According to Indian government officials, Delhi has repeatedly asked Dhaka for dates to settle the 6.5km demarcation of the boundary that emerged the core issue in the border dispute between the two countries.
According to the Indira Gandhi-Mujibur Rahman Land Agreement of 1974, the two sides agreed to demarcate the around 4,000km-long boundary as well as settle “adverse” possessions and enclaves— small pieces of territory in the other country—left over from history. Since then, most of the boundary has been demarcated except 6.5km in Noakhali, Dinajpur and Sylhet districts because both sides refuse to accept the other’s documentation and maps.
In Noakhali, for example, both governments continue to argue how to divide the Feni river between themselves.
“India, with roughly eight times Bangladesh’s population and more than 12 times the GDP, must show some generosity in settling the disputes of the past,’’ said Verghese. “The problem now seems to be that India wants to settle the whole issue as a package, while Dhaka prefers the piecemeal approach.’’
Indian officials defend the approach, arguing that Delhi has already offered zero duty tariffs to all least developed countries, including Bangladesh and Nepal. A few months ago, it repealed ban on Bangladesh’s investment in India that had been in place even after Bangladesh became a free country.
Officials in India’s commerce ministry, who did not wish to be identified , admitted that removing Bangladesh from the negative FDI (foreign direct investment) list did not mean much. In 2006-07, Indian exports to Bangladesh (manufactured goods, semi-manufactured goods, foodgrain, industrial raw materials, vehicles, trucks, etc.) amounted to $1.5 billion, while Bangladesh’s exports to India were a lowly $228 million.
That works out to around $1.73 billion of trade, although experts say goods worth $2 billion are smuggled across the border.
India’s exports to Bangladesh have gone up by an additional $1 billion this year, largely because of the 1.5mt of foodgrain the country bought from India after its large parts were ravaged by a cyclone last year, and the government was forced to feed a full third of its population (50 million of about 145 million) for six months.
Bangladeshi officials say the India-Bangladesh economic relationship is hugely unequal, partly because Bangladesh is one of the poorest countries in the world, with half its population living below the poverty line, and partly because the country’s manufacturing base is very thin.
“We know that allowing the Tatas to invest in Bangladesh would galvanize Indian investment in our country,’’ one Bangladeshi official said. “Even if India were to give duty-free access to all our goods, our exports would not be much higher. We have to expand the production base and we can only do that with foreign investment,” he added.
Even though informal trade amounts to another $2 billion, Bangladesh continues to reject a Free Trade Agreement (FTA) between the two countries, on the lines of the successful India-Sri Lanka FTA.