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[Bangladesh] Trade Gap with Delhi Increases to $2.91 billion

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.

Very intentional non-tarriff barriers by India are the main reasons behind the increase of trade gap between India and Bangladesh. Until India rectifies the situation, this gap will keep on increasing year after after.

But, considering the Indian mind-set, it is almost impossible that any negotiations will bring any tangible results. India will keep on giving hollow promises, BD will keep on waiting, but the trade gap will also keep on increasing. Any goodwill gestures from our side is seen as a weakness.

So, BD will have to take initiatives so as to import more from substitute sources instead of India. This DADA country is so self-centered that it does not attend to the trade issue knowing very well that its actions will induce the voters in BD to dump AL in the next election.
 
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how pakistan treated east pakistan before 71 i think we are treating them much better compared to that :cheers:

Indians do not have to worry about 1971 of the past. This thread is all about the present trade gap between BD and India. India is taking all the advantage from this country. Open your market for our goods to compete against your shoddy products and shut your mouths up.
 
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This is a thread abot the trade surplus India is enjoying by superficially closing its market to BD goods. So, instead of pulling in China here, please stick to the topic.
 
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Do you have the same IQ in economics as MBI Munshi?

Its a very straight thing to understand. Consumers buy what provides them value. If Indian products were found unfit for BD consumers, they would NOT buy those products. Simple availability does not mean market. BD consumers would purchase products from other places.

Goto Pakistan and you will find tons of illegally smuggled Indian goods there, from shaving razors to what not.


Lastly, the way you spoke sounds as if good quality goods are deliberately sent to Pakistan. I think you suffer from some sort of inferiority complex. If you can make such childish arguments on economics and trade then i think i have wasted my time explaining things to you.


Studying Eco nowadays - don't worry. And I did not tell anything which can make you think about my IQ. Your reply was not to the point. I just compared the length of list of bad quality products that go to PK and BD. Definitely you substandard CNG-Autos, Cabs, fertilizers, phensidyl and so on do not go to PK. It's us who get these junks from India. I did not say about the demand of your standard and substandard products in here. Unfortunately for our poor policy we have to use these. But let us connect to Burma and China- then our demand for your both quality and poor quality products will fall soon. And you told about my inferiority complex - why on earth I will feel like that for Indian products, you no need to think about me beyond what I do not think. I am just frustrated about BD's politics and AL.
 
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Interesting how you chose to completely ignore countering each point in my post as an apparently parrotic (woops, i meant patriotic*) indian.



We do, your highness. We feel extremely inferior now that your GDP grows at 8-10%. We shall try not to feel persecuted and spread the word among the scared border people.

This cockiness has no end in sight.:hitwall:

What cockiness? What borders? What GDP?

What a moronic post. The guy told you something about basic economics and instead of agreeing (or refuting) the point, you chose to ignore it, and when I pointed it out, you bring up all this bullshit about 'growth, cockiness' and all that!
 
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Its a very straight thing to understand. Consumers buy what provides them value. If Indian products were found unfit for BD consumers, they would NOT buy those products. Simple availability does not mean market. BD consumers would purchase products from other places.
The issue is not Indian export here to BD. Issue is India has superficially closed its market to Bangladeshi products. So, lift all those unwritten laws and allow our products to enter your market as freely as we import your goods, and then, let us see if our products can compete against your goods in your own market.

But, as usual in many other posts in the past, you are beating about bush. You are parroting that Indians do not like BD goods. But, why you guys are so scared of our goods that you do not even dare to open your market?
 
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The issue is not Indian export here to BD. Issue is India has superficially closed its market to Bangladeshi products. So, lift all those unwritten laws and allow our products to enter your market as freely as we import your goods, and then, let us see if our products can compete against your goods in your own market.

But, as usual in many other posts in the past, you are beating about bush. You are parroting that Indians do not like BD goods. But, why you guys are so scared of our goods that you do not even dare to open your market?


I assume you didn't made any effort to look upon the issue rather than 'beating the bush'.

This is a good read..


On India-Bangladesh Trade Imbalances
February 2, 2010 — Diganta

I read a wonderful report presented by the World Bank (Bangladesh branch) on the prospect of India-Bangladesh FTA. It analyzes the trade between India and Bangladesh, the mismatch of the volumes, the barriers of the import-export trade, some future prospects and suggestions for both India and Bangladesh.

2010-01-11__bus02.jpg

India-Bangladesh trade​

One of the major reason of political discontent in Bangladesh is the huge trade gap (shown in the image above courtesy The Daily Star) which is also supported by the fact that India has a lot of non-trade barriers for Bangladesh exports. Although the exports from Bangladesh is growing at a healthy pace, there is no sign of squeezing the trade gap. However, the amount of loss due to non-trade barriers are never properly evaluated. As per a latest report by Bangladesh Commerce Ministry, as cited in the Daily Star, -

“the barriers to discourage import from Bangladesh are: laboratory test for every consignment of food products, cosmetics, and leather and textile products, delay in getting test results, imposition of state tax, packaging requirement, anti-dumping and countervailing duties. … Also, inadequate infrastructure facilities such as warehousing, transhipment yard, parking yard and connecting roads at land customs stations of India also hinder exports from Bangladesh, the list elaborated.”

