The Government will, on May 29, finalise the list of Indian companies interested in developing Special Economic Zones (SEZs) in Bangladesh.
The development comes nearly two years after India and Bangladesh signed a Memorandum of Understanding (MoU) in June 2015 for “cooperation on establishing Indian Economic Zone (IEZ) in Bangladesh.”
The meeting — slated for May 29 to finalise such a list — will be attended by officials including from the Ministries of External Affairs and Commerce as well as representatives from industry bodies including the FICCI and the CII.
The Commerce Ministry-recognised bodies including Federation of Indian Export Organisations and EPCES (Export Promotion Council for Export oriented units and SEZs) will also take part in the meeting, which will discuss a study done in this regard by consulting firm PwC.
DLF, Mahindra
According to industry sources, the companies keen on developing SEZs in Bangladesh include DLF, Mahindra, Unitech, Tata group, K Raheja Corp, Assotech and Phoenix Group. In all, around 25 developers are likely to be selected, they said, adding that the list of companies will soon be handed over to the Bangladesh government for their consideration.
As per the India-Bangladesh MoU, “the construction of the Zone (IEZ) and Indian investment in the Zone will be facilitated through the concessional Line of Credit (LoC) extended by the Government of India to the Government of Bangladesh.”
The MoU, aimed at increasing Indian investment in Bangladesh and giving a greater role to the private sector, was inked during the Bangladesh visit of Prime Minister Narendra Modi in June 2015. India had welcomed Bangladesh’s decision to allocate land for SEZs for India.
Mongla and Bheramara in Bangladesh were identified as possible locations for the SEZs. The India-Bangladesh joint statement during the India visit of Bangladesh Prime Minister Sheikh Hasina in April 2017 had said officials have been asked to expedite the setting up of Indian SEZs on the identified locations in Bangladesh.
Mr. Modi had appreciated Ms. Hasina for assigning 1005 acres at Mirsarai for setting up an Indian SEZ and encouraging Indian businessmen to increase investments in Bangladesh. Sources said India has sought about 480 acres in Bheramara and 200 acres in Mongla to develop SEZs.
To attract investments into its SEZ segment, Bangladesh government offers incentives including exemption from income tax, VAT, customs duty and stamp duty, removal of ceilings on FDI, full repatriation of capital and dividend, no curbs on issuance of work permits as well as resident visas and citizenship for investments over a certain limit.
Trade balance is heavily in India’s favour, as out of the total bilateral trade of $6.8 billion with Bangladesh in 2015-16, India’s exports were worth $6 billion. Boosting investments from India into Bangladesh is aimed at offsetting this trade imbalance.
The move to increase investments from India also comes in the backdrop of China in October 2016 promising investments worth around $24 billion in Bangladesh. In 2015-16, out of the total Foreign Direct Investment net inflows of $2 billion into Bangladesh, India accounted for just $88 million — with a bulk of the Indian investment going into textile & weaving ($15.5 million) and banking ($23.95 million).
