



































Impact of Fence on Informal Trade and Livelihood of the Border Residents in Bangladesh: (An Empirical Study in Selected Areas of Panchagarh)


American Interdisciplinary Journal of Business 

and Economics 
ISSN: 2837-1909| Impact Factor : 4.6 

Volume. 9, Number 1; January-March, 2022; 

Published By: Scientific and Academic Development Institute (SADI) 

8933 Willis Ave Los Angeles, California 

https://sadipub.com/Journals/index.php/aijbe 

 

 

  

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MAPPING THE IMPACT OF INDIAN BORDER FENCE ON 

INFORMAL TRADE IN BANGLADESH 

 

 

Anamika U 

Bangladesh University of Professionals, Bangladesh 

 

Abstract: This study evaluates the impact of the fence constructed by India along its border with Bangladesh 

in 1983 on the informal and formal trade as well as the local people's livelihood. The research focuses on the 

Panchagarh District, one of the regions affected by the construction of the fence, utilizing a mixed-method 

approach that combines qualitative and quantitative techniques of analysis. The study highlights the historical 

trade relationship between India and Bangladesh and investigates various forms of formal and informal trade 

between the two countries. The empirical data collection conducted on Kajal-Dighi village under Kaliaganj, 

Laiyapara, Banderdanga, Paharipara under Borososhi, and Banglabandha under Tetulia Upazilla of 

Panchagarh district reveals the acuteness of the informal trading in non-fenced areas. The study finds that 

informal trade is still continuing and has significant effects on the local people's livelihood, causing 

unemployment for farmers and missing trust between the Border Guard Bangladesh (BGB) and the Indian 

Border Security Force (BSF). The paper provides alternative solutions for mitigating the fence's impact on 

local people's livelihood while creating trade policies that will benefit both countries. The study's 

recommendations highlight the need for reasonable and rational tariff structures for imported goods, reducing 

the cost of agricultural product cultivation, creating awareness among border residents, regular monitoring 

of the fence, and organizations focusing on development projects for needy people in border areas. The 

research concludes that addressing informal trading and its impact must be a priority to build a harmonious 

relationship between countries. 

Keywords: Border, Impact, Fence, Informal trade, Formal trade, Livelihood, Bangladesh, India. 

 

Introduction: 

The border between Bangladesh and India is one of the most significant issues for the border arena people's 

daily lives, creating unwarranted division, and hampering relationships. However, despite the physical 

boundary, people still meet and do business within themselves, more connected with their communities than 

countries. The fence constructed by India along its border with Bangladesh was erected to stop unlawful 

migration and illegal trading, interrupting informal and formal trade between the countries. This study 

evaluates the impact of the fence on informal and formal trade as well as the local people's livelihood, 

utilizing a mixed-method approach that combines qualitative and quantitative techniques of analysis. The 

research focuses on the Panchagarh District, one of the regions affected by the construction of the fence, and 

aims to identify development initiatives for border residency people, and the impact and consequences of the 

fencing on the local people's lives. The study also highlights the social condition of the local people living in 

the border area and alternative solutions to mitigate the fence's impact on their livelihood. To this end, this 

research will investigate the informal and illegal trade along the border, the fences' political and security 

challenges, and how development initiatives can be implemented to create a harmonious relationship between 



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India and Bangladesh while addressing informal trading and its impact on security, the economy, and the 

livelihood of local people. 

After the fencing there were significant issues that came to light. One of the main reasons for fencing is 

informal trade which is still going on and hampers the development of the Border arena people. Informal 

trade is one of the most significant cruxes in the border area. Every year thousands of products are being 

informally traded through these two borders. Human trafficking, drug trafficking, different animals, pirated 

DVDs of films etc are the main things about Informal trade.  

There is absence of education in the boundary zone. Individuals don’t get appropriate education from the 

early age. This issue of education is hampering their advancement and drives them towards unlawful 

exercises. The central government doesn’t have direct control over the border residency people as the people 

of border area are more connected with the local authority and they often support the cross border relation.  

