State Minister for Foreign Affairs Md. Shahriar Alam has said Bangladesh and India have stepped into a new era that will help the economies of both countries and promote bilateral trade.

He also observed that it could ease the net demand for foreign exchange — US dollars — to some extent for settlement of current account related trade flows, and will also reduce cost of doing business.

The state minister urged Indian businesses to take advantage of the most liberal investment regime of the region in Bangladesh.

Shahriar Alam attended the inauguration of EBL-India Business Desk at Eastern Bank Limited’s head office in Dhaka’s Gulshan as the chief guest on July 11.

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While speaking, he referred to the mechanism ‘Bangladesh-India Trade Settlement in Indian Rupee’ announced earlier on Tuesday.

The High Commission of India in Dhaka and Bangladesh Bank launched trade between India and Bangladesh in Indian rupees (INR) on July 11.

The programme saw overwhelming participation of senior officials of the government of Bangladesh, members of the banking/financial institutions, business community, and media houses.

The event was co-hosted by Indian High Commissioner Pranay Verma and Bangladesh Bank Governor Mr. Abdur Rouf Talukder.

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The High Commissioner highlighted that the India-Bangladesh relations had transformed significantly over the last decade under the visionary leadership of Prime Minister Narendra Modi and Prime Minister Sheikh Hasina and that the visibly growing economic and commercial ties and connectivity links between the two countries was one of the most important manifestations of that transformation.

He also underlined the significant expansion of bilateral trade relations and the concerted effort from the governments of both countries to find new ways to boost economic engagement.

The Indian High Commissioner said that the launch of the new mechanism to settle bilateral trade in INR was a culmination of the efforts by the central banks of both countries, which would help in reducing dependence on foreign exchange reserves for bilateral trade, reduce transaction cost and time, improve speed, efficiency and convenience of trade settlement and therefore enhance competitiveness and overall trade volumes.

He also acknowledged that this mechanism was launched in response to a long–standing demand of local businesses, and that it has tremendous potential to further enhance bilateral trade in the longer-term, especially in the context of the Comprehensive Economic Partnership Agreement (CEPA), for which negotiations are expected to start soon.

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The governor of Bangladesh Bank said that under the growing geo-political complexities, countries across the world are struggling economically. He stressed that the launch of India-Bangladesh trade in Indian rupee (INR) will minimise complexities and open new avenues for trade promotion.

The Indian banks currently identified to participate in this new mechanism from India are the State Bank of India and the ICICI Bank, whereas the designated Bangladeshi banks are Sonali Bank and Eastern Bank Ltd.

Bilateral trade settlement in INR entails each of the designated Bangladeshi Banks opening a Special Rupee Vostro Account (SRVA) in the designated Indian Banks.

To formally launch trade in INR, a formal ‘Exchange of the Letters of Credit, i.e., LC documents in INR’ between the first exporter and importer through their banks was also carried out.

The first export in INR from Bangladesh was done by Tamim Agro Industries Limited, Bogura, Bangladesh for INR 16 million. The import LC was opened by ICICI bank in India with SBI Bangladesh being the Bank of the exporter.

The first import in INR in Bangladesh was done by Nita Company Limited, Dhaka, Bangladesh for INR 12 million. The import LC was opened by SBI Dhaka Branch in Bangladesh with SBI CAG branch Mumbai being the Bank of the exporter (Tata Motors).