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Friday, July 15, 2011

Re-engaging with Bangladesh: Active economic and security co-operation can help India reinvigorate ties with Bangladesh


New Delhi and Dhaka are acting together again to boost their relationship. The upcoming visit of India’s prime minister, Dr Manmohan Singh, to Bangladesh offers an opportunity to review the bilateral relationship between New Delhi and Dhaka.

Whenever such top-level meetings take place, the Indian media recalls New Delhi’s critical role in Bangladesh’s liberation, culminating in the creation of a new country in 1971. However, relations between liberators and the liberated rarely turn out to be easy. Misaligned expectations lead to mutual resentment, and objective problems are often shrouded in negative atmospherics, making their resolution more difficult, if not intractable. With the exception of a brief period immediately after the liberation, the relationship between the two countries has been marred by mistrust and mutual suspicion.

Nevertheless, some progress has been registered recently, as recorded in a joint communiqué last year between the two countries, including the grant of a $1 billion line of credit by the Indian government to Bangladesh. India has increased the annual duty-free quota from eight to ten million pieces of Bangladesh garment imports, but Bangladesh is looking for the removal of the “quota”, an option India needs to consider.

Co-operation in the power sector, including grid connectivity, has already taken off and should grow through 2013. In addition, India’s National Thermal Power Corporation has gone ahead to set up a 1,320 Mw green field power plant in Khulna, Bangladesh, as part of a joint venture. Work on linking the railway lines between Tripura and eastern Bangladesh is also progressing. Similarly, two “Border Haats” in Meghalaya will soon be ready, encouraging cross-border trade by local populations.

Regular exchanges of business delegations have resulted in several joint venture agreements in packaging, animal foods, auto components, denim and household utensils. Exports from Bangladesh to India increased by 52 per cent in the first nine months of 2010-11, a helpful development in broadening Bangladesh’s manufacturing base in the near future.

Earlier, from India’s perspective, Bangladesh seemed resentful of India’s economically more successful track record, failing to emulate its growth strategies and resisting several large India-inspired economic projects and related Indian investments, for example from the Tata conglomerate.

Of greater concern to India was the strength of radical Islam in organised politics in Bangladesh as well as the existence of significant Islamist militant groups, some of which had international links (including with confederates in Pakistan, and, allegedly, in India). The fear of Talibanisation of Bangladesh, which seems far-fetched to casual observers, remains real and urgent for much of India’s security establishment, although Bangladesh’s new government, under Sheikh Hasina, has reversed the dalliance with Islamic extremists that marked the period of Bangladeshi government under her arch-rival Khaleda Zia.

Bangladesh’s politics has long been dominated by these two women, both linked to political dynasties. Ms Zia was perceived in India and the West as playing on Islamic radicalisation, and relations with New Delhi suffered accordingly. Ms Hasina’s return to power in December 2008 has greatly improved the mood for bilateral relations.

The migration of Bangladeshis to India has at times been a politically salient and sensitive issue for New Delhi, particularly when terrorist acts in India are attributed – not always convincingly – in whole or in part to Bangladeshi migrants. In addition, Bangladesh’s reported harbouring of movements aiming at secession of parts of India’s north-east region (much of which was coveted by Pakistan in the run-up to the Partition) has been a sore point in bilateral relations.

While Bangladeshis are worried about the potential for Indian domination, India has its own concerns about border management, water sharing, transit-related issues and illegal migration — the narrow Siliguri corridor that links the north-east region with the rest of India is a worry.
India is seen by many in Bangladesh as an insensitive regional power. Given the growing trade imbalance between the two countries, India’s government needs to emonstrate sensitivity to Ms Hasina’s public opinion. Some unilateral measures by India benefiting Bangladesh will give a fresh impetus to the relationship, notably on market access for Bangladeshi exports to and through India. A recent study by the Federation of Indian Chambers of Commerce and Industry suggests that Bangladesh is internationally (and relative to India) highly competitive in batteries, jute twine, cordage and ropes, and cement and bricks. Investment by India in these sectors in Bangladesh, combined with the option to re-export to India, will help diversify Bangladesh’s trade and reduce the trade gap between the two countries.

While Bangladeshis understandably feel “India-locked”, those in India’s north east sometimes feel “Bangladesh-locked”. India’s ability to trade with, and support, the remote north-east region is limited. Bangladesh could help. Moving beyond a history of turmoil in India’s north-east region, Bangladesh could seek market access and make investments there, setting up special economic zones along the border to tap raw materials from India’s north east using Bangladesh’s capital, technology and labour to expand employment, trade and exports. Bangladesh’s entrepreneurial and business communities can help develop this Indian region.

Active economic and security co-operation is very much in the mutual interest of both countries, even where it is asymmetric. The two governments must accept this proposition and work towards implementing it.

Published in the Business Standard, New Delhi, India, July 15, 2011

Rajeev Ranjan Chaturvedy is senior assistant director, International Affairs at Ficci, New Delhi and David M Malone is the president of IDRC, Canada, and the author of Does the Elephant Dance? Contemporary Indian Foreign Policy

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