BGB (Border Guard Bangladesh) and the local people have mistrust between them. When someone is being 

killed by BSF (the border security force of INDIA) for crossing the border, there is no reaction from the BGB 

to protect the border residency people. Corruption is another major problem. From the local people to 

government officials, local authorities, law enforcement agencies and BGB all are involved in informal trade 

in that area (Sikder&Sarkar, 2005).  

Research Objective:  

This research paper evaluates the impact of the fence on the formal and informal trading in Panchagarh  

District and how it changes the life of the commoners. This paper particularly focuses on the border around 

Panchagarh district as the case study area. It will pursue the development and changes of the border residency 

people after fencing and enclaves exchange program within this district. It will also identify the constraints 

that are on the way of development of those people’s livelihood. There are few major objectives of this paper 

those are:  

To identify the development initiatives for the people of border residency Panchagarh.  

To analyze the impacts and the consequences of the fencing on the local people in today’s time. 

To highlight the formal and informal trade between India and Bangladesh.  

To identify the impact of illegal and informal trade after the fence on local people.  

To highlight the social condition of the local people living in the border area.  

To recommend the alternative solution that can be implied for the development of the border residence.  

Methodology:  

This paper adopted a mixed methodological approach and both the qualitative and quantitative techniques of 

analysis have been used. Quantitative techniques used to know about the value and quantity of the legal and 

illegal traded items along with prices and respondents. On the other hand, qualitative information had to 

gather to explain the impact of the fence and other informal trade related issues. Almost 500 responded from 

20 different border arena villages were used as sample study. Among them, they were government officials, 

informal and formal traders, border resident people, local governance and local government leaders.  

Data collection:  

To execute the study different types of primary and secondary data were needed. Primary data’s are collected 

through field survey and personal interviews. We collected the secondary data from online journal, article, 

related books as well as online survey. We divided the process into three different parts  

 



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Data requirement plan: The required data for the research are recent development initiatives, security 

challenges, border fencing effects and present conditions of the border arena people. According to the 

requirement plan, this paper has covered, the people interviews of the border arena, the researchers who 

worked on this issues and we took interviews of government officials who execute laws and rules for the 

border.  

Source of Data: We will collect the data mainly from two different sources such as Primary sources 

Secondary Sources  

Primary Sources: For primary sources, personal interview and documented information from local resident 

people and business owners, local traders and government official numbers has taken.  

Secondary Sources: As primary data is not enough to get the possible outcomes, we have collected secondary 

data. Related journals and articles, online articles and e-books and Government websites and the official 

journals.  

Data collection Mechanism:  

To see the development and changes after the fencing we will observe the physical changes of the local area 

and systematic changes. Interview of the local people to understand their perception about fencing and how 

it affects their daily life. Interview of the local agencies and custom officers to understand the security 

challenges and how they deal with the informal trade and business.  

Historical aspect of trade relation between India-Bangladesh  

On fifteenth August, 1947 the world saw a historical partition in the South Asia. The British Empire isolated 

two countries dependent on the religion as India and Pakistan. India was a Hindu dominant part nation and 

Pakistan was Muslim part. Pakistan needed to have two sections which was West Pakistan and East Pakistan. 

In 1971, Pakistan likewise got partitioned and another nation was conceived named Bangladesh. India helped 

Bangladesh to accomplish independence. It made them friendly neighbors after the independence.  

Just after the independence, Bangladesh was in a disastrous condition. At that time the trade relation between 

India and Bangladesh got a way to move on. After that a series of discussions happened between both the 

countries and as a result the first Indo-Bangla trade agreement was signed on March 28, 1972 (Indo Bangla 

trade and economic relation: Chapter 5). that was the first formal trade agreement between these two 

countries. The main target of the treaty was to promote trade and commercial relations between two countries 

and to strengthen the economic relation based on the mutual benefit, understanding and friendship. The main 

goods which were included to be traded were oil seeds, chilies, raw cottons, milk, milk products, kerosene 

oil, eggs etc. (Sen,Sunanda. 1972). But as the time passed the trade agreement became failure. The cos of 

living jumped a high number within few months. The expectation of having a mutual economic agreement 

was not successful. Smuggling became a vital concern for the government of  

Bangladesh and India. Finally the security forces had to be sent to the border to stop the smuggling. That’s 

why the agreement was canceled.  

