Bangladesh is now India’s largest trade partner in South Asia, replacing Sri Lanka at the top spot, reported The Island on Saturday.
According to the paper, analysts blame the deterioration of the commercial relationship between the two countries on “tariff issues and India’s growing tensions with Sri Lanka over the Tamil question".
It also highlights India’s “better ties” with their western neighbour, which has enabled them to allow concessional tariff rates on textiles from Bangladesh.
"There has been a fair amount of surge in agricultural commodity exports to Bangladesh. Their exports have also increased due to concessions given on textiles. Total trade volumes will be in excess of $5 billion (around INR 273.50 billion) in the current financial year," said a Commerce Ministry official.
"To move to the next phase of economic ties with Sri Lanka is going to be difficult,
"There is no bonhomie between India and Sri Lanka that they would want to push trade relations to the next level."
According to The Island, India’s trade with Bangladesh rose to $4.5 billion from $3.3 billion between April (2012) and January (2013). During the same time period, India’s trade with Sri Lanka however fell from $4.2 billion to $3.5 billion.
The official said that Sri Lanka’s increase of customs duty on cars from India is partly to blame for the drop. The duty on cars is now 200% - 350%, up from 120% - 291% before April last year.
