In 1947, Ratan Nandi’s (name changed) parents migrated empty-handed from East Pakistan (now Bangladesh) to Angrail, a small border village in West Bengal’s North 24 Parganas district. For many years thereafter, the family eked out a hand-to-mouth existence.

Today, those days are far behind them. Nandi is the proud owner of a two-storey house — thanks to his friends across the border. Like many of Angrail’s 8,000 residents, almost all of them Hindu, he has built a fortune smuggling cattle to Putkhali, across the border. “Everyone in this village is in the cattle trade,” concedes Munna, another smuggler. Sources in the Customs department estimate that the illegal business is worth Rs 20,000 crore annually.

Mutual dependence

The trade has transformed Angrail. Once impoverished, it is today dotted with palatial bungalows. Its men have lost interest in working the land. And the central government’s Mahatma Gandhi National Rural Employment Guarantee Scheme has few takers here.

While the cattle trade is illegal, at least on the Indian side of the border, there is also a large amount of official trade, something that has made Bangladesh India’s biggest trading partner in the SAARC (South Asian Association for Regional Cooperation) bloc. The neighbouring country depends on India for everything from yarn, chemicals and cereals to automobiles, iron and steel and engineering equipment. A World Bank report says Indian goods account for 15 per cent of its import bill.

If Bangladesh is dependent on cross-border trade, legal or illegal, to meet its demand for an array of industrial and agricultural products, the North-East Indian states of Tripura and Meghalaya are dependent on Bangladesh for food and market access.

The balance is so delicate that in March, the disruption in supplies from Bangladesh due to strikes sent the prices of food and vegetables soaring in Agartala. Tripura’s capital has little connectivity with the rest of the India except by air.

Business people from the mainland also rely on India’s neighbour. The gutkha industry depends on Bangladesh for betel nuts. Dipti Vyas’s multi-crore bridal-wear business in Ahmedabad, depends on embroidery and jari workers from Bangladesh. In West Bengal and elsewhere, hospitals and hotels have prospered thanks to Bangladeshi medical tourists.

Still, whether it is formal or informal trade, India does most of the exporting; Bangladesh’s exporters face many challenges accessing the Indian market.

The World Bank says Bangladesh could export more goods to India but for high tariff and non-tariff barriers (such as Customs and infrastructure issues) on the Indian side. Apart from garments and betel nuts, it can export textiles, knitted fabric, jute products, fish, rice-bran and a few other products.

It is in India’s long-term interest to correct the imbalance. Politically, this will lead to better relations and help secure the border. From an economic point of view, it will encourage Bangladesh to open its economy further to Indian goods, getting favourable terms and rates thanks to its geographical proximity. Better relations will also help India better connect to its North-East through Bangladesh, cutting travel time and enabling faster movement of goods.

Of blurred lines

India and Bangladesh have always had interlinked economies because of their history and, of course, the topography of the Bengal delta. The delta is full of shared rivers and water bodies, with people living next to each other along the border. Stark realities force them to live in mutual cooperation, without much regard to legality.

Sat-ghar and Kulupara, two villages located on the international border, perhaps best exemplify this complex human and economic relationship.

Once, a river ran alongside Sat-ghar, in West Bengal’s North 24 Parganas district. Today, all that is left is a 50-metre-wide riverbed, where rice is grown in the dry season. On the eastern bank, there is a hamlet of 20 households. The setting is similar to any other village in the delta, except that a couple of houses are in India and the rest are in Bangladesh’s Khulna district. They are divided by an imaginary line, an international border that runs through the river, making twists and turns in angles and degrees known only to the locals, the Border Security Force (BSF), and those who divided India.

In Kulupara village, located in the neighbouring Nadia district, Bajlu Mondal is obliged to his Bangladeshi neighbours, who allow him to cut through their land to get home. It saves him a 30-minute detour. Similarly, Mohammed Ila of Darshana in Bangladesh depends on his Indian neighbours from Gede, also in Nadia, to irrigate his farmland.

Haripakar, in West Bengal’s Dakshin Dinajpur district, has a mosque right on the zero line, with gates on either side of the border.

This shared topography, coupled with barriers to trading in some items, has created a thriving informal market. The trade in illegal cattle is particularly rampant, thanks to a huge demand for beef in Bangladesh and the world’s largest cattle population in India. Sunil Kumar, a BSF jawan posted in Sat-ghar, is keenly aware of the ground realities. He believes it would be better to ease restrictions. It’s economics and perhaps it is best to accept it. “Let all items, including livestock, be traded freely between the two nations,” says Kumar. In 2012, the BSF had made such a proposal.