After the failure of the 1972 trade agreement a new agreement was signed between these two countries in 

1973. It included 3 new articles and rephrased the 1972 agreement. But this agreement also didn’t last long 

when Sheikh Mujibur Rahman was assassinated. After the assassination Major Ziaur Rahman took power 

and the trade relation with India was on hold. Then again in 1976 both countries signed a trade protocol which 

visualized higher volume of trade and long term arrangements of coal and newsprint in order to balance the 

trade (Indo Bangla trade and economic relation: Chapter 5). During that time India was exporting to 

Bangladesh until both countries agreed on India importing from Bangladesh in 1978. In 1980 there was 

another agreement on trade between them. This agreement removed the clause of state to state base rather for 

the first time the provisions of the agreement were open for the stakeholders. It was provided for bilateral 

consultation at least once in a year instead of once in six months. It was signed for 3 years and came into 

effect from October 4, 1980. After few years Bangladesh started to move on to the path of economic 

liberalization. The main reason behind this is the establishment of SAARC. Since 1982 and particularly after 



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Bangladesh moved on the path of economic liberalization, bilateral trade has been improving steadily 

(Balaji,Madhumita. 2016). In 1992, both the countries extended the bilateral trade agreement for 3 years 

again. India agreed to import Urea, newsprint, scrapped railway wagons and phosphoric acid from 

Bangladesh (Indo Bangla trade and economic relation: Chapter 5). When Sheikh Hasina came into power 

in 1996, the trade relation improved considerably. During her regime she visited  

Delhi few times and signed a number of treaties. In January 1997, then prime minister of India Inder Kumar  

Gujral visited Bangladesh. Many economic issues were resolved during this period of time. After that in 

Khaleda Zia’s regime (2001-2006), there was a massive increase in the export of Bangladesh to India and 

import dropped down (Balaji,Madhumita. 2016). In 2006, Khaled Zia visited India and signed a number of 

economic agreements. There were two bilateral agreements aiming to boost economic activities.  

In 2008 when Sheikh Hasina came into power again she adopted India positive foreign policy, the trade was 

increased. In 2011-2012, India’s total export to Bangladesh reached 5.84 billion US dollars. This does not 

obviously take into account the substantial volume of ‘illegal or informal’ exports that takes place 

continuously and is estimated at a substantive figure (Balaji,Madhumita. 2016).  

A high level of Bangladesh’s import from India is in the idea of sources of info (cotton) implied for the 

generation of its primary fare thing (readymade garments); an area in which the country has championed 

itself. In 2011-2012, Bangladesh’s exports to India reached only 584.64 million US dollars. In 2014-15, BD 

export figure further dropped down to USD 396 million. In the current scenario the total bilateral trade 

volume of USD 6.5 billion looks impressive but the sheen is lost when one looks at the country’s exports to 

India that account for a mere USD 500 million leaving a high trade deficit(Ahmed, Zahoor and G ,Deepika. 

2014).  

There are few issues between these two countries as per as trade is concerned. Two countries start trading 

with each other when they perceived clear comparative advantages in exporting products required by each 

other. India has a ‘revealed comparative advantages’ in many goods that are required by Bangladesh. This is 

one reason why Indian exports to Bangladesh have been growing over the years.  

On the other hand, Bangladesh lacks a similar ‘revealed comparative advantages’. As a result, its products 

have not been able to find an easy market in India. Trade is also facilitated when two countries have a 

complementary in their products. This complementary has to be both of products as well as quantity. India 

has the capability to meet the import requirements of Bangladesh. But in most cases, the reverse is not true. 

