DHAKA: Commerce Minister Tofail Ahmed has urged the Indian government to withdraw the countervailing duty (CVD) on Bangladeshi exports to help boost trade between the two countries.
Ahmed made the suggestion while exchanging views with Nirmala Sitharaman, India’s minister of state for commerce and industry, at the Bengal Global Business Summit in Kolkata on Sunday.
CVDs are tariffs levied on imported goods to offset subsidies made to producers of the goods in the exporting country. The duties are meant to level the playing field between domestic and foreign manufacturers of the same product.
“Bangladeshi businesses have been facing challenges in exporting to India due to the CVD. The Indian government should withdraw the duty to increase bilateral trade,” a commerce ministry statement quoted Ahmed as saying.
Currently, the highest rate of CVD on Bangladeshi products destined to India is 20 percent. Garments, Bangladesh’s main export item, have been facing 12.5 percent CVD since April 2013. The duty reduced the competitiveness of Bangladeshi items in India, and caused exports to fall.
This is after the Indian government allowed duty-free entry to all Bangladeshi products except 25 alcoholic and beverage items in November 2012.
With the CVD, 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.
In fiscal 2012-13, exports to India were worth $563.97 million, according to Export Promotion Bureau.
Bangladesh’s exports to India have not increased despite measures to reduce the huge trade gap between the two neighbours.
Stakeholders have identified some major impediments — a lack of product diversification in Bangladesh, non-tariff barriers, and inadequate banking facility along the bordering areas of the two countries.
Bangladesh mainly imports basic commodities from India like rice, cotton, onion, fabric, chemical products and dye, limestone, cattle, electricity, machinery and pulses. As a result, India has become a top source of Bangladesh’s imports.
Bangladesh’s imports from India were recorded at $6.03 billion in fiscal 2013-14 and $4.78 billion in the previous year, according to commerce ministry data.
