Trade gap with Delhi increases to $2.91b
FE Report
A high-powered team headed by Commerce Minister Faruk Khan left for India Thursday to find out ways to address the huge trade gap with India.
It may be mentioned that Bangladesh's trade imbalance with India has widened by $1.37 billion over the last five years mainly due to imposition of para-tariff and non-tariff barriers on Bangladeshi products by Indian authorities.
The country's trade gap with India increased to nearly $ 2.91 billion in 2009-10 fiscal year against $ 1.62 billion in 2005-06 fiscal, a Commerce Ministry statement said.
The statement, however, said Bangladesh's trade imbalance continued to rise in the last five fiscal years following a mismatch between the country's exports to India and imports from its neighbour.
Bangladesh exported products worth of $ 241.96 million in 2005-06 fiscal year against its imports of $ 1868 million.
On the other hand, the country's total exports to India marked a marginal rise to $ 304 million in 2009-10 fiscal as against its imports from India amounting to $ 3213 million, the commerce ministry figures showed.
Terming various para-tariff and non-tariff barriers main hindrances to the growth of Bangladesh's exports to India, the commerce ministry statement said exporters and businessmen said they often face a good number of non-tariff and para-tariff barriers while exporting to India.
These include education tax at 0.08 per cent and 0.16 per cent on tariff value for cotton items and non cotton items, Indian customs authority asks for laboratory test for each and every consignment of food products, cosmetics, leather and textile products. Exporters are subjected to pay Rs. 3000 as laboratory test fee for each type of food items. The laboratory report normally takes 15-20 days as the samples are sent by ordinary mails to the laboratories located far from the land customs stations which delays the clearance of consignment.
Furthermore, the Indian authorities have recently imposed 18 per cent tax and value added tax (VAT) as central value added tax, Special Central Vat and Education Tax on apparels of Bangladesh origin defying the SAFTA agreement.
Under the SAFTA list of sensitive goods, India is supposed to provide duty-free access to 8.0 million pieces of apparels originating from Bangladesh from 2008.
Original SAFTA certificate issued by the Export Promotion Bureau (EPB) is not accepted by Indian customs at Agartala. Indian customs men ask both the exporters and importers to submit details of rules of origin calculation along with the documents, ignoring the set criteria of the regional agreement, according to the list.
Sanitary import permit has been made mandatory for Indian importers of processed food, toiletries and cosmetics from Bangladesh.
Indian government has recently imposed 18 per cent extra duty on cement imports from Bangladesh, affecting cement exports to India's North Eastern region.
Packaging requirement has been specified for food items with maximum retail price, standard unit, month and year of packaging to be inscribed on the packets. All pre-packaged commodities like processed foods, cosmetics, toiletries, spices imported by India requires generic and common name of the commodity packed, net quantity in terms of standard unit of weights and measures.
Non-tariff barrier like inordinate delay in clearance of Bangladeshi goods from customs for various reasons, including non-availability of their designated officers and certificates from departments concerned of the Indian government causes problems for Bangladeshi exporters.
Besides, inadequate physical facilities like warehousing, transshipment yard, parking yard and connecting roads at land customs stations of India also hinder exports from Bangladesh, the list pointed out.
The Bangladesh delegation now in India will sign two agreements on border hat and standard operating procedures (SOP) on truck movement between the two countries on October 23.
A number of issues including removal of tariff and non-tariff barriers, duty-free access to Indian market, further reduction of 61 items from India's negative list, Free Trade Agreement (FTA) and investment, relaxing universal Indian ban on cotton export to Bangladesh are likely to dominate official talks between Bangladesh and India.
The list of 61 items includes 49 ready-made garment (RMG) products. The major goods under 61 items of the Indian sensitive list include different kinds of RMG, soybean oil, refined palm oil, aviation turbine fuel and fuel oil, natural rubber (smoked sheets), toilet or facial tissue stock, sanitary napkin, all kinds of paper or paperboard labels and silk fabrics.
The team is expected to come back on October 24 after the four-day visit.