Thus, there exists a case of partial complementary or one way complementary between the two countries. In 

the case of sea-borne trade certain products have to go to specific ports for customs clearance. This has given 

rise to black-market smuggling which bypasses custom posts altogether or even “official smuggling” 

involving bribes to customs and other officials on both sides of the border (Ahmed, Zahoor and G ,Deepika. 

2014). Trade between the two countries has also been constrained by the lack of trans- shipment/transit 

facilities between Bangladesh and India. Although some policy decisions have been taken in this regard, but 

progress on ground is still awaited. Trans- Shipment through Bangladesh is expected to benefit India by 

cutting the distance between India’s northeast and the mainland, thus facilitating the transport of goods. These 

goods can also be expected through Chittagong Port. This will also bring in significant amount of revenue to 

Bangladesh as port fee (Ahmad, Zahoor and G, Deepika. 2014).  

India and Bangladesh have shared the common objective of fostering closer economic integration in South  

Asia. Bilateral trade and investment relations are currently of special interest to both countries. After the India 

visit of Sheikh Hasina in January 2010, there has been a genuine effort to boost indo-Bangladesh relations 

(Chakma, B. 2015). India likewise demonstrated it’s longing to get greater speculation and educated 

Bangladesh that about $3.5 billion worth private venture will be there.  

Different Kinds of Trade between Bangladesh and India:  

India and Bangladesh both are having a long borderline which has encompassed Bangladesh. These 

peripheral territories are being shielded by the fringe security from both Bangladesh and India. In Bangladesh 



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border BGB (Border Guard Bangladesh) is protecting it and in India BSF (Border Security Force) is doing 

it. The border areas are very important for the trading between these two countries. Just after the 

independence, there was no fencing. The people of border arenas usually did informal trading  

This made a concerning fact for both Bangladesh and India. In 1982 the borders were surrounded by fences.  

This impacted trading in the border arenas. So, the border arena has two types of trade. They are:  

 
Formal Trade:  

Formal trade is a kind of trade which is legal. The government knows about all the formal trades happening 

in the border arenas. Every year thousands of things are being traded legally between the borders. Between 

Bangladesh and India, there are various agreements for the formal trades which has been mentioned earlier 

in this chapter. There are various kinds of things which are being traded in formal way. For example: Cotton, 

cow, Cosmetics, Saree, battery, fabrics, electronics, Wooden furniture, raw jute, vehicles, tissue paper etc. 

These are few of the products which are traded between India and Bangladesh through the border areas. 

Along with formal trades, there have been also informal trades in border arenas.  

Informal Trade:  

Informal trade is something that can’t be calculated. Informal trade is also acknowledged as illegal trade. 

Products that are being traded illegally are called informal trade products. In the border areas, informal trades 

are very much popular. Individuals of those regions are generally relying upon the illegal exchanges. In the 

border areas of India and Bangladesh, unofficial trade is exceedingly present. For example: In Panchagarh 

border which is named Banglabandha and there are different places of border where informal trade is 

flourishing. According to the survey in Panchagarh, there are various products which are legal as well as 

labeled as illegal goods and are being traded illegally such as cow, drugs, phensidyl, mobile phone, memory 

card, cosmetics, tea leaves etc. (the exact number of the informal goods is being attached in the appendix) 

These are the two types of trade happen in the border arena of Bangladesh and India.  

The impact of Fence and Informal trade on the local arena of Panchagarh:  

The impact of fence in the border area of Panchagarh has significant consequences on the local area. Before 

fencing people indiscriminately went other side of the border and brought their necessary goods. The 

movement of informal traders slows down due to fence and it became a life threat profession. However, many 

people take the risk and try to do businesses. Sometimes they successes and sometimes they caught by the 

BGB (Border guards Bangladesh) or BSF (Border Security Force). After the fencing, the flow of informal 

goods and products has decreased drastically. There are different types of people who truly hold this informal 

business staying in and from outside of Bangladesh. These people are extremely powerful and influential. 