However, the the World Bank report painted a different picture of the same. It says – “The very low level and slow growth of Bangladesh’s exports to India is not necessarily attributable to restrictive import policies in India.” (Page xxii) It argued -

1. Despite the steep reduction in import tariff, increase in Bangladesh exports remains low.
2. “Bangladesh producers’ costs are too high to compete with Indian producers, or with exporters in other countries who have to pay the higher MFN tariffs.”
3. With respect to RMG, it writes as I quote -

“Three quarters of Bangladesh’s exports are ready made garments, most of which go the US and Europe. Bangladesh RMG producers appear to have a marked labour cost advantage over RMG producers in India, owing to lower wages and similar labour productivity, but India’s specific duties on garments appear to have prevented any substantial penetration of its domestic markets by developing country clothing producers including Bangladesh. … high protection levels provided by India’s specific duties on garments are mostly redundant by wide margins.That is, actual domestic prices in India are probably not far above and may even be below prevailing international prices at the cif stage in India. It is also relevant that Sri Lanka-which is a major RMG exporter- has had negligible RMG exports to India, despite the 75% preference for garments negotiated under the Sri Lanka-India FTA.”

The report is also not upbeat about Bangladesh RMG exports in India even if all restrictions are eased out (Page xxiii). It points out that there are various reasons why Bangladesh would not have a good market for RMG in India. In brief, they are -

1. India is also a major RMG exporter. The RMG price level in India is close to that of Bangladesh.
2. Bangladesh does neither produce yarns, nor it have a textile industry to back up.
3. Bangladesh RMG industry is a value-addition (i.e. to produce shirts) on top of a textile industry (i.e.fabrics). If there are rules of origin specified in a FTA, a lot of exports would be filtered out of it.
4. Popular choice (such as : brands, style and fashion) is different and diverse in India than those in Bangladesh. Interestingly, most of the Bangladesh exported RMG is actually marketed by retailers such as Walmart in US and Europe. Since India did not open market in retails, Bangladesh exports could face hurdles in marketing their products themselves.


The study also pointed out why Bangladesh RMG exporter may not be interested in exporting in India. The margin of export would be very thin (due to small difference in retail market price) which is again vulnerable to Rupee-Taka exchange rate (i.e. if Indian rupee is devalued, the profit margin may be wiped off). Instead, if they focus on exporting the same RMG to Europe and USA where Bangladesh enjoy less tariff barriers and healthy profit margins, they can have a sustainable market share.

The report also dedicated a chapter towards the informal trade or the underworld trade (i.e. smuggled trade) between India and Bangladesh. It points out -

“All the literature on the India-Bangladesh informal trade confirms that this trade is essentially one-way, from India to Bangladesh.”

The report concluded that this trade indicates higher trade barriers in Bangladesh side and suggested Bangladesh to reduce tariffs, ease customs administration and advised both countries to improve formal infrastructure to facilitate “un-smuggled” trade.

If anyone wants insight into the India-Bangladesh trade, the composition, history and tariff and routes – this is the right report to look into. A lot of my queries were in deed answered by this one piece of study thanks to World Bank.

Further Read : Bangladesh trade competitiveness study

Bangladesh-China-Northeast India:Opportunities and Anxieties
 
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We are talking here not about whether the BD RMG sector can make a profit or not in the Indian market, but whether India will lift all those unwritten barriers that discourage our exporters to go to India. The barriers are mostly responsible for eating away our profit margins. Get away with your barriers and allow us to compete in Indian market.
 
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You didn't read the entire article.. ehh.. did you?
 
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on a serious note, what products bangaldesh make, which are competent in indian market?? care to elaborate.
 
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on a serious note, what products bangaldesh make, which are competent in indian market?? care to elaborate.

Well you can take our Garments and we need 100% quota free, then cosmetics, furnitures, pharmaceuticals, bicycle, motor cycle, ships, cements, jutes, footwear, processed food, electronics, toys, batteries, tyres, glass, pvc, plastics etc. We want our product to enter Indian market without any obstacle the same way Indian products come to Bangladesh.
 
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If you guys feel India coniders BD a dumping ground stop buying Indian products. Indian companies will run away. As simple as that. You have option to substitute them from China or Thailand. No need to vomit unproved allegation in a forum.
 
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Iajdani

Except Jute (which is better than the jute produced in India) and processed foods do not bother about the other products if you are a practical person.
 
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Iajdani

Except Jute (which is better than the jute produced in India) and processed foods do not bother about the other products if you are a practical person.

What makes you think so? What the products I mentioned earlier are renowned in world market and being exported to EU, USA, Middle East and far east. You think Indians have better standard than them?
 
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