Talks on CEPA soon: Modi

Bangladesh and India will soon start holding negotiations on a bilateral comprehensive economic partnership agreement (CEPA), announced Prime Minister Narendra Modi of India yesterday.

"We both believe that by taking lessons from the Covid pandemic and recent global developments, we need to make our economies stronger," he told reporters after talks with Prime Minister Sheikh Hasina at Hyderabad House in New Delhi.

India is the largest market in Asia for Bangladesh's exports and both countries will soon start discussions on the CEPA, he said.

"With the expansion of connectivity between our two countries, and the development of trade infrastructure on the border, the two economies will be able to connect more with each other, support each other. Our bilateral trade is growing rapidly," he said.

Indian Foreign Secretary Vinay Mohan Kwatra told the media that CEPA is expected to be finalised before Bangladesh graduates into a developing country from a least developed nation by 2026.

Modi said rising energy prices were now posing a challenge to all developing countries and the unveiling of the first unit of a Maitree thermal power plant in Rampal would increase the availability of affordable electricity in Bangladesh.

"Fruitful talks are also underway between the two countries on connecting power transmission lines," he said.

According to Modi, the inauguration of a railway bridge over the Rupsha river "is a remarkable step" towards enhancing connectivity.

This bridge is an important part of a new railway line being built between Khulna and the Mongla port under an Indian line of credit. India will continue to extend all support for the development and expansion of Bangladesh's railway system, said the Indian prime minister.

He said the two countries also decided to increase cooperation in sectors like IT, space and nuclear energy, which were of interest to the younger generations.

He said Bangladesh has made remarkable progress under the leadership of Sheikh Hasina in the last couple of years. "Our mutual cooperation has also increased rapidly in every field," he said.

"Today, Bangladesh is India's largest development partner and our largest trade partner in the region," he added.

A joint study by the two countries showed that a CEPA could increase exports from India to Bangladesh by anywhere from $4 billion to $10 billion in a span of five years.

Similarly, exports from Bangladesh to India could increase by $3 billion to $5 billion, albeit in a span of 10 years.

The total gain for both countries from such an agreement could be anywhere from $7 billion to $15 billion.

The study also showed that of the $8.1 billion-worth of goods imported by Bangladesh from India in 2019, 31.9 per cent was duty free.

As for the breakdown, some 67.3 per cent of the total capital goods imports from India were duty-free followed by 56.9 per cent of fuel imports and 30.2 per cent of industrial supplies.

In terms of change in real GDP, it will increase by 1.72 per cent from what was in 2019 in case of Bangladesh while in the case of India, it will rise by 0.03 per cent, the study said.

In percentage, the combined effect of a CEPA on Bangladesh's exports to India would result in approximately a 190.15 per cent increase from what was in 2019 while in the case of India's exports to Bangladesh, the estimated increase is expected to be 188.34 per cent.