As Bangladesh currently has LDC status, it enjoys duty-free access for its products imported into India under SAFTA. A better maritime connection should have a chain effect like an agreement on motor vehicles. Increased trade and public transit are inspiring new economic activities that increase revenues and reduce costs for businesses and consumers. In the joint statement, both sides stressed the need to eliminate non-tariff barriers. Both Prime Minister Modi and his Bangladeshi counterpart Sheikh Hasina stressed the need for predictability of trade policies, regulations and procedures. Reducing transportation and trading costs for merchants will result in savings for consumers. This will be more pronounced in indian states bordering Bangladesh – particularly West Bengal, where commodity prices could fall by more than 4.5% – as well as in all districts of Bangladesh. It would also remove debris – described in Connecting to Thrive – that has made it cheaper to trade with Germany from India or Bangladesh than between India and Bangladesh. Researchers, analysts and bureaucrats have drawn on historical trade flows – rather than focusing solely on them – to advocate for regional connectivity and trade. Their work has paved the way for market opportunities that are becoming more and more tangible. Bangladesh signed its first bilateral trade agreement with Bimstec member Bhutan in December.

Trade agreements with Thailand and Nepal, two other members, are reportedly imminent. Connectivity and commerce create the types of relationships people need to succeed. On the other hand, Bangladesh already enjoys duty-free access to more than 90% of its products exported to China. Sources said the BFTI provided an introductory report on the meeting. India has also submitted a similar report to the Ministry of Commerce. The introductory report outlined what the study would cover. The BFIT study includes the analysis of all types of agreements between Bangladesh and India, the state and potential of roads, waterways, railways and airways, as well as the analysis of trade statistics of the two countries since independence. CePA is a progressive form of free trade agreement that will ensure preferential and even duty-free access to goods, services and investments in both countries.

Although India does not have a CEPA with Nepal or Bhutan, it offers concessions on the goods and services of these countries. In January this year, the two sides held in-depth discussions on the agreement, which will boost trade and investment in both directions. The meeting took place between the two ministries of commerce, headed by Indian Trade Minister Anup Wadhawan, while the Bangladeshi side was led by his counterpart Jafar Uddin. There is no trade agreement between India and the United States. In April 2018, the United States initiated a review of the eligibility of India`s compliance with the Market Access criteria of the Generalized System of Preferences (GSP) and in March 2019 decided that India no longer met the criteria, thereby withdrawing India`s GSP status. The repeal of GSP benefits eliminated special tariff treatment for $5.6 billion of Indian exports to the United States in India`s export-oriented sectors such as pharmaceuticals, textiles, agricultural products and auto parts. The United States and India are continuing their discussions on trade issues. Contrary to its approach to the European Union, Dhaka reportedly looked into its interest in a trade deal with the United States and then abandoned it. A trade official said a free trade agreement would require too many reforms. Trade deals are not politically divisive in Bangladesh. Dhaka enjoys more continuity and consensus in economic development. This is remarkable given the political changes that have taken place.

New trade routes reduce trade costs. And per capita income is now similar on both sides of the border. This changes the cost-benefit ratio of formal trade. Businesses may consider reducing their dependence on domestic consumers with new sources of income from neighbouring markets. The country enjoys trade privileges under several multilateral agreements. Namely the Asia-Pacific Trade Agreement and the South Asia Free Trade Area. But its duty-free access to key markets could expire in 2026 when it completely transitions from low-income to middle-income status. A bimstec port conclave agreement now connects the Thai port of Ranong to the ports of Chennai, Vishakhapatnam and Kolkata. They are also considering two more ambitious agreements. A bimstec agreement on coastal navigation and a Bimstec free trade agreement. Bilateral merchandise trade between India and Bangladesh fell 7.82 percent to $9.45 billion in the 2019-2020 fiscal year, up from $10.25 billion in the 2018-19 fiscal year, according to the Ministry of Trade and Industry. These bilateral agreements will pave the way for a Bimstec free trade agreement.

It could also allow Bangladesh to reap some of the benefits of the trading region before a deal is finalized. Free trade has become a taboo in India. In 2018 and 2019, special interest groups campaigned against India`s accession to the Regional Comprehensive Economic Partnership. The World Bank released a report this month entitled „Connecting to Thrive: Challenges and Opportunities of Transport Integration in Eastern South Asia.“ The report states that bilateral trade today accounts for only about 10% of Bangladesh`s trade and only 1% of India`s trade. .