New Delhi, Mar 10: Bangladesh has overtaken Sri Lanka as India's largest trading partner in South Asia with total trade volumes expected to be more than $5 billion in the current financial year, says a Commerce Ministry official.
Between April (2012) and January (2013) in the current fiscal year, India's trade with Bangladesh rose to $4.5 billion from $3.3 billion in the year earlier. During the same period, India's trade with Sri Lanka fell to $3.5 billion from $4.2 billion.
There has been rise in exports of agricultural products to Bangladesh, while imports from that country has also increased due to concessions in duty on textiles.
On the other hand, the fall in trade with Sri Lanka has been attributed to the increase in customs duty by Lanka on Indian automobiles starting April last year.
Sri Lanka increased the import duty on cars from 120-291% to 200-350%; from 51-61% to 100% on three-wheelers; and from 61% to 100% on scooters and motorcycles, reports The Island newspaper.
Sri Lanka has also substantially increased the excise duty on automobiles. As a result, several Indian auto makers, including Bajaj Auto Ltd and Maruti Suzuki India Ltd, for which Sri Lanka is an important export market, have taken a hit.
“Because automobile exports to Sri Lanka is a high-value item, that one single measure has meant exports to the country have suffered,” the commerce ministry official added. In April-December of the current fiscal year, India's automobile exports to Sri Lanka were $357 million as against $1 billion in 2011-12.
“Bangladesh itself is a fast-growing economy. They have recorded something like 6% growth consistently. It is a large market, 150 million, with a growing middle class.
So Bangladesh itself, apart from the export opportunities or the opportunities of access to India, presents a number of opportunities,” Indian foreign secretary Ranjan Mathai said.
Later this year, India will start exporting 500MW power to Bangladesh. While 250MW will be given at concessional rates, the rest will be at market rates, an official said.
