India and Bangladesh should enter FTA : World Bank

New Delhi, Mar 31 (UNI) A World Bank study today suggested that India and Bangladesh should sign a Free Trade Agreement (FTA), with both standing to gain from such an arrangement and India continuing with its unilateral liberalisation policy.

The study assumes significance in the context of SAARC summit beginning here on April 3, where the heads of state government of the member countries will outline the future agenda of the regional trading agreement.

The study maintained that India, the largest member of the SAARC, can benefit from the FTA as its trade with Bangladesh is small in relation to the overall trade, the gains would mostly stem from expanded exports of surplus grains.

The FTA can also help Bangladesh, as consumers will have access to cheaper exports from India, the study claimed.

Meanwhile, it warned that with cheaper imports, the Indian producers might collude among themselves or with Bangladeshi importers to artificially increase prices or keep out cheaper imports.

The study stated that to minimise such risks, Bangladesh has to pursue similar economic benefits from multilateral liberalisation while it lowers trade barriers with India.

''Besides FTA, some coordinated improvements in the transport, storage and administrative infrastructure at land borders would yield substantial benefits for both the countries,'' the study pointed out.

UNI