Reset in India-Bangladesh Ties

Saturday, June 06, 2015
Modi and Hasina (right) shake hands in Dhaka (photo: Reuters)

India and Bangladesh signed a land boundary agreement on Saturday, completing four decades of negotiations between the two neighbours. With the land question out of the way, it was back to business with India announcing a $2 billion new credit line to Bangladesh and $4.5 billion of investments in power.

Under the land deal, signed in Dhaka in the presence of Prime Minister Narendra Modi and his Bangladeshi counterpart Sheikh Hasina, the two countries will swap some 200 tiny enclaves dotted around the border. Their inhabitants have been deprived of public services and living in squalid conditions.

The 106 Indian enclaves in Bangladesh and 92 Bangladeshi enclaves in India are islands of foreign territory inside each country.

Under the pact, each country will take over most of the enclaves on its territory and residents will have the right to stay where they are or move to the other side of the border.

"We have shown political consolidation and goodwill with the signing of this deal," said Modi, who is visiting Bangladesh on a two-day state visit. Hasina agreed: "I salute all the citizens of India for supporting this bill in parliament."

The land accord was originally agreed in 1974 by then prime minister Indira Gandhi and Sheikh Mujibur Rahman of Bangladesh. Progress stopped for a long time, however, after Mujibur was assassinated in 1975 and subsequent governments failed to agree on the transfer of enclaves.

The two countries are now looking to boost trade and security along the border and to fight human trafficking.

The two prime ministers, along with West Bengal Chief Minister Mamata Banerjee, also inaugurated bus services across t]he border.

India's announcement of a $2 billion new credit line to Bangladesh follows the $1 billion assistance it provided in 2011 for infrastructre development.

Adani Power Limited of India and Reliance Power Limited of India signed deals worth over $4.5 billion with state-run Bangladesh Power Development Board (BPDB) to develop six units of power plants to produce 4,600 MW of electricity.

Reliance will invest $3 billion to produce 3,000 MW, while Adani will set up two coal-fired plants with a total capacity of 1,600 MW, costing more than $1.5 billion.

"Bangladesh will be able to more than double power imports from India to 1,100 MW from 500 MW at present," Modi said.

Total trade between India and Bangladesh stood at $6.9 billion for the 2014-2015 fiscal year. Trade is heavily in India’s favour, with its exports to Bangladesh at $6.2 billion.

Dhaka has offered special economic zones in Mongla and Bheramara for Indian investors. India has already accorded Bangladesh the status of zero-tariff imports for all but 25 tariff lines.

"India will invest more as Bangladesh today offered an exclusive economic zone for India and this investment will help to narrow the gap," Modi said.

- Karan Singh

To Learn More:

India, Bangladesh sign historic land boundary agreement (by Serajul Quadir, Reuters)

India and Bangladesh seal land-swap deal (Al Jazeera)

PM Modi announces US $2 billion line of credit to Bangladesh (DNA)

Adani, Reliance to build Bangladesh power plants to ease crisis (by Serajul Quadir, Reuters)

Bangladesh offers Special Economic Zones to Indian companies (PTI)


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