The negotiations with Bangladesh for a free trade agreement will begin before October this year, External Affairs Minister Yashwant Sinha informed the Rajya Sabha on Thursday.
"There is a major trade imbalance between the two countries and it is a highly surcharged and emotional issue,'' Sinha said.
Keeping this in mind, the government is of the opinion that there should be a free trade agreement similar to the one India has with Sri Lanka.
He said during the negotiations "we would be extremely careful how much value is added" to each item for inclusion in the duty-free list.
Sinha said Bangladesh had signalled acceptance to the suggestion for a free trade pact during his recent visit to Dhaka.
Asked whether Bangladesh has been harbouring the Indian terrorist organisations, Sinha said the matter would soon be taken up with Dhaka.