Indian External Affairs Minister K Natwar Singh yesterday said India and Bangladesh need to evolve positions and action plans to counter the common threats of terrorism and religious fundamentalism that confront both the societies.

"We must make a good faith endeavour to avoid any provocative words or deeds that would inevitably make our bilateral relations and mutual dialogue needlessly more difficult," he said outlining the Indian approach on major bilateral issues.

"Where there are joint projects of mutual advantage, we should not allow politics to trump sound economics. This relates to issues such as the export of natural gas and the establishment of a tri-nation gas pipeline," Singh said.

The Indian minister was addressing a session of 'Indo-Bangladesh Dhaka Dialogue on Trade, Investment and Connectivity' organised by Centre for Policy Dialogue (CPD), a local think-tank, and India International Centre (IIC).

Singh said both the countries must proceed expeditiously to sign, not just a revised trade agreement for which there is agreement on both sides, but go a step further and try and conclude a Free Trade Agreement (FTA).

Responding to his comment, Foreign Minister M Morshed Khan said there is a perception problem about FTA in Bangladesh. "By and large FTA limits different things," he observed, urging his Indian counterpart to rename and renegotiate FTA.

Morshed said the two countries should seriously try to increase two-way trade and narrow the huge trade imbalance between them.

Referring to Indo-Sri Lankan experience in bilateral FTA, Singh said an FTA with Bangladesh could also bring significant benefit to both the countries.

"We must improve road, rail and air links between the two countries because this is the necessary infrastructure which is vital for augmenting the volume of bilateral trade and investment," he said, adding that other supplementary agreements such as bilateral investment protection and promotion agreement also need to be concluded.

Indo-Bangla bilateral trade last year was about $1.6 billion, which though substantial, does not fully capture the potential that exists between our two countries, Singh observed, saying that a huge volume of trade still takes place on informal basis.

"Both the countries need to take a certain number of initiatives so that the full bilateral trade and economic potential can be realised," he added.

"I reiterate the obvious importance of a dialogue, because in an era of growing tensions we need to remind ourselves that there is virtually nothing in this world that cannot be resolved through dialogue," the Indian minister said.

About "illegal immigration" and border management, Singh said, "We will try and be as flexible as we can on all these issues subject to our responsibility to safeguard India's national sovereignty and territorial integrity.

"The issue of illegal immigration is a serious issue that needs to be addressed. Similarly, we must ensure that our territories are not allowed to be used for any activities inimical to each other's interests," the Indian foreign minister added.

He suggested resuming the talks on boundary issues at the earliest.

Singh said these issues are of utmost importance to both the countries and there is no alternative to sitting together and sorting out whatever differences two countries have through a process of constructive dialogue.

The Indian minister said he is happy that high-level visits are now occurring with the desired frequency that should characterise the two friendly countries. "I am here to take stock of bilateral relations and see how to take them forward."

A stable, prosperous, secular and democratic Bangladesh is not just in the interest of its people but clearly in the interest of India and the region as a whole, Singh said. "…We respect Bangladesh's sovereignty," he added.

"There is traditional goodwill for Bangladesh in India and I am convinced the same is the case here," Singh mentioned. He felt that Indo-Bangla relations are far below their potential and this is something for which both countries must take responsibility.

"We also hope that the prime ministers of our two countries will meet sooner rather than later and certainly at the Saarc Summit later this year. You will appreciate that these visits are necessary to provide political impetus to the relationship."

"Countries across the globe now see India as an indispensable economic partner and are seeking mutually rewarding economic and commercial links with our emerging economy," he said, asking should not India's neighbours also seek to share in the prospects for mutual prosperity that India offers?

About the regional integration, the Indian minister said South Asia is the least integrated and so the challenge for the intellectuals of Saarc is to convert a least integrated geographic area into a fully integrated economic and trade area.

Speaking at the dialogue, Morshed Khan said increasing two-way trade between the two countries and significantly narrowing the large trade imbalance is an objective worth pursuing seriously by both the countries.

"Enhancing access of Bangladeshi products to India, through concrete steps, will certainly be welcome to us," he said. "We shall continue to encourage trade creating investment from India that may play its own important role in increasing trade."

There is a need for constructive appreciation of forward movement that highlights the value of cooperation, the Bangladesh foreign minister said. "There is no dearth of goodwill, I can assure you, in Bangladesh in this regard."

Morshed said even the best of neighbours have differences between them. "The important thing to emphasise is that none of these differences are beyond resolution as long as we keep our dialogue open, remain engaged effectively with each other and move forward."

India and Bangladesh face common challenges to alleviate poverty and bring development and prosperity to the doorsteps of the people, Morshed mentioned.

Prof Rehman Sobhan, chairman of CPD, presided over the dialogue held at Brac Centre Inn where Deb Mukharji, former Indian high commissioner in Dhaka, also spoke. Dr Debapriya Bhattacharya, executive director of CPD, made a presentation on the topic.