South Asian Media Net
BHUTAN INDUSTRIES YET TO TAP BD OPENING
Thursday, September 30,2010
THIMPHU: Despite several intermediary industrial products being on the list of 18 Bhutanese products that got duty free entry to the Bangladeshi market three months ago, industrialists say they are yet to fully explore the new opening.
Some industrialists have exported some amount, but say that striking a deal and getting a good price is fraught with difficulties because of competition with Indian exporters, the fluctuating US dollar rate and the rising transportation costs.
Industrial and construction material like boulders, dolomite, gypsum, limestone, calcium carbonate, ferro-silicon and billets are some products that got duty free access to Bangladesh from June this year.
In spite of the duty exemption, Bangladeshis arent willing to pay higher and theres always the problem of delay in payment, said a ferro industrialist, who exported about 100 metric tonne (MT) of ferro silicon to Bangladesh last month.
Ferro industrialists said they prefer to sell to the Indian market that had a huge demand, compared with Bangladesh. Indian importers also paid in advance.
A steel industrialist said it was difficult to compete with Indian exporters, who get export incentives and excise duty refund or duty drawbacks.
An Indian exporter in a telephone interview told Kuensel that, when they export to Bangladesh or any other country, that brings hard currency earnings, exporters get incentives.
For instance, for billets, they get four percent of the capped value of Nu 21,000 per MT, from the export promotion councils of India. Similarly the percentage of drawback differs on other steel products. This means a refund of about Nu 840/MT, apart from the excise duty refund, he said.
Bhutanese dont get such incentives, said a steel industrialist, who exported about 300 MT of billets to Bangladesh this year. While Indian exporters get the excise duty refund; for us, its a cost component, because the government takes it and we have to price our products comparatively higher.
He also said that he would be able to export up to Nu 2.5M a month, had the market situation been conducive enough.
Some steel industrialists said that they get up to USD 600 a MT on an average from exports to Bangladesh and about Nu 26,000 a MT to India. Steel prices, however, remain volatile, with prices changing on a daily basis, depending on the demand worldwide.
A Bangladeshi exporter told Kuensel that billets manufactured in Bhutan were about 11 percent higher in price compared with billets from India, even after paying the import duty of 2,500 takka an MT or about USD 35 on Indian billets.
In India, under the (central value added) cenvat scheme, a manufacturer of the final product or provider of taxable service is allowed to take credit of duty of excise, as well as of service tax paid on any goods used in the manufacture of capital goods, states Cenvat credit rules of 2004.
This allows Indian manufacturers to have a more competitive edge over products manufactured in Bhutan that uses raw materials from India, said the Bangladeshi importer.
After the implementation of the load limit in West Bengal, transportation cost has also doubled, said industrialists. Earlier, it was Nu 350 a MT for to the Bangladeshi border, but now it is around Nu 700 a MT, they said.
The Bhutan ferro alloys ltd, Ugyen ferro alloys ltd, Druk Wang alloys ltd, Bhutan ferro industries and Druk ferro alloys ltd in Pasakha and SD eastern Bhutan pvt ltd in Samdrupjongkhar are operating at about 70 percent of their installed capacity of 0.010M MT a year.
The five steel industries at Pasakha operating at about 31 percent of installed capacity of 0.500M MT manufacture TMT bars, billets, ingots and structural steel, which are mainly sold to India.
BHUTAN INDUSTRIES YET TO TAP BD OPENING
Thursday, September 30,2010
THIMPHU: Despite several intermediary industrial products being on the list of 18 Bhutanese products that got duty free entry to the Bangladeshi market three months ago, industrialists say they are yet to fully explore the new opening.
Some industrialists have exported some amount, but say that striking a deal and getting a good price is fraught with difficulties because of competition with Indian exporters, the fluctuating US dollar rate and the rising transportation costs.
Industrial and construction material like boulders, dolomite, gypsum, limestone, calcium carbonate, ferro-silicon and billets are some products that got duty free access to Bangladesh from June this year.
In spite of the duty exemption, Bangladeshis arent willing to pay higher and theres always the problem of delay in payment, said a ferro industrialist, who exported about 100 metric tonne (MT) of ferro silicon to Bangladesh last month.
Ferro industrialists said they prefer to sell to the Indian market that had a huge demand, compared with Bangladesh. Indian importers also paid in advance.
A steel industrialist said it was difficult to compete with Indian exporters, who get export incentives and excise duty refund or duty drawbacks.
An Indian exporter in a telephone interview told Kuensel that, when they export to Bangladesh or any other country, that brings hard currency earnings, exporters get incentives.
For instance, for billets, they get four percent of the capped value of Nu 21,000 per MT, from the export promotion councils of India. Similarly the percentage of drawback differs on other steel products. This means a refund of about Nu 840/MT, apart from the excise duty refund, he said.
Bhutanese dont get such incentives, said a steel industrialist, who exported about 300 MT of billets to Bangladesh this year. While Indian exporters get the excise duty refund; for us, its a cost component, because the government takes it and we have to price our products comparatively higher.
He also said that he would be able to export up to Nu 2.5M a month, had the market situation been conducive enough.
Some steel industrialists said that they get up to USD 600 a MT on an average from exports to Bangladesh and about Nu 26,000 a MT to India. Steel prices, however, remain volatile, with prices changing on a daily basis, depending on the demand worldwide.
A Bangladeshi exporter told Kuensel that billets manufactured in Bhutan were about 11 percent higher in price compared with billets from India, even after paying the import duty of 2,500 takka an MT or about USD 35 on Indian billets.
In India, under the (central value added) cenvat scheme, a manufacturer of the final product or provider of taxable service is allowed to take credit of duty of excise, as well as of service tax paid on any goods used in the manufacture of capital goods, states Cenvat credit rules of 2004.
This allows Indian manufacturers to have a more competitive edge over products manufactured in Bhutan that uses raw materials from India, said the Bangladeshi importer.
After the implementation of the load limit in West Bengal, transportation cost has also doubled, said industrialists. Earlier, it was Nu 350 a MT for to the Bangladeshi border, but now it is around Nu 700 a MT, they said.
The Bhutan ferro alloys ltd, Ugyen ferro alloys ltd, Druk Wang alloys ltd, Bhutan ferro industries and Druk ferro alloys ltd in Pasakha and SD eastern Bhutan pvt ltd in Samdrupjongkhar are operating at about 70 percent of their installed capacity of 0.010M MT a year.
The five steel industries at Pasakha operating at about 31 percent of installed capacity of 0.500M MT manufacture TMT bars, billets, ingots and structural steel, which are mainly sold to India.
