Bangladesh's trade gap with India reduced slightly in the just concluded fiscal (2011-12) as compared to that of the previous fiscal. According to Bangladesh Bank statistics, Bangladesh imports goods worth about US$ 4.401 billion from India in last fiscal as against the country’s total export of US$ 498.419 million leaving a trade gap of US$ 3.901 billion in favour of India. In the previous fiscal the gap was US$ 4.456 billion. The sources said the actual trade gap would be much higher as bilateral trade also takes place through informal channels between the two next door neighbours.
The trade imbalance with India registered continuous rise although  India allowed the duty free entrance of 46 RMG products and reduced negative lists. The country witnessed a persistent trade deficit growth with India over the last several years.
The country experienced substantial growth in import from India as it emerged as one of the largest source of raw materials for Bangladeshi manufacturing industries, at the same time it faces various non tariff barriers to enter Indian market which increases the trade deficit, said an exporter.
Bangladesh's export to India is gradually improving and reached half a billion dollar in 2010-11 from $289.42 million in 2006-07. 
In the just concluded fiscal (2011-12), Bangladesh exported goods worth about US$
498.419 million to India as against US$ 512.51 in the previous fiscal registering a negative growth of 2.75 per cent.
Bangladesh imported Indian goods worth around $4.570 billion in the fiscal 2010-11. The import figure was US$ 3.214 billion in 2009-10, US$ 2.843 billion in 2008-09, US$ 3.384 billion in 2007-08 and US$ 2.268 billion in FY-2006-07.
The export figure of the country was around US$ 512.51 million in 2010-11. The export figure US$ 304.63 million in 2009-10, US$ 276.58 million in 2008-09, US$ 358.08 million in 2007-08 and $289.42 million in fiscal
2006-07.
Analysts and businessmen attributed the reasons to various non-tariff barriers including testing and certification and weak border infrastructure that dampen the export potentials.
Some of them also blamed diplomatic failure for the scenario. "Even after duty-free access of Bangladesh-made RMG to India, Bangladesh could not make any significant growth in export mainly because of non tariff barriers and government's lack of initiative in negotiation with the counterpart on different trade related issues," said a businessmen.
Bangladesh's exports to India increased substantially in the middle of last fiscal since Indian prime  minister Dr. Man Mohan had eased the sensitive item list of his country allowing duty-free and quota-free access of about 46 Bangladeshi garment products.
But the tempo of exports has slowed down in recent days due to depreciation of Indian rupee. Rupee has been depreciated around 20 per cent since last September when the duty free imports were allowed.
Bangladeshi exporters often face problems as India refuses to accept certification of Bangladesh Standards and Testing Institute (BSTI), although Bangladeshi entrepreneurs are highly competitive and capable of competing with any country.
According to a study conducted by the Bangladesh High Commission in New Delhi last year, harsh testing requirement, complex harmonised code classifications, inadequate infrastructure, and special labelling requirements are among major non-tariff barriers that Indian authorities have imposed, to hinder Bangladeshi exports to that country
The study also noted that Indian authorities impose mandatory standard requirements, additional technical regulations, and difficult banking norms. Apart from that the Indians also slap duties, other than tariff, and restrict the entry of Bangladeshi trucks into India. Exporters complained that each item of food consignment is subject to certification by port health officers, which is a month long process, and seriously hamper exports of food items to India. About exports of soaps, sources said, all types of soaps are subjected to chemical tests and samples are sent to laboratories that take more than a month to issue clearance.
Despite huge demand for cement, steel products, electrical and electronic goods, and leather products, in North East India, these products need to comply with Indian Bureau of Standards’ (BIS) mandatory marketing and standard requirements, which also affect exports, the deputy high commissioner noted.
Most of the land customs stations on the Indian side have no warehousing facilities, and goods exported from Bangladesh are kept in the open, till customs formalities are over, which, in turn, result in huge damage and inconsistent supply of goods.
The number of bank branches in north-eastern India, that are allowed to handle foreign currency transactions and open letters of credit, is very limited. Even these are not authorised to carry out direct transactions with Bangladesh, which is a major impediment for Bangladeshi exports to North Eastern India.
“The existing para-tariff and non-tariff barriers, imposed often by Indian authorities on shipment from Bangladesh to India, are major obstacles, hindering growth of Bangladesh’s exports to India,” said an entrepreneur adding that Bangladesh’s current exports to India would increase two- to three-folds, if these barriers are removed.
Increased import of machinery, automobiles, railway locomotives and carriages, equipment, cotton, yarn/thread, fabrics etc boosted the Indian exports to Bangladesh, traditionally an import-dependent country, traders said.
Bangladesh's producers, entrepreneurs and traders import from India because they find Indian goods to be competitive and good value for money.

News: The Independent/Bangladesh/23-Aug-12