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Bangladesh and India are moving to accelerate negotiations on a Comprehensive Economic Partnership Agreement (CEPA), aiming to deepen bilateral trade, reduce tariff and non-tariff barriers, and expand investment flows.

Officials say the proposed deal is designed to go beyond a traditional free-trade agreement by covering trade in services, investment facilitation and regulatory cooperation alongside tariff reductions.

The initiative has gained urgency as Bangladesh prepares for its graduation from the least-developed country (LDC) category in 2026, although the government has sought a three-year deferral. The agreement is expected to help Bangladesh retain smoother access to the Indian market in the post-graduation period while opening new avenues for business, supply chains and economic collaboration.

Under the proposed framework, Bangladesh is seeking better market access for key sectors such as ready-made garments, pharmaceuticals and agricultural products, while also aiming to attract greater Indian investment into its special economic zones.

Talks on CEPA date back to 2018, when both sides first explored the idea and later agreed to conduct a joint feasibility study. The study, carried out by the Centre for Regional Trade of India and Bangladesh Foreign Trade Institute, found that such a deal could help Bangladesh retain trade benefits currently enjoyed under the South Asian Free Trade Area in the post-LDC era.

Despite close geographic proximity, trade economists point to persistent non-tariff barriers and logistical bottlenecks—particularly along the Benapole-Petrapole corridor—as major constraints on bilateral trade.

Momentum for the negotiations picked up earlier this month following a meeting between Indian High Commissioner Pranay Verma and Bangladesh’s commerce minister. Both sides agreed to accelerate technical consultations to conclude the agreement at the earliest possible time.

However, several complex issues remain unresolved, including rules-of-origin requirements, anti-dumping measures on certain Bangladeshi exports and the harmonisation of regulatory standards.

Both countries are also exploring ways to expand border trade facilities and improve multimodal connectivity—such as rail and inland waterways—to support higher trade volumes under the agreement.

Policymakers increasingly view the CEPA not just as a tariff-cutting arrangement but as a broader strategic framework for regional economic integration, particularly as Bangladesh’s external trade landscape evolves.