Enhancing India's Trade with Bangladesh and Myanmar Across Border
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EXPORT-IMPORT BANK OF INDIA WORKING PAPER NO. 77 ACT EAST: ENHANCING INDIA'S TRADE WITH BANGLADESH AND MYANMAR ACROSS BORDER EXIM Bank's Working Paper Series is an aempt to disseminate the findings of research studies carried out in the Bank. The results of research studies can interest exporters, policy makers, industrialists, export promoon agencies as well as researchers. However, views expressed do not necessarily reflect those of the Bank. While reasonable care has been taken to ensure authencity of informaon and data, EXIM Bank accepts no responsibility for authencity, accuracy or completeness of such items. © Export-Import Bank of India June 2018 Act East: Enhancing India's Trade with Bangladesh and Myanmar Across Border CONTENTS Page No. List of Tables 5 List of Charts 7 List of Exhibits 7 List of Annexures 9 Execuve Summary 1. Background 22 2. Internaonal Trade of Bangladesh and Myanmar 27 3. Foreign Investment in Bangladesh and Myanmar 35 4. India's Bilateral Relaons with Bangladesh and Myanmar 42 5. India's Border Trade and Connecvity with Bangladesh and Myanmar 53 6. Potenal Areas for Enhancing India's Trade with Bangladesh and Myanmar 67 7. Exim Bank's Presence in Bangladesh and Myanmar 91 8. Status of Infrastructure at Bangladesh and Myanmar Borders: Based On Field Visit 96 9. Key Observaons and Way Forward 103 References 108 Project Team: Mr. David Sinate, Chief General Manager Mr. Vanlalruata Fanai, Assistant General Manager Ms. Sara Joy, Manager 3 Act East: Enhancing India's Trade with Bangladesh and Myanmar Across Border LIST OF TABLES Table No. Title Page No. 1.1 Macroeconomic Snapshot of Bangladesh- Select Indicators 24 1.2 Macroeconomic Snapshot of Myanmar- Select Indicators 26 2.1 Bangladesh's Export Composion 29 2.2 Bangladesh's Import Composion 29 2.3 Major Export Desnaons of Bangladesh 30 2.4 Major Import Sources of Bangladesh 30 2.5 Myanmar's Export Composion 32 2.6 Myanmar's Import Composion 33 2.7 Major Export Desnaons of Myanmar 33 2.8 Major Import Sources of Myanmar 34 3.1 Trends in Bangladesh's FDI Flows 35 3.2 FDI Flows in Myanmar 38 4.1 India's Major Exports to Bangladesh 43 4.2 India's Major Imports from Bangladesh 44 4.3 India's Major Exports to Myanmar 48 4.4 India's Major Imports from Myanmar 49 5.1 Length of India's Border with Bangladesh 54 5.2 India's Port Wise Exports to Bangladesh 54 5.3 India's Port Wise Imports from Bangladesh 55 5.4 List of Integrated Check Posts (ICPs)/Land Customs Staons (LCSs) 56 5.5 Length of India's Border with Myanmar 61 5.6 India's Port Wise Exports to Myanmar 62 5.7 India's Port Wise Imports from Myanmar 62 5.8 India's Border Trade with Myanmar 63 5.9 Land Customs Staons Dealing with Indo-Myanmar Trade 65 6.1 Bangladesh's Major Imports and India's Share in 2017 68 6.2 Bangladesh's Major Sources of Imports of Machinery and Mechanical Appliances (HS-84) 69 6.3 Machinery and Mechanical Appliances (HS-84) - Potenal Exports to Bangladesh 69 6.4 Bangladesh's Major Sources of Imports of Electrical Machinery and Equipment (HS-85) 70 6.5 Electrical Machinery and Equipment (HS-85) - Potenal Exports to Bangladesh 70 6.6 Bangladesh's Major Sources of Imports of Animal or Vegetable Fats and Oils (HS-15) 71 6.7 Animal or Vegetable Fats and Oils (HS-15) - Potenal Export Items to Bangladesh 72 5 Act East: Enhancing India's Trade with Bangladesh and Myanmar Across Border Table No. Title Page No. 6.8 Bangladesh's Major Sources of Imports of Knied or Crocheted Fabrics (HS-60) 72 6.9 Knied or Crocheted Fabrics (HS-60) - Potenal Export to Bangladesh 73 6.10 Bangladesh's Major Sources of Imports of Sugars and Sugar Confeconery (HS-17) 73 6.11 Sugars and Sugar Confeconery (HS-17) - Potenal Export Items to Bangladesh 74 6.12 Bangladesh's Major Sources of Imports of Paper and Paperboard (HS-48) 74 6.13 Paper and Paperboard (HS-48) - Potenal Export Items to Bangladesh 75 6.14 Bangladesh's Major Sources of Imports of Opcal, Photographic, Medical and Surgical Apparatus (HS-90) 76 6.15 Opcal, Photographic, Medical and Surgical Apparatus (HS-90) - Potenal Export Items to Bangladesh 77 6.16 Bangladesh's Major Exports and India's Share in 2017 78 6.17 Myanmar's Major Imports and India's Share in 2017 79 6.18 Myanmar's Import Sources of Mineral fuels, Mineral Oils and Products of their Disllaon (HS-27) 80 6.19 Mineral fuels, Mineral Oils and Products of their Disllaon (HS-27) - Potenal Export Items to Myanmar 81 6.20 Myanmar's