India’s decision to welcome investment from Bangladesh also raises an expectation that foreign trade policies of both the countries will get further liberalized. The India-Bangladesh border stretches 4,096 kilometer. The two countries are geographically as also culturally linked to each other. It is interesting to note that roughly 161 million people of Bangladesh depend on number of articles of day to day use produced in India. With the recent announcement by RBI the residents of Bangladesh will now have an opportunity to play a participative role in strengthening the economic activity in India as also in improving the supply side of the goods required by them.

Recent Steps taken by India in FDI with Bangladesh

The permission to make foreign direct investments in India by individuals and companies resident in Bangladesh, in the shares of Indian companies is a welcome development and is likely to be beneficial for both the countries. As per the current FDI framework, a person who is a citizen of Bangladesh or an entity incorporated in Bangladesh may, with the prior approval of the Foreign Investment Promotion Board (FIPB) of the Government of India (GOI), purchase shares and convertible debentures of an Indian company under Foreign Direct Investment Scheme, subject to the terms and conditions specified in the FEMA, which is subject to amendment from time to time.

Recent Deal after the removal of ban on Bangladesh FDI

A total of 181 FDI and joint venture investment proposals from India worth over US $ 435 million have been registered with the Board of Investment, Govt. of Bangladesh in sectors such as agro industry, textiles, chemicals and engineering industries. Out of 181 projects, more than 57 are already at the stage of production. This remarkable development in the trade market would also lead to greater investments from India into Bangladesh. When interdependence has become a globalized phenomenon, it’s high time that neighbours resolve their conflicts and look forward towards economic co-operation. An improved co-operation in the field of commerce and trade among South Asian region is imperative.

Let us hope that the step taken by RBI has the desired impact in strengthening the South –Asian co-operation. In conclusion, while Asia playing such a big role in world economy, South Asia can emulate, a model like European Union for free movement of goods and labour to make their trade strong.