Exports to India shot up by 68 percent, amounting to $241.96 million in fiscal 2005-06. In the preceding year, they stood at $143.66 million only.

On the other hand, imports from India dropped by around 8 percent, totalling $1,868 million in the last financial year from $2,025.78 million in FY 2004-05, according to Export Promotion Bureau (EPB) statistics.

The trade deficit with the neighbouring country ballooned to a record $2,003 million in 2003-04. However, it came down to $1,882 million in the following year and $1,626 million in FY 05-06.

"Exports to the northeastern states of India increased substantially in the last financial year," Mir Sahabuddin Mohammad, vice-chairman of Export Promotion Bureau (EPB), told The Daily Star.

Explaining, he said the banks in the northeastern India earlier could not open letters of credit (L/Cs) for imports from Bangladesh, discouraging the potential importers. But now they can open L/Cs, which is a step forward in facilitating trade between the two countries, he noted.

Besides, EPB had organised several exhibitions in India and received a good response from the Indian importers and buyers, observed the EPB vice-chairman adding there are demands for Bangladeshi products including toiletries, cosmetics, melamine, fish, leather and ceramics in these Indian states.

Some non-tariff barriers like mandatory testing required by India, inadequate banking facilities and poor infrastructure at the land ports are hindering Bangladesh's export growth to India, local exporters said.

India deliberately tries to stall import from Bangladesh, as its land customs officials are not informed about the preferential market access given to Dhaka by New Delhi, according to a study jointly carried out by a Bangladeshi and an Indian chamber.

"It is almost impossible to export products to India if the exporters have to undergo cumbersome and cost-incurring certification procedures," the study styled "Enhancing the Trade and Investment between Bangladesh and Northeast India" pinpoints how difficult it is to export to India.

Conducted by Chittagong Chamber of Commerce and Industry (CCCI) and Tripura Chamber of Commerce and Industry (TCCI), it also cites examples of different goods having difficulty entering the Indian market.

In FY 2005-06, India restricted import of jute products from Bangladesh by pushing up the import duties substantially and by imposing other non-tariff barriers. The action was meant to stem the import of jute products from Bangladesh that rose by more than 500 percent during April-November period of that fiscal.

The trade between Bangladesh and Northeast India through informal channels is many times higher than that done through formal channel.

It is widely believed that the total volume of unofficial trade between the two countries is more than $2 billion annually and of that amount, over one-third occurs between Bangladesh and Northeast India.

Though routes and channels for formal trade between the two countries are limited, the scope for informal trade is unlimited due to the porous nature of common border.