In a strategic move, India is taking a second look at finalising a trade agreement with Bangladesh as the latter explores the prospect of joining the China-led Regional Comprehensive Economic Partnership (RCEP), as reported by Economic Times.
The decision comes after India withdrew from the RCEP pact in 2019, citing worries about trade imbalances with China and other unaddressed issues.
The RCEP currently includes the 10 Association of Southeast Asian Nations (ASEAN) countries, along with Australia, China, Japan, South Korea and New Zealand.
With Bangladesh being India's largest trade partner in south Asia, the implications are significant.
Although negotiations for a bilateral comprehensive economic partnership agreement are underway, concerns have emerged with Bangladesh considering RCEP membership.
The reduction in Bangladesh's overall imports and its contemplation of RCEP participation have prompted India to approach the situation carefully.
Officials are particularly mindful of potential impacts on sectors such as cotton yarn and edible commodities.
Notably, India's exports to Bangladesh reached $6.04 billion in April-October (FY24), with imports totaling $1.15 billion during the same period.
Also, the European Union's recent decision to extend preferential access to Bangladesh's exports holds particular significance, especially in light of the EU's suspension of benefits, effective 1 January 2023, under the generalised system of preferences for India's exports, encompassing textiles, chemicals, leather, plastics, metals and machinery.
Nayan Dwivedi is Staff Writer at Swarajya.
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