India and Bangladesh can earn more revenue from the border customs houses only through taking some reform measures, even though the two sides do not reach any free trade agreement (FTA), the World Bank (WB) suggested.

The Daily Star reported Sunday that the bank in a recent report said better infrastructure, faster clearance and reduced transaction costs would also brighten the prospects for Bangladesh exporters' finding market niches in India, especially if they rely on importing inputs from that country.

"The economic interests of India and Bangladesh would be maintained if they take reform measures which would affect smuggling in the border areas, whether or not they participate in an FTA," the report said.

The WB report on Studies on India-Bangladesh Trade, Trade Policies and Potential of FTA mentioned the bank's findings of eight smuggling channels, including five smuggling-prone zones along Bangladesh's western borders with India, and three in its north and eastern borders with India.

"Informal and illegal trade between India and Bangladesh is substantial and by some estimates, it could be as high as three- quarters of recorded trade. It is mostly one way -- from India to Bangladesh," the report found.

The bank, however, suggested that Bangladesh should bring down its existing high tariffs protecting import substitution industries by reversing policies under which protection rates drastically increased over the last seven years through usage of para-tariffs and customs duties.

In the report, the bank suggested that both the countries take some measures to check the illegal trade in the border areas so that revenue collection increases.

The WB also pointed out that the two countries should improve the infrastructure of the customs posts in their land border areas.

The reforms would also benefit India, first by reducing "black economy" activities in India associated with the bootleg border trade through Bangladeshi customs, and secondly by improving the access of Indian exporters to the Bangladeshi market, the bank said.

Source: Xinhua