Despite promises, trade gap with India persists

Dhaka,  Tue,  27 June 2017
Published : 11 Apr 2017, 21:19:48
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Despite promises, trade gap with India persists

Sayed Kamaluddin
The Indian bureaucracy has persistently been sabotaging all initiatives of the political leadership to narrow the burgeoning trade gap between Bangladesh and India for decades now. Nevertheless, Prime Minister Sheikh Hasina is apparently happy with the outcome of her just-concluded summit meeting with the Indian Prime Minister Narendra Modi.  She believes she has secured "firm promise" from her Indian counterpart that Delhi will "take concrete actions" to redress the balance.

This, indeed, is a welcome assurance coming as it does from the highest level and one sincerely hopes that such promises would be kept promptly before amnesia and apathy set in as in the past. 

Prime Minister Hasina is a pragmatic politician and knows where the shoe pinches. She raised the issue during her talks with Mr. Narendra Modi at the Hyderabad House in New Delhi and later informed the media that "Prime Minister Modi was receptive to the issue of growing trade deficit and assured of his government's concrete steps to address this."

Incidentally, Sheikh Hasina has also reportedly raised the issue of Indian imposition of anti-dumping duties on imports of jute from Bangladesh seeking to resolve the burning issue. However, response to this from her Indian counterpart was perhaps not up to her expectations and she did not mention it in her press meet.

ANTI-DUMPING DUTY ON JUTE: India accounts for about 30 per cent of Bangladesh's total export of jute. According to media reports, in January this year India imposed anti-dumping duty on import of jute and jute goods from Bangladesh and Nepal ranging between $19 and $351.72 per ton. The anti-dumping duty, as the name suggests, is a protectionist duty imposed by the importing country. It means the importing country believes that foreign imported goods, and in this case, jute and jute goods from Bangladesh and Nepal, are priced below fair market value. This duty has been imposed for five years.

Bangladesh, of course, opposes this assessment. As a result of the imposition of anti-dumping duty, jute/jute goods exports to India have suffered tremendously. During July-March period of FY2016-17, it decreased by over 17 per cent to $105.25 million as against $171.41 million in the corresponding period last year. The anti-dumping duties became effective from January 05, so the first six-month of this period the trade was not affected. Trade sources claim that since the imposition of anti-dump duties, jute and jute goods exports to India has practically stopped. The sources say India used to import around $300 million worth of jute/jute goods annually.

THE MYTH OF DUTY-FREE EXPORTS TO INDIA: Nearly six years ago when then Indian Prime Minister Dr Manmohan Singh visited Dhaka in September 2011, his government extended duty-free benefits to all Bangladeshi

products excepting alcoholic beverages. The national media was awash with stories about likely positive impact of the Indian decision on Bangladesh's trade with India and how it might help reduce the growing trade gap. Everybody was happy and literally, it caused a euphoric extravaganza.

Reports say, when this facility was extended, Indian imports from Bangladesh accounted for 0.1 per cent of its total imports, now it stands at 0.2 per cent. 

However, from the year following the extension of duty-free benefits to all Bangladeshi products, the Indian government imposed a 12.36 per cent countervailing duty on Bangladeshi readymade garment shipment. So the benefit that India offered in 201, was neutralised by the countervailing duty introduced in 2012.

A major English-language daily quoted Ms. Farkhunda Jabeen Khan, director of a major exporting group MAKS Attire as saying: "Our garment export to India would have been way higher had there been no countervailing duty in place." Other market players also agree with this observation.

Exports to India during July-March (FY2016-17) nine-month period rose by 7.28 per cent to $522.83 million, but earnings from apparel exports decreased by 7.85 per cent to $99.99 million. According to MAKS Attire director Khan, India's total apparel market is worth $40 billion and is considerably large to feel threatened from Bangladesh's tiny volume of exports there.

PROMISING SECTOR BEING SNUFFED: Production of packaged snacks by the processed food industry in Bangladesh has emerged lately and is now putting its footprint in the world's most competitive markets with some success. But its luck in trying to enter into the large and lucrative Indian market has not been meeting with such successes.

Despite a number of agreements signed by both Bangladesh and Indian governments in facilitating mutual efforts to enter each others' market, Bangladeshi producers are facing problems. The Indian customs authorities don't accept certification by the Bangladesh Standards and Testing Institution (BSTI) and the exporters are required to testing their products in Indian labs there. It costs time, money and customers' disillusionment.

According to newspaper reports, this is happening despite agreement between BST and India's NABL (National Accreditation and Calibration Laboratories) in which BSTI received accreditation for 161 parameters of 27 different products such as fruit juice, fruit drinks, jam jelly, biscuits, noodles, carbonated beverages, soap, cement, MS rod and GI pipes.

A number of inter-governmental meetings since 2012 have taken place where these issues were discussed and agreed minutes were signed. At the last India-Bangladesh Commerce Secretary level meeting in Delhi in

November 2016, these issues were again raised. Just a year before this meeting, during Prime Minister Narendra Modi's Dhaka visit in June

2015, BSTI and Bureau of Indian Standards (BIS) signed an agreement on cooperation and conformity assessment to eliminate technical barriers to trade and facilitate reciprocal market access of products from both countries.

Despite all efforts nothing has changed so far. However, Indian products are not facing any difficulties in entering the Bangladesh market. Newspapers have reported a few days back, quoting a senior commerce ministry official, saying: "We are yet to get any notification in this regard."

Industry sources say that the recognition of certificates issued by BSTI by the concerned Indian agencies could help to narrow the huge trade gap that exists between the two countries. 

sayed.kamaluddin@gmail.com

 
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