023, with imports totaling US$ 278 million. This ongoing growth
underscores the sustained and expanding economic exchange between India and Bangladesh, affirming the mutual
benefit derived from their trade relationship.
2023: Key Milestones in India-Bangladesh Trade Relations
Comprehensive Economic Partnership Agreement (CEPA)
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6/6/25, 2:38 PM Bangladesh-India Trade Cooperation: Expanding Market for Mutual Benefit - The Geopolitics
India and Bangladesh are actively working towards a Comprehensive Economic Partnership Agreement (CEPA) in
2023, aiming to strengthen their economic ties. This agreement is anticipated to significantly boost trade, create job
opportunities, and enhance living standards in both nations. The collaboration reflects a commitment to expanding
the market for mutual benefit, fostering economic growth and development.
Swadhinata Sarak and Maitree Thermal Power Project
The Swadhinata Sarak, a road infrastructure project, serves as a symbol of the growing friendship between India and
Bangladesh. Beyond strategic interests, it focuses on enhancing connectivity between the two nations, fostering an
environment conducive to increased trade. Additionally, the joint inauguration of the Maitree Thermal Power project
by the Prime Ministers contributes to energy security, adding to the already significant areas of cooperation,
including trade, connectivity, and water sharing.
Currency Diversification in Bilateral Trade
In April 2023, India and Bangladesh took a strategic step to simplify trade transactions by agreeing to use their own
currencies (Rupee and Taka) for a part of their bilateral trade. This move aims to reduce dependence on the US
dollar, making trade more convenient for both nations. The gradual shift to local currencies aligns with the global
trend of currency diversification and signifies a proactive approach to enhance economic cooperation.
Border Haats Expansion
Bangladesh and India are exploring the establishment of 16 new border haats, particularly in Mizoram and West
Bengal. These initiatives aim to boost trade by providing better access to markets and economic opportunities for
border communities. The expansion aligns with the broader strategy of reducing informal trade along the border,
fostering economic growth in these regions.
Infrastructure and Connectivity Improvements
Both nations are actively enhancing infrastructure and connectivity to promote trade. Supported by initiatives,
including Japanese funding, these efforts include the development of the Matabari Port in Bangladesh by 2027. The
improved infrastructure is expected to facilitate smoother trade flows from India to Bangladesh and onward to Asian
markets. Collaborative projects like the “Bay of Bengal Northeast Industrial Value Chain Concept” further
underscore the commitment to strengthening economic ties.
Other developments
In 2023, India and Bangladesh have elevated their economic partnership to a new level through a series of
Memoranda of Understanding (MoUs) covering crucial areas. These agreements represent a comprehensive
approach, focusing on water management, railway collaboration, scientific research, space technology, broadcasting,
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6/6/25, 2:38 PM Bangladesh-India Trade Cooperation: Expanding Market for Mutual Benefit - The Geopolitics
and judiciary. This holistic strategy addresses various facets that collectively strengthen the foundation for increased
trade and mutual economic benefits between the two nations.
Key Areas of
Significance for Trade Relations
Cooperation
Water Cooperative effort for responsible water use, creating a favorable environment for trade
Management activities.
Railway Enhances transportation connectivity, facilitating smoother cross-border movement of
Collaboration goods and people, promoting trade.
Scientific Commitment to innovation and addressing common challenges, contributing to
Cooperation technological advancements that positively impact trade.
Joint efforts in telecommunications and satellite technology, crucial for enhancing
Space Technology
connectivity and facilitating trade-related communication.
Broadcasting Fosters cultural ties and shared narratives, creating a platform for mutual understanding that
Cooperation can positively influence trade relations.
Judiciary
Reinforces the rule of law, creating a conducive legal environment for trade and investment.
Training
Expanding Bilateral Trade for Mutual Benefit
The future of Bangladesh-India trade cooperation holds immense potential for mutual benefit and regional
prosperity. The Indo-Pacific, with its economic dynamism and strategic relevance, has become a focal point for
foreign policy considerations. Within this framework, the Bay of Bengal region stands out as a vital area for growth
and collaboration. The bilateral relations between Bangladesh and India serve as a model for the entire region,
showcasing collaborative efforts that span various sectors. As the geopolitical construct of the Indo-Pacific evolves,
it is crucial for these smaller regions to develop through inter-country cooperation and a shared vision of the future.
The trade dynamics between Bangladesh and India are central to this shared future. Through initiatives like
Comprehensive Economic Partnership Agreements (CEPA) and the Bay of Bengal Northeast Industrial Value Chain
Concept, both nations aim to boost trade and economic ties significantly. Such collaborations are expected to result
in substantial growth in exports and imports, contributing to the prosperity of both countries. An increased focus on
water management, transportation connectivity, scientific cooperation, and space technology further strengthens the
foundation for a flourishing trade relationship.
As both nations continue to navigate the complexities of regional geopolitics, their commitment to a shared future
becomes crucial. By fostering economic cooperation, addressing common challenges, and strengthening diplomatic
ties, Bangladesh and India are poised to shape a positive and mutually beneficial trajectory for their trade relations in
the years to come.
Navigating Challenges and Building Collaborations
The future of Bangladesh-India trade cooperation is not without challenges. The specter of potential migration due
to climate change in Bangladesh poses a unique set of considerations for India. However, a shared commitment to
securing Bangladesh politically, socially, and economically becomes a driving force in preventing undesirable
scenarios. By emphasizing inclusive policies and sustainable development, both nations can proactively address
challenges related to migration, contributing to regional stability.
While China plays a significant role in the region, the unique historical and geographical ties between India and
Bangladesh create a distinct imperative for collaboration. Despite China’s economic presence, the strategic
importance of India as a neighbor with the longest land border in South Asia cannot be overlooked. This inescapable
relationship brings obligations, encouraging a nuanced approach to diplomacy that prioritizes being Bangladesh-
friendly.
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6/6/25, 2:38 PM Bangladesh-India Trade Cooperation: Expanding Market for Mutual Benefit - The Geopolitics
The potential for a Free Trade Agreement (FTA) adds another layer to the positive trajectory of Bangladesh-India
trade. Projections indicate significant growth in bilateral trade if an FTA is established, offering opportunities for
both nations to capitalize on their respective strengths. Initiatives like the “Bay of Bengal Northeast Industrial Value
Chain Concept” further underscore the commitment to attracting manufacturing and increasing trade.
To conclude, in 2023, the Bangladesh-India trade relations have reached noteworthy milestones, laying the
groundwork for unprecedented growth and collaboration. The Comprehensive Economic Partnership Agreement
(CEPA) underscores a shared commitment to economic expansion, job creation, and improved living standards.
Symbolic projects like the Swadhinata Sarak and the Maitree Thermal Power project signify deepening ties and
contribute to enhanced connectivity and energy security, vital elements for fostering increased trade. The strategic
move towards currency diversification in bilateral trade reflects a proactive approach to facilitate smoother
transactions. Initiatives like the expansion of border haats, infrastructure enhancements, and collaborative projects
demonstrate a joint vision for robust economic ties and regional development. The series of Memoranda of
Understanding (MoUs) covering crucial areas further exemplify the comprehensive nature of this economic
partnership, reinforcing the foundation for increased trade and mutual economic benefits. This collective effort,
marked by a collaborative spirit, not only navigates challenges but also contributes to the broader prosperity of the
region.
[Photo by Moheen Reeyad, via Wikimedia Commons]
S. M. Saifee Islam is a Research Associate at the Centre for Bangladesh and global affairs (CBGA). The views and
opinions expressed in this article are those of the author.
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