India notifies BD of ‘malpractices’ in RMG exporting process

India notifies BD of ‘malpractices’ in RMG exporting process

Calls for taking corrective measures

Rezaul Karim | Published: November 01, 2019 Financial Express

Indian authorities have identified few ‘discrepancies’ in the process of exporting readymade garments (RMG) from Bangladesh to India under the South Asian Free Trade Area (SAFTA) deal, officials said.

They said the High Commission of India in Dhaka in a recent letter apprised the Bangladesh government of at least three types of malpractices in 83 cases, seeking corrective actions in this regard.

These are: discrepancies between Free On Board (FOB) value and SAFTA value, re-issue of country of origin (CoO) after one year of shipment and issuance of CoO certificates from two separate offices of the Export Promotion Bureau (EPB) in Dhaka and Chattogram.

India took up the issue with the relevant Bangladesh authorities at a time when export of the RMG items to the huge next door market started growing substantially.

According to official figures, apparel exports to India grew by nearly 14 times to about US$ 500 million in the last fiscal year (2018-19) from only around $ 36 million in 2010-11, just before SAFTA’s taking effect.

In November 2011, India granted duty-free and quota-free market access to all but tobacco and alcohol under the SAFTA deal for poorer members of the regional trading bloc.

Experts viewed that the exporters should remain alert about such type of discrepancies as it might affect clothing shipments to the neighbouring country.

The EPB should also have been much aware of such mistakes considering diversification of the market and the country’s image abroad, they added.

“This is simply clerical mistakes and the EPB should not repeat it,” Manzur Ahmed, an expert on free trade affairs, told the FE. He, however, said there is some genuineness of the allegations raised by the Indian authorities.

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) president Dr Rubana Huq did not return a request for comment at the time of going to press.

In July and August last, the Indian High Commission requested Bangladesh to check some sets of CoO certificates under the Rules of Origin (RoO) criteria of the SAFTA agreement. On October 23 last, the Indian High Commission in Dhaka again sent a letter in this regard.

When contacted, EPB vice chairman Fatima Yasmin said: “We will send a response to the Indian authorities through the foreign ministry about the allegations after necessary scrutiny.”

She also said that necessary actions will be taken as per the existing policy/rule if any forgery is found in this regard.

“In all the 83 cases, the Free on Board (FOB) value of the goods as mentioned in the Bills of Entry is much higher than the FOB value of the same goods mentioned in the country of origin (CoO),” according to the documents attached with the letter sent by the Indian high commissioner.

“Out of these 83 cases, 22 CoO have been claimed to be re-issued by EPB, Bangladesh after almost one year of export of the consignments/issuance of the original CoO. In these re-issued certificates, the value of the goods has been enhanced vis-a-vis the value declared in the original CoO,” mentioned the documents obtained by the FE.

The origin criteria has also been changed from “B” to “D”. However, there is no such provision for re-issuance available in the RoO, according to the documents.

When contacted, Bangladesh Tariff Commission (BTC) member Mustafa Abid Khan said: “Normally the Indian government informs us if they can identify any suspicions information in the CoO. We inform the Indian authorities after verifying the issues.”

He added: “If we find any faults in issuing the CoO, we inform the Indian authorities.”

In six CoO certificates, out of 22 re-issued, it has been found that the re-issued certificates have been issued by Dhaka branch of the EPB, whereas, the original CoO certificates were issued by Chittagong branch of the EPB, said the Indian High Commission in Dhaka.

The High Commission has further requested the respective ministries to ask the issuing authority of EPB to provide all the supporting documents submitted by the Bangladeshi suppliers at the time of issuance of the CoO (both original and re-issued).

It also requested to examine the issue and take necessary corrective actions to avoid such malpractice under article 20 OCP, annex- II of the SAFTA agreement.

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