Trade gap with India on further rise

Business Report

Exports to India is on stiff decline despite the fact that Bangladesh is enjoying duty free benefits to Indian market, except on 25 products dubbed as alcoholic and beverage items.
Export Promotion Bureau (EPB) sources said last week that export to India fell by 19 percent in 2013-14 compared to the previous year’s data and the overall trend in the first few months of the current fiscal showed no improvement.
Export to India was worth $456.63 million merchandise in 2013-14 while India’s formal export to Bangladesh stood over $5 billion along with export of goods of another $5 billion through informal channel.
Bangladesh won the highest export so far to the Indian market in 220112-13 when it rose to 563,97 million with ready made garment export fetching over $72,21million that year.
But last year the overall export fell to 456.63 million while garment export further rise
to $96.26 million. In fact export to India; particularly that of RMG products started to rise following the offer of duty free benefit to garment export by the Indian Prime Minister Dr Monmohan Singh during his visit to Bangladesh in September 2011. But shipment began to fall again in 2013-14 due to a 12.5 percent countervailing duty on Bangladeshi garments.
Bangladeshi exporters came to face sharp competitiveness to the Indian garment with the levying of countervailing duty. But the subsequent slow down in overall export led to further widening of the trade gap with Delhi while the duty free exports was mooted out to reduce the gap.
There are also allegations that the Indian businesses which are operating in Bangladesh that also covers the textile and garment sector, are not interested to export their produce to India. They sell their produce in local market and export garments to global market enjoying Bangladesh’s duty free status to many developed nations.
Another reasons which worked as the biggest negative signal to Bangladeshi exporters is the non-payment of export proceeds to the tune of $5 million by an Indian trading house. The insecurity of exporters further grew with a silent role of the Indian government to force the buyer Lilliput, which is a leading kid wears brand in India to clear the payment.
Consequently, many RMG exporters are looking at other destinations than India to avoid facing embarrassing situation like workers protest in the streets demanding payment of wages when the money remained stuck with Indian buyer. At least 22 exporters of kids wear items are losing funds in the scandal.
Two reasons—tariff, non-tariff and para-tariff barriers and the Lilliput issue—have reduced Bangladesh’s exports to India, Abdus Salam Murshedy, a former president of Bangladesh Garment Manufacturers and Exporters Association reported to have explained the reasons for the decline in exports to India.
“Uncertainty for years in receiving payments from the Lilliput has acted as a warning to many others,” he said.
Moreover, the 12.5 percent countervailing duty, in addition to some non-tariff and para-tariff barriers have taken away whatever benefits were offered officially by the duty free offe, he said although he is doing business with India for long time.
Inordinate delay in finding laboratory tests results of Bangladeshi goods is yet another dissuading factor to the Indian market, he added.
The visa problem is a long time issue. These issues must be resolved soon to bring boost to export to Indian market, he said. “We need multiple-entry visas to grab more market share in India,” he emphasized.
Murshedy said India can become the second biggest apparel market for Bangladesh after the EU as the demand for Bangladeshi apparel items is rapidly growing among the Indian middle class.

Source: Weekly Holiday