The respondents mentioned few such people’s names who are involved into this business directly while 

staying outside of the country. Informal traders use many special techniques during the time of bringing in 

and out the goods from India to Bangladesh and vice versa. After receiving the goods they sell those products 

in their respective local markets and even where they get more money. For instance informal traders bought 

Indian sarees, different types of alcohol approximately BDT 500 to 700 per piece and sell at BDT 3000 to 

4000 though they do not pay any tariff or tax to the government respectively,  

In Bangladesh a very competitive market picture we can observe but it increases five times more when goods 

and services comes through illegal way or informal channel. It has an adverse effect on the local market. 

Price hike goes up and down price, instability and competitive market situation prevails all over the market. 



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According to economic law, in any market when the supply is less than the demand is high; it increases the 

price of the products and goods. At the same time when supply is low then the demand goes down. Same 

thing happened in cow market. The supplies of the cows are less than their demand. During the festivals or 

eid the demand increases. Because of the demand, cow traders brought cows at lower price such as one cow 

at Tk. 5,000 to 6,000 and they can sell it up to 30,000 to 50,000 Tk, according to the respondents. After the 

fence people cannot move easily for trading purpose or any other purpose without Visa and it is consider as 

illegal movement and illegal migration to enter into India. Fence not only reduce their movement but also 

reduce the informal trading as it becomes life threating if they caught while bringing in products without Visa 

access.  

Reason or justification behind the informal trade:  

According to the respondents and involved people, the most harmful commodity they bring in are drugs, 

cigarettes, phensidyl, alcohol which are strictly prohibited to trade both legally and illegally under the Drugs 

Policy of Bangladesh but they are doing for some extra money to earn for their livelihood i.e. They justify 

their activities by saying that these drugs used for medical purpose such as phensidylas cough syrup and 

alcohol or other drugs as pain killer. They are less concern about the consequences and laws rather more 

concern about earning as much as money they can by adopting any possible means (Shikder, 2012). From 

our field survey it was observed that most of the people are either farmer or daily labor that has no permanent 

work for their livelihood. They have no other alternatives but to do involve with smuggling or so called black. 

Especially the border arena local people both male and female are involved with this activity. Male members 

are more active into these types of informal trading where women work as helper to their husbands. As they 

pay for the goods they believe it’s a legal trade but they have a little idea about the legal and formal trade. 

They are not fully aware of the trading laws and the punishments of informal trade. Some people think fence 

is just a symbol that shows countries boundary not their relations with the people living other side of the 

fence. The bond they share it continues after the fence with informal trade relation. It’s risky but easy and 

profitable for the both traders in Bangladesh and India.  

Case Studies and Analysis  

To understand the trading prompts and its impact on the livelihood we gather some major data for the 

research. To recognize the existing border relation and informal trading relations and their working system, 

we took Panchagarh district as our study area. Panchagarh district is surrounded from three sides by India 

and the estimated border length is 288km. Only 135.591km border is fenced by the BSF whereas the rest of 

the area is yet to be enclosed (Bdnews24.com. 2018). These unprotected non-fenced border areas are being 

indiscriminately used as the hubs for informal trading. Empirical data on the cross-border informal business 

and trade has showed the acuteness of this practice and the methods traders are using for a long period of 

time.  

The empirical data collection had been conducted on Kajal-Dighi village under Kaliaganj union, laiyapara, 

Banderdanga village, Paharipara under Borososhi and Banglabandha under Tetulia Upazilla of Panchagarh 

district here the interviewees varied from local chairman, tax officers, immigration officers and employers of 

BGB Headquarter to local people who are in full or partially involved into the informal trading. The 

questionnaire which was asked to the interviewees is given below.  

Questions asked the BGB officers and guards:  

1. How many people are guarding the border?  

2. What are the new equipment and policies they are taking to develop the security of the border?  

3. How BGB is using technologies to modernize them?  

4. What are the problems of Border Management?  

5. Porous nature of  

6. What are the difficulties in identifying nationals?  

7. How does over-population affect the guarding process?  



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8. How and why did they arrange flag meeting?  

