India, Bangladesh to gain only modest benefits from bilateral trade

A new study finds that trade between India and Bangladesh would do better if there were broad-based liberalization, rather than a Free Trade Agreement (FTA).

For more on this study, please visit http://www.worldbank.org/sar

Data:
– Over 15% of Bangladeshi imports come from India.
– Bangladesh has a large trade deficit with India; this is offset by surpluses with other countries.
– Bangladeshi exports to India receive tariff concessions under the South Asia Free Trade Agreement
– Such trade accounts for less than 1% of India’s overall imports.
– Illegal trade between the two countries amounts to 3/4 of regular trade.

Conclusions:
An India-Bangladesh free trade agreement has been under consideration for some time. Although the report points at possible advantages, it concludes that there is no compelling case for India and Bangladesh to pursue a bilateral FTA. Rather a broader-based liberalization would be preferable since this would yield much larger economic benefits, whilst minimizing risks.

For more on this study, please visit http://www.worldbank.org/sar

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