India, Dec. 16 -- Bangladesh and India share more than a long border. Rivers flow across both countries, supply chains overlap naturally and centuries of cultural and commercial exchange make economic cooperation an obvious choice. On paper, Bangladesh should be one of India's closest economic partners. Geography alone makes the case.

Sourcing inputs from India and exporting finished goods back across the land border could cut transport costs by as much as 30-50 per cent. For Bangladesh's USD 50-billion garment industry, this is not a marginal saving. Indian yarn, dyes, chemicals and machinery are cheaper, closer and easier to integrate than imports hauled across oceans from China or Europe.

Until recently, this logic was reflected in t...