Bangladesh Commerce Minister Munshi concluded his visit to India on Thursday. He was on a two-day visit to India for talks aimed at deciding the negotiation roadmap for India-Bangladesh Comprehensive Economic Partnership Agreement (CEPA). The last meeting between the Commerce Ministers of the two countries was held in Dhaka in September 2018.
Both sides held comprehensive discussions to further strengthen bilateral economic relations. During this visit, Munshi had bilateral meetings with Indian commerce and industry minister Piyush Goyal.
In a reply to the question in the talk show on Comprehensive Economic Partnership Agreement (CEPA), Bangladesh Commerce Minister Tipu Munshi said, “study confirmed the CEPA would provide a sound basis for substantial enhancement of trade and commercial partnership between the two countries. Both sides have agreed to start the CEPA discussions at an early date.”
“CEPA will create new jobs, raise living standards, and provide wider social and economic opportunities in India and Bangladesh”, Minister Tipu Munshi added during his talk with WNN.
For the unversed, India and Bangladesh, earlier this year, had finalised a joint feasibility study for a proposed CEPA. The trade deal is significant as it will be the first of its kind agreement for Bangladesh and a large Asian country.
Both ministers also discussed the settlement of trade in Indian Rupees.
The other countries that India is going to trade with Indian rupees are Sri Lanka and Mauritius. The trade is quite successful with Russia following the imposition of sanctions on Moscow over the Ukraine war. While Bhutan and Nepal are already doing a major chunk of their trade with Indian rupees.
India’s rupee trade settlement mechanism is a means of using rupees instead of dollars and other big currencies for international transactions. It is attracting interest from several countries and there are likely to be more Vostro accounts opened that are approved by the Reserve Bank of India or RBI.
A Vostro account is an account in a correspondent bank held on behalf of another bank. Vostro account is an essential part of correspondent banking in which a foreign bank acts as an agent providing financial services on behalf of a domestic bank.
Given the India’s focus on energy security and associated high import costs, rupee trade is an effective way to mitigate the spillovers of this global change especially the challenges faced on account of currency volatility and reserve changes.
And this would certainly ease India’s hard currency outflow substantially. Reduce the Dependency on US dollar requirements and Strengthen Rupee. This mechanism also may Reduce the Cost of Conversion Charges for Exporters and Importers, especially in the case of trade and commerce with neighbouring countries like Bangladesh as one of the largest India’s trading partner in South Asia.
India is the second biggest export partner for Bangladesh accounting for 12 per cent of the total. China, with a share of 21.5 per cent, is the biggest export partner for Bangladesh. But for India, “Buck doesn’t stop here”.
Aaccording to an earlier report published by IANS, India is looking to expand the rupee trade in Africa, UAE, and Saudi Arabia as well. India and UAE have already started talks around the rupee settlement mechanism.
During his two days visit starting December 22-23, there was also a discussion on resolving the pending issues between the both the countries.
In their bilateral meeting, Bangladesh Commerce Minister Tipu Munshi and Indian commerce and industry minister Piyush Goyal agreed to work together in order to resolve the issues raised during the course of the meeting and ensure that the outcomes expected in the Joint Statement by the two leaders, PM Narendra Modi and PM Sheikh Hasina, in September 2022 are achieved in letter and spirit at the earliest.
Notably, the India-Bangladesh joint statement was issued after Prime Minister Sheikh Hasina’s India visit in September this year and meeting with Indian Prime Minister Narendra Modi had a key emphasis on signing the trade pact.
-Dr. M Shahid Siddiqui (PhD); Follow via Twitter @shahidsiddiqui