9. Is fencing helping the local people and decreasing the border illegal migration and trade?  

10. What are the reasons behind the illegal trade going on still now even after fencing the border?  

Questions asked to the Customs officers and Tax officers:  

1. What kind of problem customsdo face because of informal trade?  

2. How many informal products are collected by the customs?  

3. Which products are mostly caught by customs?  

4. What do they do with the collected products?  

5. How do these informal trades affect the relation between India and Bangladesh?  

6. Recommendation to reduce the informal  

7. Has the formal trade increased and informal trade decreased after fencing?  

During the interviews, informal traders opined that fencing has made it difficult for them to carry out products 

and goods and to pass them through borders. A 26 years aged man, who used to illegally trade alcohol and 

phensidyl, said that the fencing after 2013 made it inconvenient for to trade without any hassle. As the border 

guard got stricter after the fencing from both BGB and BSF, they started to use some strategies to get some 

little convenience. For example- they preferred night to smuggle products and they used bamboo to throw 

the products like phensidyl, parts of mobile, memory cards and tea to carry all the way through India to 

Bangladesh and vice versa. During the dry season, the strategy would be different i.e. moving through the 

path underneath the bridge towards the fencing area, distorting the fence a bit to pass through and restoring 

it after coming back.  

The cross border informal trading became more challenging after the fencing; nonetheless it is going n 

smoothly because smoothly. It’s because local people are involved, except the traders themselves, assist the 

traders by protecting them or by providing necessary information i.e. when any particular fenced area would 

be walked past by the guards and would be free for a short period of time from any kind of on looks. More 

than 100 people are involved in the informal trading in the village of paharipara. The number of women (10 

to 20) is much less than that of men.  

Interviewees pointed out several reasons working behind the informal trades; among them unemployment, 

low profit rate, part time income opportunities are mention worthy. According to the interviewee, who is 26 

years old informal trader, a strong syndicate system is working behind the curtain of the whole process of 

illegal trading. The syndicate is basically a group of investors who are running the business by investing in a 

large amount of capital. Syndicate members consist of Bangladeshi and Indians.  

Information from Informal Traders:  

Some of the traders are not directly involved in the trading procedure; rather they feel at ease to do it passively. 

Those traders assign people who are willing to carry out merchandise and sell them in the local market if 

they get paid a handsome remuneration. If any of them is unfortunate enough to get caught by the border 

guards, he may sentenced to prison for several years. One of the female interviewee talked about a boy who 

got caught back in 2013 while he was doing informal trading and he was sentenced to 5 years prison due to 

this reason. His family tried to get him released even by offering three lakh taka ransoms but it went in vain. 

The boy got released 5 years later but died 12 months later of his acquittal. In Paharipara, one of the 

interviewee named Mohammad Ali, a thirty years aged man involved in informal trading, said that there is 

no such way informal trade can be stopped as many people get benefitted extensively from it. He informed 

us that informal traders like him use Indian sim card to communicate with other members of their network in 

the border area. When asked about the payment method, he gave away the information that banking system 

is used mostly for that; but if they use cash money, they would transact it in ‘taka’ currency. During the 

monsoon season, Ilesha fish is very demandable product for the business. On other regular business season, 

mostly papers, cosmetics, sarees, goats, fish and cigarette are traded from Panchagarh to phulbaria, India 

while motor bikes parts, cycles, cows and reminiscence cards are passed through the border from Phulbaria 



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to Panchagarh. A group particular of traders are totally engaged in informal cow trading. Informal traders 

take advantage during the price hike situation or crisis situation after natural disaster. They bring sugar, 

onions, and salt and sell it in the nearby market for profit.  

