Of Bangladesh's SEZ

Bangladesh is offering an exclusive export processing zone for Indian companies to garner investment from its giant neighbour. Amid signs of rapidly rising trade between the two neighbours, sources said, Indian companies are looking to step up investment too. To sweeten the deal, tax holidays for three to 10 years are on offer. “There are 10-12 export processing zones in Bangladesh and we expect Indian companies to come. Trade relations are improving and we have said we can allow Indian companies to take over some of the EPZs,” said a senior Bangladesh government official. Indian investments in Bangladesh add up to about $600 million (over Rs 3,000 crore), and this is expected to go up substantially as economic ties deepen between the two neighbours. “There is an export processing zone (EPZ) exclusively for Korean firms and we can do the same for Indian companies,” the official said adding that they expect a robust response from Indian firms. After a rush of investment in SEZs in India, flow of projects has dried up after the government announced its intent to withdraw tax concessions and several of the large projects ran into land acquisition hurdles. The official said several Indian textile firms are setting up base in Bangladesh taking advantage of the cheap labour costs and tariff concessions on offer in developed countries. “Some companies are manufacturing in Bangladesh and exporting from there while some Indian buying houses have started operations and are sourcing material from there,” the official said. Trade ties between the two countries have shown steady improvement as political engagement between New Delhi and Dhaka has gathered pace. According to the latest available Indian government data, imports from Bangladesh have shot up 85% to nearly $300 million during April-September, 2011. Within this it is textiles and raw jute imports that have seen a steep rise. Raw jute imports from Bangladesh rose over 500% to $54 million, while readymade garment imports rose nearly three-fold from $8 million in the first half of 2010-11 to $22 million during April-September, 2011. Import of made-up of textiles also increased to $27 million. India had offered tariff concessions as well as duty-free import quotas to Bangladesh to boost trade ties. India’s exports to Bangladesh have, however, remained stagnant at around $1.4 billion during the first half of the current fiscal.