India, Bangladesh likely to sign pacts worth over $9 billion

New Delhi: India and Bangladesh are expected to sign a dozen business-to-business pacts on Monday valued at over $9 billion aimed at deepening economic ties and correcting a balance of trade that is heavily skewed in India’s favour.

The business agreements are expected to be signed on Monday, the last day of Bangladeshi Prime Minister Sheikh Hasina’s four-day visit, her first bilateral one in seven years, that saw New Delhi roll out the red carpet for her.

The $9 billion in commercial pacts is in addition to India’s announcement of a $4.5 billion line of credit—the largest it has extended to a country. New Delhi has developed warm ties with Bangladesh especially since 2009, when Hasina became Prime Minister for the second time. This is thanks largely due to Hasina’s crackdown on anti-India insurgency emanating from Bangladeshi soil. The commercial pacts are also seen as India’s way of addressing Bangladeshi concerns on the trade imbalance.

Besides the line of credit, there were 21 other pacts for cementing closer cooperation in areas from infrastructure, energy and connectivity to people-to-people ties, space, civil nuclear and defence. In defence, India has extended another $500 million to Bangladesh to buy military hardware—seen as a first-of-its- kind line of credit from New Delhi to an immediate neighbour.

Officials and analysts have hailed the warmth in India-Bangladesh ties, holding them up as an example of the success of India’s “neighbourhood first” foreign policy scripted by the Narendra Modi government that took office in May 2014.

“This is a message to all of India’s neighbours,” said former foreign secretary Lalit Mansingh. “There are countries in India’s neighbourhood that have played the China card,” he said referring to countries like Nepal, Sri Lanka and the Maldives. “Sheikh Hasina on the other hand has never done this despite the fact that Bangladesh has accepted grants and military supplies from China. She has never used the ‘China card’ against India and is seen as sensitive to Indian interests,” Mansingh said. “I think the message is to South Asia as a whole that cooperation with India can result in disproportionate returns,” he added.

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Foreign secretary S. Jaishankar who briefed reporters on Sheikh Hasina’s visit on Saturday described ties with Bangladesh as “an exceptional relationship.” According to a joint statement issued late on Saturday, the two countries “emphasized that relations between India and Bangladesh are based on fraternal ties and reflective of an all-encompassing partnership based on sovereignty, equality, trust and understanding that goes far beyond a strategic partnership.”

“The two prime ministers expressed firm commitment to set an example of good neighbourliness in the region. They emphasised that we must continue to progress together. Both leaders thus agreed to promote shared interests of the two peoples so as to live together harmoniously and in a mutually beneficial inter-dependent environment,” the joint statement said, indicating a political, economic and strategic convergence between the two countries.

On terrorism, Jaishankar said, “We are very clear and so is the Bangladesh government today that different aspects of terrorism, terrorist networks ... terrorism is a threat to each other and we have cooperated extremely well in dealing with it which is why you have a visible improvement in the security situation in the East and Northeast (of India).”

“I would say that the positions taken by the Bangladeshi prime minister and the positions we have taken, there is a very similar thinking at play. Both of us, our thinking is shaped by our experience,” he said adding that often, both countries had “coordinated” their positions on such matters.

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That Jaishankar was obliquely referring to the contrast between India’s ties with Bangladesh vis-a-vis India’s relations with Pakistan was evident given the tensions between the two countries on many issues, mainly terrorism. India and Bangladesh have resolved a long-standing border dispute and exchanged territories in adverse possession besides settling a maritime boundary dispute—all peacefully in the last several years. The two countries are also engaged in regional and sub-regional cooperation mainly in energy and connectivity projects.

“The benefits of cooperation, the benefits of connectivity, the benefits of trade, the benefits of cooperating against terrorism... I think the lessons are out there. Now, it’s up to others to pick up those lessons and decide which ones of those they are going to use,” Jaishankar said in response to a question whether Pakistan could draw lessons from the India-Bangladesh script.