The commerce ministry plans to seek a waiver of the countervailing duty on Bangladesh’s garment exports to India to cut trade imbalance between the neighbouring countries.
The commerce ministry will send a letter to its Indian counterpart today asking for a level-playing field for Bangladeshi garment exporters, Shawkat Ali Waresi, a joint secretary of the ministry, told The Daily Star.
At present, Bangladeshi RMG exports to India bear a countervailing duty of 12.36 percent, which the local Indian products do as well under the guise of excise duty.
A countervailing duty is a duty imposed on imports to offset subsidies accorded to producers in the exporting country, in a bid to bring the imported price to its true market price.
The non-country specific countervailing duty has existed for long on India’s garment imports.
For fiscal 2013-14, India proposed removal of excise duty for local RMG products, a move which can make Indian products cheaper than Bangladeshi garments in the market.
“We will urge the Indian government to give national treatment to our RMG exports as well,” he added.
Manzur Ahmed, an adviser to the Federation of Bangladesh Chambers of Commerce and Industry, said the Indian proposal was discriminatory.
“It is illegal. It is a gross violation of international norms,” Ahmed told The Daily Star. “Both Indian and Bangladeshi garment makers should be equally treated.”
India turned into a major exporting destination for Bangladeshi garment makers after it announced duty-free and quota-free imports from here in 2011.
In fiscal 2011-12, Bangladesh exported RMG products worth $55.02 million to India, up 53 percent year-on-year, according to Export Promotion Bureau.
At present, trade balance between the two countries is heavily tilted in favour of India (86 percent) as Bangladesh depends on India for basic commodities, according to data from the commerce ministry.
India officially exported goods worth $3.8 billion through formal channels in fiscal 2011-12; and, according to sources, more than $5 billion through informal channels.
On the other hand, Bangladesh exported goods worth $490.41 million in that period.
“If the Indian budgetary proposal comes into effect, it will create an uneven playing field and Bangladesh will lose its business in the Indian market,” Ahmed added.