Cementing Bangladesh-India ties through border haats

Prime Minister Narendra Modi's forthcoming visit to Bangladesh on March 26, will, among other things, celebrate the strong and multi-dimensional economic relations between Bangladesh and India. These relations include trade in goods and services, cross-border investment, energy trade and investment, coastal shipping and river-based connectivity.

One indicator of the strength of a cross-border bond is the extent of people-to-people contact, and the evidence here is remarkable: Pre-Covid-19, Bangladesh was the single largest source of foreign tourists in India, as well as the largest international market for India's medical services.

Less well-known, except perhaps in academic, policy and local circles, is the singular success story of the Bangladesh-India border haats, which are local markets that enable small-volume trading along the densely populated border. In 2011, the two nations flagged off the first of their border haats, trying to recapture the once-thriving economic and cultural relationships that had been truncated by the creation of national borders. Conceived as a confidence-building measure between the two nations, four border haats were set up between 2011 and 2015: Two in Meghalaya and two in Tripura. Initially, only local produce was permitted for trade. But subsequently, the range of items has been broadened to include goods of household consumption.

As part of a World Bank-CUTS study team that analysed the functioning of border haats, we were surprised at how well the haats had fulfilled their original mandate and perhaps even gone beyond it. What is the secret of their success?

One, haats boost the local economies around the border. They create new opportunities for all participants by increasing the income of vendors; opening new business opportunities for buyers who source from the haats and sell locally; enabling transporters to earn more on days when the haats operate and allowing small businesses such as food joints and vehicle repair shops to set up outside the haat premises.

Two, haats enable women to participate and be more visible, as compared to their near-absence in formal cross-border trade. Women are active as buyers in all haats. In the Meghalaya haats at Kalaichar and Balat, all the women buyers were also mini entrepreneurs, reselling the products they bought from Bangladeshi sellers. Much more is possible, across all haats.

Three, and most important, haats have helped build trust by connecting people. Haats have not only created new bonds and friendships among people residing on either side of the border but have also rejuvenated old family ties that were temporarily disconnected by political barriers. For example, a young woman in Srinagar, Tripura, met with her aged mother after a 13-year separation. Mitali was a young girl living in Bangladesh. After her marriage 15 years ago, she moved to her in-laws who were living in the neighbouring area, in Indian territory. When a fence came up along the Bangladesh–India border, the requirement of passports and visas stood in the way of Mitali's visits to her parental home. The border haat that links East Madugram and Srinagar has given them a place to reconnect.

Four, the haats are not a substitute for formal trade, which means that the commerce ministries of the two countries need not fear a loss of control over cross-border commerce. A simple thought experiment makes this clear. If the purchase limit for each individual at the haats were doubled, the haat operational days increased to two days a week, and 50 haats established along the border, compared to the current four, the total trade generated would still be only about 1% of the total formal trade between the two countries. Hence, commerce ministries should rest easy about the potential loss of tariff revenue or leakages into the formal trade system.

Five, haats are strongly supported by border agencies. They have reduced smuggling and contributed to a peace dividend in their localised precincts, and provided relief to the border enforcement agencies. Thus, border agencies have called for a large increase in the number of haats along the Bangladesh-India border.

Given such a strong endorsement from almost all stakeholders and the unambiguously positive impact on local communities, it is surprising that more border haats have been somewhat slow in coming. According to a press release from the department of commerce, India, 10 more border haats are in the offing. Both countries would do well to increase the pace of construction and implementation of the new haats, while also streamlining procedures and improving facilities, especially for women.

The success of these border markets also prompts a more ambitious thought.

Could countries with more fraught bilateral relations, such as India-Pakistan or Afghanistan-Pakistan, also pilot a border haat model, putting people at the centre of the endeavour? Could the Wagah-Attari border provide the venue for a controlled border haat experiment that could be gradually scaled up, depending on the experience?

Sanjay Kathuria is Senior Visiting Fellow, Centre for Policy Research, and teaches at Georgetown University and Ashoka University

Nikita Singla is associate director, Bureau of Research on Industry and Economic Fundamentals, New Delhi