Quantity of informal goods smuggled from India to Bangladesh:  

Items  Unit  Quantity ( per month)  

Cow  Number  1000-1500  

Phensedyle  Piece  12000-15000  

Cosmetics  Box  146  

Mobile  Carton  2-3  

Memory Card  Box  5-6  

Parts of Motor Cycle  Piece  80  

Saree  Piece  3000-3200  

Tea leaves  Kg  30-40  

Drugs(Heroin, Yaba, Cocaineetc)  Gram, Piece  800-1000gram, 9000piece 

Stones  Ton    

Quantity of informal goods smuggled from Bangladesh to Bangladesh:  

Items  Unit  Quantity ( per month) 

Fish (seasonal)  Kg  2167  

Tea leaves  Kg  20-25  

Goat  Number  500-800  

Cigarette  Carton  50-60  

In Tetulia Upazilla, a cow trader, who is a primary trader and has a group working for him, gave information 

about the trading method. He used to earn twenty to thirty thousand taka per month by cow trading. After 

fencing the border, BGB became stricter than before and cow trading informally became very risky and 

hazardous. BGB even captured traders with cows and busted out several organized auction. As this business 

became precarious, many former informal traders have started to work in farming, tea gardens, took job as 

drivers or some have taken jobs as rock- lifters. Before fencing there were scarcities of sugar, onion in this 

area. Therefore people used to bring these products from India. Phensidyl still gets illegal access to 

Panchagarh from Vojonpur and Narayanjot. Per phensidyl cost 100 taka but they sell it by 1000 taka in the 

local market.  

Interviewees revealed the previously existing vat system on this business. When the cows would cross the 

border and get here in Bangladesh, the merchants used to take them to the camp. The officers of camp would 

count it and give them a slip of vat. They would have to pay 500 taka for one cow in a tax office which would 

have permitted the traders to sell the cows. There was a time limit. Within 4 days, illegally traded cows could 

be sold in a legal way. This system was stopped later by the BGB intervention because farmers’ harvest would 

get damaged by the cows. As the complaints were piling up, BGB got strict on illegal cow entry. After being 

asked about the Alcohol trading, few informal trader interviewees said that they had never traded alcohol 

because it is harmful for the youths. They were only focused on the cows because they were conscious on 

not to cause any harm to the society. However, they had to face a lot of hassles to get the cows passed through 

the border and many of them get caught and faces serious consequences.  

Information from BGB Officials:  

In the interview session with BGB officers, they talked about the security aspect of the informal trading and 

how it affects the border security. The BGB was being accused of not carrying on their duties and 

responsibilities properly; so, they became stricter than before. In Panchagarh there are 19 to 25units while in 



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India, it is 40 to 50 units. BGB believes that fencing is kind of disrespectful but it increased security for both 

the country. People in the border area feel more secured now than it was before. To reduce the informal 

trading more, BGB needs more advance technological equipment i.e. CCTV cameras, more search lights, 

advance Laser lights, sensor sound activated goods and etc. They need more security force too.  

There is a good understanding persisting between BSF and BGB. They arrange flag meetings if any 

commander gets changed or for further development of the relation (Jamwal, N.S, 2004). After being asked 

about the migration and if they face difficult to identify the illegal immigrants as they look alike local people, 

they answered affirmatively. But the local people help BGB to identify. BGB suggested that if the 

communication network of the traders could be interrupted, 50% of the informal trading could have been 

stopped. They think that, most of the traders take life risk and get engaged in this business because of the 

unemployment problem. If those traders are given decent jobs, they would never have come to this risky 

occupation in the first place.  

Information from Local government:  

In the interview session with the Chairman of Banglabandha, Kudrat-E-Khuda, he informed that informal 

trading has reduced after opening the land port of Banglebandha. Still there are areas which are yet to be 

fenced and protected and those areas are being used as hubs to execute informal trading. Rivers, such as 

Mahananda River in Tetulia, are the main corridors for them. Because of fencing, people are changing their 

professions and stop taking risks. He himself tries to aware local people about the risk factors of cutting the 

fence and doing the informal business. He is also affirmative that cows, phensidyls are still being passed 

through the border informally for business. The chairman revealed about the behavioral pattern of the BSF 

guards. According to him, BSF guards who came from Kashmir border region inflict upon more 

aggressiveness than they need to show. It is because Kashmir border region is conflict-prone and those guards 

are habituated and trained to have that much aggressiveness and harshness. The Chairman opined that fencing 

has made the local people feel secured.  

