Regional Value Chain Issues focusing on SAFTA

In the case of Ceramic Table Ware - raw materials are imported from neighboring India
via overland freight; transportation and handling charges increase the raw material prices
by an average of 17%. Since India and Bangladesh do not have transit arrangements,
Indian shipments must be offloaded and then reloaded onto Bangladeshi trucks at
crossing points such as Benapol. This inefficiency increases the price of raw materials
freight on board (FOB) at the border crossingby an average of 7%, which is nearly the
same additional cost required for overland transport from the border to Dhaka
(approximately 300 km).

GIZ along with CBI have identified some potential value chains in the SAARC region:

1. Increasing trade of womens wear ready-made garments (RMG) from Bangladesh to Nepal /
SAARC (other countries)
2. Increasing import of fabrics and yarns from India for RMG industry to Bangladesh.

USAIDs Bangladesh Value Chain selection study identified the following sectors in
Bangladesh as promising: On one end is jute, a well-established sector in Bangladesh
with decades old relationships and marketing channels. Although coconuts are an
integral part of the Bangladeshi household economy, the husk of the coconut (coir) has

begun resurgence in recent years and has the potential to become a major contributor in
agricultural value chain. Cut flowers are a relatively small, but high growth sector in
Bangladesh with a strong potential to be integrated in the global value chain.

SME and Skill Development

In July of 2015 the National Small Industries Corporation Ltd (NSIC) of India
expressed interest to work jointly with the SME Foundation (SMEF) for the integrated
development of SME sectors in Bangladesh, especially in the industrial fields. Sharing of
knowledge and transfer of technology between the two organizations with similar goals
towards development. NSIC proposed the establishment of an incubator center in
Bangladesh with the support of SMEF to accelerate the access of improved facilities to
the entrepreneurs in a sustainable way along with the help of IamSME and IIDFC.
Mutual cooperation agreement between NSIC, India and Industrial and Infrastructure
Development Finance Company Limited (IIDFC), Bangladesh was renewed for further
three years on 24 March 2013. The agreement included facilitating sustainable business
alliances between enterprises in India and Bangladesh, Transfer of Technology and
holding Exhibitions and fostering Enterprise to Enterprise Cooperation through exchange
of delegations.
Bangladesh Bank and Small Industrial Development Bank of India (SIDBI) discussed to
work together to explore ideas of cooperation. SIDBI will help in Credit Guarantee
Scheme, SME asset reconstruction, Loan syndications for MSMEs, Cluster development
programme, Setting up of new enterprises, Marketing assistance programme for MSMEs,
Capacity building of Bank/NBFIs etc. NSIC assured that they will help on setting up of
incubation centres on mutually agreed terms.
Indian investors would invest in Bangladesh in coming days as a special zone had been
allocated for them and the Indian government has also agreed to give Bangladesh some
land for similar purpose Tofail Ahmed, MoC said at the Indian Technical and
Economic Cooperation (ITEC) and the Indian Council of Cultural Relations (ICCR) Day
program on 14 August 2015.

Inland Water Way

The Protocol on Inland Water Transit and Trade (PIWT&T) between Bangladesh and
India was first signed in 1972 for mutually beneficial arrangement for the use of
waterways for commerce and passage of goods between two places in one country
through the territory of the other. (link: http://www.biwta.gov.bd/website/?page_id=892)

Routes:
- Kolkata-Chandpur-Pandu-Silghat-Kolkata
- Kolkata-Chandpur-Karimganj-Kolkata
- Silghat-Pandu-Ashuganj-Karimganj-Pandu-Silghat
- Rajshahi-Dhulian-Rajshahi

Ports of call: Five Ports of Call on each side to provide facilities to the vessels of the
other country engaged in inter-country trade.

Bangladesh
Narayanganj
Khulna
Mongla
Sirajganj
Ashuganj

India
Kolkata
Haldia
Karimganj
Pandu
Silghat

On June 6 2015, India and Bangladesh inked the agreement on Coastal Shipping for twoway trade through ports; renewed the 1972 Protocol on Inland Waterways Transit and
Trade (PIWTT) for using their waterways for commerce; and signed an MoU for use of
Chittagong and Mongla Ports for movement of goods to and from India. Though India
and Bangladesh share an over 1,000 km of riverrine border, the trade traffic between the
two takes place mostly on the congested land border. The sea trade route has not been
used much.

Not only will India get easier access to its northeast, Bangladesnh will also get transit
through India into Nepal and Bhutan, according to the renewed Bilateral Trade
Agreement inked in 1972. This also gives a fillip to connectivity in the Bangladesh,
Bhutan, India, and Nepal sub-regional grouping of SAARC.

This Coastal Shipping Agreement would basically enable the direct regular movement of
ships between India and Bangladesh, which would bring the shipping time down from 30
to 40 days on average to seven to 10 days.