India seeks duty benefits on exports of 225 items

India yesterday sought duty benefits from Bangladesh for 225 of its products under the South Asian Free Trade Area (Safta).

“Currently, India has been enjoying duty benefits on exports of 25 products to Bangladesh under the Safta. They demanded removal of 225 Indian products from the negative list so that they can enjoy duty benefits on those products as well,” said Manoj Kumar Roy, additional secretary to the Bangladesh commerce ministry.

The demand came at a commerce secretary-level meeting between the two countries at Sonargaon Hotel in Dhaka.

Since November 2012, India has been allowing duty-free benefit on exports of all Bangladeshi products, except for 25 alcoholic and drug items, under Safta.

During the meeting, India also demanded reduction of duty on exports of pomegranate and orange from India and permission to set up pasteurised milk factories in Bangladesh.   

“Regarding the dairy milk factory, we told them that we will give our decision during the next meeting in New Delhi, after consulting the sector people in Bangladesh,” Roy said.

He said Bangladesh and India would sign a trade agreement during Indian Prime Minister Narendra Modi's Dhaka visit, likely next month.

At yesterday's meeting, the Indian side agreed to accept Bangladesh Standards and Testing Institution's (BSTI) certification of 25 items for export to India, mainly dairy and food products.

India will also consider removal of 12.5 percent countervailing duty (CVD), a domestic tax to protect the local industry, on export of Bangladeshi garment items to India.

They also agreed to consider the removal of trade barriers on export and use of jute bags from Bangladesh, as exporters are facing problems on export of such goods to India.

India agreed that it would not stop exporting some essential commodities like cotton to Bangladesh without prior notice.

India often stops exporting essential items to Bangladesh without prior notice, for which Bangladesh businesses suffer a lot.

Exports to India declined 19 percent year-on-year to $456.63 million in fiscal 2013-14, mainly due to a slowdown in shipment of garment items that enjoy duty benefits in the neighbouring market.

In fiscal 2012-13, exports to India totaled $563.97 million, according to the Export Promotion Bureau.

Generally, India exports goods worth more than $5 billion a year to Bangladesh through formal channels. It is believed products worth another $5 billion enter Bangladesh through informal channels.

The total trade between the two countries increased from $3.15 billion in fiscal year 2009-10 to $6 billion in 2013-14, registering 90 percent growth, said Hedayetullah Al Mamoon, senior secretary to the commerce ministry who headed the Bangladesh side.

“However, this growth was mainly driven by substantial increase of import into Bangladesh from India, which further increased the trade deficit. We need to narrow the gap,” he added.

Indian Commerce Secretary Rajeev Kher led his side.

He later told reporters, “We discussed two important issues -- how to strengthen the relationship and how to increase trade between the two countries.”