Customs office situated in Panchagarh Sadar delivered the information about what happens to the 

merchandises captured by the BGB. Mostly Cows, cycle, Tea leaves and alcohols are seized. They are put 

immediate auction in the locality. Every month nearly 15 to 20 cases are filed against informal traders. Almost 

every month BGB catches hold of 15 to 20 cows and 10 to 15 kg tea leave. According to the custom officers, 

there is too much tax and vat imposed on the products which is the reason working behind this informal 

trading business. There is 25% custom duty and ATV as well as SD; these increase the price of the products 

in Bangladesh. Reformation in the duty policies can decrease the informal ways of trade. Most of the 

interviewees in the case study pose positive attitude towards the fencing as they believe that fencing has 

increased the border security in a greater extent. People do cooperate with BGB and local police. But informal 

trading is still going on in different ways and methods though in Panchagarh the percentage of informal trade 

is much less than other border areas in Bangladesh.( Informal and Illegal Trade)  

Concluding Observations and Policy Recommendations  

Illegal trade occurs in border area because they don’t have to pay extra money such as tariff, non- tariff 

barriers, duties, tax or any type of import restrictions. To avoid such import barriers informal trade increased 

all of a sudden and become popular method but after the fence in border area especially Panchagarh people 

faced lot of challenges during informal trades. So informal trade decreases day by day though not fully 

stopped. Still a lot of people are engaged with cross-border informal business and earn their livelihood to rely 

on that. According to respondents there are five types of people involved in informal trade including carriers, 

carriers-investors, investors, primary traders and syndicate traders. Among them syndicate traders and 

investors plays an important role in informal trading.  

They also bribe the law enforcement bodies or agencies to import illegally through border routes. Most of the 

time cows and buffaloes are illegally imported by using rivers in dry seasons and other products using secret 

routes. Later those smuggled items store in village houses and some are taken by businessmen who actually 



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buy these commodities from village houses and supply to the local market and some store in their go downs. 

It is pointed out that high and unrealistic tariff values discourage the formal import and encourage the 

informal trades. As smuggling cannot prohibitory stop the law agencies and government should focus on 

trade liberalization and reduce formal trade barriers. Moreover these people also help to bring harmony in 

the border area to reduce border conflict through a mutual economic relation among the people and sometimes 

between the countries law agencies.  

As illegal trade creates a free trade situation in border areas and the importance of such trade is no less 

significant than the official bilateral trade between India and Bangladesh. It is said that Bangladesh suffers a 

trade deficit both in formal and informal trade with India. To save economy of Bangladesh trade surplus is 

necessary.  

Recommendations:  

Most of the people who involved with informal trade are either farmer, labor or jobless people as well as very 

poor. They are involved to earn money and try to get rid of from the extreme poverty. Most of them have no 

lands, permanent jobs or even houses. There several steps can be taken to reduce informal trade. There are 

some recommendations given below:  

1. Reasonable and rational tariff structure for the imported goods should be  

2. Reduce the cost of agricultural products cultivation by supporting financially and technologically.  

3. Create awareness among border residents the impact of informal trade to our  

4. Regular monitoring in the fence by BGB to stop illegal movement to control informal Using new 

technologies and more forces in units need to be ensured.  

5. Youth and employment project to reduce poverty especially in the border arena  

6. For correcting trade policy, two nations government should set for more dialogue and negotiation to 

control informal trade  

7. Soft policy should imply rather coercion in case of illegal movement of the people  

8. NGOs should come forward with development projects for the needy peoples in border areas.  

9. Short terms loans for the farmers and labors to work and start other business along with their  

10. Government should focus on the development of such areas people’s daily life including education 

and health facility, infrastructure developments such as road, bridge construction and fulfill other human  

6186 | DOI: 10.47772/IJRISS |Volume VII Issue I January 2023 

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