Bangladesh Trade with India: Trends and Patterns

Abstract

Bangladesh has a large and persistent trade deficit with its neighboring country India over the years. This paper explored the trends and patterns of trade between these two countries using both aggregated and disaggregated data. More specifically, it examined the relative position of the two countries in global trade, explores the overall trend in exports to and imports from India, and the trend in trade balance using aggregate level data. Further, utilizing some disaggregated data, analysis is conducted regarding the commodity composition of Bangladesh exports to and imports from India by major product categories. Additionally, the paper estimates revealed comparative advantage (RCA) to reflect inter-industry trade based on comparative advantage by HS-2 digit commodity groups. The paper finds that India has a much stronger position in the global trade vis-A -vis Bangladesh and that India strongly dominates Bangladesh in bilateral trade, resulting in a very large and persistent trade deficit with India. At a disaggregated level, the paper finds that Bangladesh has comparative advantage in some products whereas India has comparative advantage relatively in more product categories.