Favouring a free trade agreement between India and Bangladesh, business leaders of the two countries have suggested that a direct air link be established between Guwahati and Dhaka to promote commerce and tourism.

Speaking at a press conference in Dhaka on Wednesday, members of the Bangladesh India Chamber of Commerce and Industry also recommended that Bangladesh set up a consulate in the north eastern region to facilitate trade.

BICCI has been formed by FBCCI and the Federation of Indian Chambers of Commerce and Industry, the apex trade bodies of Bangladesh and India, who jointly organised a seminar on FTA in Dhaka. Participants at the seminar endorsed the proposal for a FTA between the two neighbours, the Bangladesh Observer reported on Thursday.

Formal talks on the issue are scheduled to be held between officials of the two countries in October.

The BICCI members said that before the signing of FTA, the body's executive committee will undertake two studies by December 2003 on the improvement of trade infrastructure between the two countries, waiving of non-tariff barrier, harmonisation of custom procedures and documentation.

Meanwhile, the Indian businessmen participating in the seminar have hinted at the possibility of setting up fertilizer and leather plants in Bangladesh using local gas and leather as raw materials, the Daily Star reported on Thursday.

FICCI president A C Muthiah was quoted as saying that the Indian government is planning to set up fertilizer plants in countries where raw materials are available as Indian gas reserves are gradually decreasing.