Legalising the cattletrade will earn the Indian government some revenues, while allowing the BSF to focus its energies on combating the menace of fake currency, narcotics and gun-running.

When walls collapse

Any measures to free trade with Bangladesh need to ensure that the benefits are shared more equitably, instead of widening the trade surplus in India’s favour.

It took New Delhi two decades after drafting a “Look East” policy in the early 1990s to begin addressing the trade imbalance, allowing anti-India sentiments in Dhaka to gain ground in the interim.

In September 2011, the two countries finally inked a tariff pact under the South Asian Free Trade Agreement (2004) and the South Asian Preferential Trade Agreement (1993), leading to removal of trade barriers (by India).

In all, 61 items were allowed to be imported at zero duty. A vast majority (46) of these relate to textiles and readymade garments, arguably Bangladesh’s only high-value export item.

India’s exporters also have a greater incentive to export to Bangladesh, with Dhaka reducing tariffs by 20 per cent.

The initiative has worked. In 2011-12, bilateral trade shot up 34 per cent to $5.19 billion. India’s imports grew 25 per cent to $498 million. In particular, import of readymade garments jumped by over 50 per cent to nearly $55 million, albeit on a low base.

In 2013, Bangladesh replaced Sri Lanka as India’s largest trading partner in the SAARC region.

Indian investors had been wary of entering Bangladesh after the Tata Group called off its proposal to invest $3 billion in power, steel and fertiliser projects in 2008. But the improved bilateral relations have encouraged them to enter Bangladesh. Bharti Airtel’s acquisition of Warid Telecom in 2010 is a case in point.

Bilateral trade, which has more than doubled in the last five years, is set to grow faster, provided no new barriers are put up.

Border realities

The way forward may be clear. But if India is to have better trade relations with Bangladesh, it has to make sure things are smooth on the border. Kaji Shafiulla knows just how difficult the passage can be. A frequent traveller to India, the Dhaka native made his 14th visit to the subcontinent in April this year. He flew to Delhi, toured the city, and also visited Nainital before making his way to Kolkata.

When he heads back to Dhaka, Shafiulla usually prefers to travel by road — once across the border, it takes him less than seven hours to get to Dhaka. By road, the distance between Kolkata and Dhaka is just 450 km. However, the journey from Kolkata to Petrapole, India’s largest land Customs station, is tortuous and lasts five hours. A good part of the 69-km drive on the narrow Jessore Road is through congested towns and urban areas.

Petrapole itself is a nightmarish place. The immigration counter is shabby, making even the average Indian railway station look swanky. As for trade, long lines of trucks can be seen on either side of the border. “Petrapole is the biggest stumbling block in making bilateral trade more attractive for Bangladesh,” says a senior diplomat who does not want to be named.

For Bangladesh, the border with West Bengal is important, as it gives it access to the large mainland Indian market. Petrapole is its biggest access point to that market. It is close to the NH 2 (Kolkata-Delhi) and NH 6 (West Bengal-Gujarat) highways. So, despite its crumbling infrastructure, Petrapole is the most preferred route for bilateral trade and travel. The border checkpost accounts for nearly half of the over $5-billion bilateral trade between India and Bangladesh. Nearly half of the 1.5 million India-Bangladesh passenger traffic passes through it annually.

The movement of goods and people would have been much smoother, but for decades, Indian politics ignored the importance of ensuring easy access to Bangladesh. Now, when New Delhi finally feels the urgency to improve ties, it faces a very big hurdle — land acquisition, a subject of political brinkmanship in West Bengal.

Stumbling blocks

A Rs 300-crore road-widening project initiated in 2006-07, at the peak of the anti-land acquisition movement, has died a premature death. As things stand, thousands of trucks carrying cargo queue up on either side of the border for days — Indian authorities are unable to clear more than 400 vehicles a day.

“The bottlenecks make cargo movement through Petrapole three times costlier,” says Pramod Nahata, owner of ERT Shipping, a Kolkata-based clearing agent.

Mahadipur in Malda district, the most important border gate after Petrapole, simply discouraged imports till 2011-12 due to the “lack of infrastructure”. There is no proposal to upgrade this Customs point.

The checkpost in Hili may not be able to handle even one more truck. The border outpost, in the middle of a congested town of 30,000 people, has hardly any road space left.

As a cheaper alternative, the two countries are now looking to start coastal shipping, but that will take time.

For now, the focus remains on West Bengal, home to more than half of the Indo-Bangla land border, and a state topographically better located to allow Bangladesh access to a pan-India market.

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