In a strategic move, India, Japan and Bangladesh are in discussions to coordinate connectivity efforts in Bangladesh and India's north-eastern states to create regional value chains and attract manufacturers to the region over the next five years.

The plan involves adjusting tariffs, boosting connectivity and jointly courting investment, particularly from Japanese enterprises. This will eventually lead to India’s closer connection to countries on the Mekong River system such as Myanmar, Laos, Thailand, Cambodia and Vietnam.

According to sources familiar with the proposal, the aim of such a joint collaboration is to lure investment towards Bangladesh and India’s northeastern states from current manufacturing hubs in Southeast Asian nations like Thailand.

According to the sources, preliminary discussions for a joint approach are underway. Bangladesh has shown a positive response while the matter is under discussion by the Indian government. The Ministry of External Affairs did not respond to a press query.

The three countries are looking to take advantage of major connectivity projects that will be completed over the next few years. Japan has been active in sponsoring infrastructure projects in both Bangladesh and the northeast region of India. In the former, Tokyo has helped build the deep water Matarbari port. Japan has also funded road connectivity projects in India’s northeastern provinces. These efforts, allied to infrastructure building by India and Bangladesh, will help connect the region and attract attention and investment from the private sector.

Rather than looking at India’s northeast and other regional connectivity efforts in silos, this joint effort reflects a wider strategic vision to bind India and Bangladesh economically to Southeast Asia and Japan. This occurs in the backdrop of a strong Chinese effort to boost investment and infrastructure connectivity in Bangladesh. Beijing hopes to use trade and economics to expand its footprint and influence.

Even as infrastructure connectivity efforts continue, the three countries are considering discussions on a range of policy responses that will attract business to Bangladesh and India's northeast. It is proposed that New Delhi, Tokyo and Dhaka create a mechanism to discuss three key stumbling blocks to investment in the region: tariffs, customs procedures and connectivity.

Adding to this, India and Bangladesh are in the process of negotiating a Comprehensive Economic Partnership Agreement (CEPA) that is expected to boost bilateral trade. According to reports, Dhaka and Tokyo are also in talks to conclude an economic cooperation agreement that would spur trade and investment.

With infrastructure projects set to be completed over a five to ten year horizon, the proposal for joint discussions on investment promotion, customs and tariffs will set the stage for an economic boom in India’s northeast.

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