"The volume of informal trade between the two neighbouring countries is several times higher than the formal one," said Isher Judge Ahluwalia, vice-chairperson of Planning Board of Punjab, India.

She, however, said if the cross border investments go up significantly, the market force will be able to tackle informal trade. "Tata investment will help boost investment relations between the two countries."

Ahluwalia, also a member of National Manufacturing Competitiveness Council of India, was addressing a discussion on 'Development Trends in India' organised by Citibank NA at Gulshan in Dhaka on Saturday.

Speaking at the function, she also observed that a close relationship between Bangladesh and India is necessary to maximise the economic goals of the two countries.

Presided over by former foreign secretary Farooq Sobhan, the discussion was also attended by Indian High Commissioner in Dhaka Veena Sikri, Citibank NA Bangladesh Chief Executive Officer Mamun Rashid, businesspeople, economists, and bankers.

Presenting an overview of the Indian economy, she said the country's economy recorded an average 5.6 percent annual GDP growth in the past 25 years. During 1950-1980 period the average growth rate was 3.5 percent, she added.

She said the higher growth performance in the post-1980 period was primarily due to some reform activities initiated by the Indian government especially in the fields of power, telecoms, education, healthcare and other social sectors.