Import Sources of Plascs and Arcles (HS-39) 81 6.21 Plascs and Arcles (HS-39)-Potenal Export Items to Myanmar 82 6.22 Myanmar’s Import Sources of Animal or Vegetable Fats and Oils (HS-15) 83 6.23 Animal or Vegetable Fats and Oils (HS-15) - Potenal Export Items to Myanmar 83 6.24 Myanmar's Import Sources of Arcles of Iron or Steel (HS-73) 84 6.25 Arcles of Iron or Steel (HS-73) - Potenal Export Items to Myanmar 85 6.26 Myanmar's Import Sources of Miscellaneous Edible Preparaons (HS-21) 86 6.27 Miscellaneous Edible Preparaons (HS-21) - Potenal Export Items to Myanmar 86 6.28 Myanmar's Import Sources of Man-made Staple Fibres (HS-55) 87 6.29 Man-made Staple Fibres (HS-55) - Potenal Export Items to Myanmar 87 6.30 Myanmar's Import Sources of Man-made filaments, Strip and Texle Materials (HS-54) 88 6.31 Man-made filaments, Strip and Texle Materials (HS-54) - Potenal Export Items to Myanmar 89 6.32 Myanmar's Major Exports and India's Share in 2017 90 7.1 Exim Bank's Operave Lines of Credit in Bangladesh and Myanmar 92 8.1 Major Commodies Traded at ICP Petrapole 97 8.2 Major Commodies Traded at LCS Moreh 98 8.3 Major Commodies Traded at LCS Zokhawthar 100 6 Act East: Enhancing India's Trade with Bangladesh and Myanmar Across Border LIST OF CHARTS Chart No. Title Page No. 2.1 Internaonal Trade of Bangladesh 27 2.2 Exports and Imports of Bangladesh as a Percent of GDP 28 2.3 Internaonal Trade of Myanmar 31 2.4 Exports and Imports of Myanmar as a Percent of GDP 32 3.1 Sectorwise FDI Inflows to Bangladesh 35 3.2 Sectorwise FDI inflows to Myanmar 38 4.1 India's Trade with Bangladesh 42 4.2 Sectorwise FDI Inflows from India to Bangladesh 46 4.3 India's Trade with Myanmar 47 4.4 Sectorwise FDI Inflows from India to Myanmar 51 LIST OF EXHIBITS Exhibit No. Title Page No. 1.1 Map of Bangladesh 22 1.2 Map of Myanmar 25 4.1 ASEAN- India Free Trade Area 50 5.1 Protocol Routes 59 8.1 ICP Petrapole 96 8.2 Trucks waing for Transshipment at ICP Petrapole 97 8.3 Transshipment between Indian and Bangladeshi Trucks at ICP Petrapole 97 8.4 ICP Moreh 99 8.5 LCS Zokhawthar 100 8.6 Bridge Connecng India and Myanmar at Zokhawthar 100 8.7 World Bank Road Connecng Zokhawthar LCS Bypassing Champhai 102 List of Annexures Annexures No. Title Page No. I Roles and Funcons of Land Ports Authority of India (LPAI) 109 II List of Officials Consulted During Field Trip 111 7 Act East: Enhancing India's Trade with Bangladesh and Myanmar Across Border EXECUTIVE SUMMARY India's Look East Policy, which was introduced in 1992, discipline supporng macroeconomic stability. was relaunched in 2014 as the 'Act East Policy', with According to the Internaonal Monetary Fund (IMF), the objecve of promong economic cooperaon, the country has benefied from favorable external cultural es and develop strategic relaonship with demand, high remiances, and low commodity countries in the Asia-Pacific region through prices, resulng in strong output growth, falling connuous engagement at bilateral, regional and inflaon, moderate public debt, and a rebuilding of mullateral levels, thereby providing enhanced external resilience. connecvity to the states of India's North East Region (NER). In fact, immediate border countries in the East rd and North East India region would play important role Bangladesh is the 43 largest economy in the world in the success of India's Act East Policy. Myanmar, the and is also among the fastest growing economies, only member country of Associaon of Southeast with a growth rate of 7.1 percent in 2017. Over the Asian Naons (ASEAN), which borders India, shares a last decade, nominal GDP has more than trebled from land boundary of around 1,643 km with four Indian US$ 85.6 billion in 2007 to an esmated US$ 261.4 states including Manipur, Mizoram, Nagaland and billion in 2017, with a per-capita income of Arunachal Pradesh. Bangladesh is equally crical to US$ 1,601.7 in 2017. The economic growth of the success of India's 'Act East', with 4,096.7 km long Bangladesh has been mainly driven by exports, border is being shared with India along the states of especially of readymade garments, remiances and West Bengal, Assam, Meghalaya, Tripura and agriculture sector. Bangladesh has managed to Mizoram. sustain a high growth of over 7 percent in 2017 in spite of marginal growth in exports and fall in Regional Cooperaon such as Bay of Bengal Iniave remiance inflows, supported by strong private for Mul-Sectoral Technical and Economic consumpon and investments in infrastructure Cooperaon (BIMSTEC), whose membership include projects.