Land Boundary Swap Agreement and Improvement in Trade Ties

Land Boundary Swap Agreement and Improvement in Trade Ties

Question: India and Bangladesh have recently signed the historic Land Boundary Swap agreement. Discuss the key highlights of this agreement and also outline the attempts made to improve trade ties between the 2 nations.

Land Boundary Swap Agreement: Highlights

• India and Bangladesh have signed an agreement on 6th June 2015 to simplify the border spanning 4000 km and clarify the identities of 52,000 persons living in the enclaves for over 4 decades

• As per this deal, the two nations will swap close to 200 tiny enclaves dotted around the border

• More than 50,000 people are currently staying at these tiny enclaves wherein citizens are of one country but located in the other

• As per this historic Land Boundary Swap Agreement, both sides will exchange the enclaves enabling citizens to reside in their own countries

• This dispute dates back to colonial times and has been a contentious issue since then

• The British departed from India before the proper democrat of the border

• This had left individuals residing in the enclaves stateless and unable to access public services

• The countries will now be able to administer enclaves on its territory and enclave citizens will now be able to make choices regarding their nationality and where they want to live

• The deal had been originally agreed to in the 1970s by Indira Gandhi and Sheikh Mujibur Rahman, but fell through following the latter’s assassination

• Prior to the LBA, 106 Indian enclaves in Bangladesh and 92 Bangladeshi enclaves in India are islands of foreign territory within each nation
• As per this agreement, each country will take the enclaves most on its territory and residents have the right to stay where they are or move to the other nation

Improvement of Trade Ties: Outline

• The two nations signed a total of 20 agreements, from which several were in place to boost trade and security along the border, combat human trafficking and share water resources

• String of trade and investment agreements have accompanied the land deal

• This includes USD 4.5 billion investment in power and USD 2 billion credit facility for Bangladesh

• Adani Power Limited of India and Reliance Power signed deals with state run Bangladesh Power Development Board for developing 6 units of power plants for producing electricity of 4600 MW

• Reliance has committed to invest $3 billion to produce 3,000 MW power, while Adani will establish two coal-fired plants with a total capacity of 1,600 MW, totalling more than $1.5 billion.

• India has also accorded the status of zero tariff imports for all except 25 tariff lines to Bangladesh

Facts and Stats

• The two countries are looking to boost trade and security along the border and to fight human trafficking.

• India's announcement of a new credit line to Bangladesh follows a USD 1 billion assistance provided in 2011 for infrastructure development.

• Bangladesh will be able to double power imports to India totalling 1100 MW

• Trade between India and Bangladesh on an aggregate stood at USD 6.9 billion for 2014-2015

• Exports to Bangladesh stood at USD 6.2 billion

• Cumulative total investments by India in Bangladesh stood at $2.5 billion in 2012-2013