Indo-Bangladesh Trade: The Scenario of Export, Import and Trade Balance

Abstract

The nature and composition of bilateral trade between India and Bangladesh has changed during the last three decades. Although India’s exports to Bangladesh have become more diversified during this period, no significant changes have been observed in the composition of its export basket. Bangladesh’s exports to India, on the other hand, remained confined within very few items with a considerable change in its composition with time. Both of them have initiated trade liberalization policies almost at the same time, Bangladesh in 1990 and India in 1991. Trading with Bangladesh, India has enjoyed increasing trade surplus always, but most importantly the growth rate of trade surplus has slowed down with the passage of time. A number of policies have been adopted by both these countries for better performances in their bilateral trade. The econometric analysis of this paper reveals that the GDP of India and the exchange rate policy of India played significant role in determining the volume and direction of trade between these two countries.