India - Bangladesh Relations, MVA and BBIN Pacts UPSC IAS Target

India - Bangladesh Relations, MVA and BBIN Pacts UPSC

03 Oct 2019

Category : International Relations

Topic: India - Bangladesh Relations, MVA and BBIN Pacts UPSC

India and Bangladesh are South-Asian neighbours. Political relations b/w the two countries were followed by the visit of Indira Gandhi (the Prime Minister) on March 19, 1972, at Dhaka. At this place (in Dhaka), she had signed a treaty “Indo-Bangladesh friendship, co-operation, and peaceful relations”, widely known as the Indira-Mujib treaty of 1972. The Prime minister of Bangladesh at that time was Sheikh Mujibur Rahman.

History of India and Bangladesh

The relations of India with Bangladesh are cultural, civilizational, social, and economic. The two countries were strong pals during the Bangladesh Liberation War in 1971. From the mid-1970s, however, relations deteriorated because Bangladesh developed closer ties with Islamic nations, joined the Organization of the Islamic Conference, and increased emphasis on Islamic identity over the country's ethnolinguistic roots. The two countries developed different Cold War alliances in the 1980s, which further chilled bilateral relations. Also, with the inception of economic liberalization in South Asia, they forged greater bilateral engagement and trade. The historic Ganges Water Sharing Treaty was concluded in 1996. In terms of counter-terrorism, India and Bangladesh are close strategic partners. They are also the largest trading partners in South Asia.

High -Level Exchanges and Visits

  • President Hamid represented Bangladesh at the Founding Conference of the International Solar Alliance in New Delhi on 11 March 2018.

  • Prime Minister of Bangladesh Sheikh Hasina paid a State Visit to India from 07-10 April 2017. During the visit, 36 bilateral documents were concluded in various areas like space, civil nuclear energy, defence, information technology, and capacity building, etc.

  • The Prime Ministers of both the countries also met on the sidelines of summits of CHOGM in April 2018 in London, BRICS-BIMSTEC in October 2016 in Goa, and BIMSTEC in August 2018 in Kathmandu.

  • Prime Minister Narendra Modi paid a State visit to Bangladesh on 6 &7 June 2015. During the visit, 22 bilateral documents were concluded including the exchange of instrument of ratification for the India-Bangladesh Land Boundary Agreement (LBA).

  • Minister of Finance and Corporate Affairs Arun Jaitley in October 2017 to sign the Dollar credit line agreement to operationalize the third Line of Credit of USD 4.5 billion to Bangladesh,

Bilateral institutional mechanisms b/w India and Bangladesh

There are more than 60 bilateral institutional mechanisms b/w Bangladesh and India in the areas of security, power energy, science and technology, defence, rivers & maritime affairs etc.
  • A Joint Consultative Commission (JCC) led by the Ministers of Foreign/External Affairs coordinates and oversees implementation of initiatives taken b/w the two countries.
  • The 4th JCC was held in Dhaka on 22 October, 2017.

Bilateral Trade and Investment b/w India and Bangladesh

When it comes to trade, Bangladesh is considered one of the biggest partners of India in South Asia. Bangladesh and India have trade agreement which is facilitative in nature. Bilateral trade between the countries has grown steadily over the last decade. India’s exports to Bangladesh for the (Indian) financial year 2017-18 (April to March) stood at US $ 8.46 billion and imports from Bangladesh during the financial year 2017-18 stood at US $ 0.68 billion.

Bilateral Trade Year
7 billion $ 2015-16
9.3 billion $ 2017-18

India-Bangladesh are the members of various regional trade agreements including:

  • The Asia Pacific Trade Agreement (APTA)
  • SAARC Preferential Trade Agreement (SAPTA)
  • The Agreement on South Asian Free Trade Area (SAFTA) which govern the tariff regimes for trade.
Under SAFTA, India has granted duty-free quota access to Bangladesh on all items except tobacco and alcohol. Various bilateral institutional mechanisms including Commerce Secretary Level Meeting, Joint Working Groups on Trade, Shipping Secretary Level Talks, Customs and Fisheries, and Sub-groups on Banking and Infrastructure meet regularly.

Four Border Haats:

  • Two in Tripura (Srinagar and Kamalasagar)
  • Two in Meghalaya (Kalaichar and Balat), have been set-up for the benefit of bordering communities.
Total Indian investment proposals in Bangladesh registered with the Bangladesh Investment Development Authority (BIDA) exceed US$ 3 billion. Collective FDI from India to Bangladesh has doubled from USD 243.91 mn in 2014 to USD 539.91 mn in June 2018. Indian companies have invested in numerous sectors like telecommunications (Airtel), FMCG (Marico), pharmaceuticals (Sun Pharma) and automobiles (Tata, Hero Motors) sectors in Bangladesh. During PM Sheikh Hasina’s visit in April 2017, 13 agreements worth around US$ 10 billion of Indian investment primarily in energy and power sectors in Bangladesh were signed.

Bhutan, Bangladesh, India, and Nepal (BBIN) had signed a framework MVA in June 2015 to enable the movement of passenger and cargo vehicles across borders among the four countries. Bhutan has not yet approved the pact for its entry to come into existence. Although, Bhutan had given its consent for the BBIN MVA to come into force amongst the other three countries - Bangladesh, India, and Nepal, which have already ratified it. The landmark MVA was signed by Transport Ministers of the BBIN countries in Thimphu, Bhutan on 15 June 2015. According to the pact, member countries would permit vehicles registered in other countries to enter their territory under certain terms and conditions. Customs and tariffs will be determined by the respective countries and these would be finalised at bilateral and trilateral forums.


The main objective of the pact is to provide seamless people-to-people contact and enhance economic interaction by facilitating cross border movement of goods and people. India and Bangladesh agreed to early operationalization of the Bangladesh-Bhutan-India-Nepal (BBIN) Motor Vehicles Agreement for movement of goods and passengers b/w the member countries that are ready to work towards a bilateral India-Bangladesh Motor Vehicles Agreement.

Importance of Bangladesh for India

  • A neutral Bangladesh ensures the suppression of assertive China in this region.
  • Bangladesh is a pillar of ActEast policy. It can act as a bridge to political and economic linkages with South East Asia.
  • The location of Bangladesh is a tactical wedge b/w NE seven states and mainland India. Each of these states is land-locked and hasn’t a long route to the sea through Bangladesh. Transit pact with Bangladesh will increase the socio-economic development of North-East India.

Major irritants with Bangladesh

  • Bangladesh uses the china card to enhance its dealing capacity against India
  • Illicit migration since the war of independence of Bangladesh in 1971
  • The Indo-Bangladesh border is tarnished for smuggling, apart from trafficking in drugs, people, and arms.
  • Bangladesh also shares fifty-four trans-boundary rivers, and the main problem is sharing water of river Teesta.