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Bangladesh’s Benefits from India Eroded by Countervailing Duties

By   /   March 22, 2016  /   No Comments

India / Bangladesh – Bangladesh’s garment exporters cannot enjoy the zero duty benefits provided by India due to the presence of countervailing duty (CVD) and other non-tariff barriers, Commerce Minister Tofail Ahmed said. India has started giving Bangladesh the duty-free benefit for all but 25 alcoholic and drug items in 2011, he said.

Unfortunately, our exporters face 12.5 percent countervailing duty for access to the Indian market.”

CVDs are tariffs levied on imported goods to offset subsidies made to producers of the goods in the exporting country.It is usual that the balance of bilateral trade is in favor of India as Bangladesh imports a lot of goods from the neighboring country every year. “Bangladesh is also gaining from the bilateral trade with India.”Ahmed spoke at the first Bangladesh-India Cotton Fest 2016, at the Radisson hotel in Dhaka where cotton suppliers from India, spinners, importers and yarn makers from the two countries participated. Bangladesh Cotton Association (BCA), Bangladesh Textile Mills Association and Indian Cotton Association Ltd (ICA) jointly organized the daylong event.

Harsh Vardhan Shringla, Indian high commissioner to Bangladesh, said the timely supply of Indian cotton and yarn plays an important role in turning Bangladesh into the second largest garment exporter worldwide.Bangladesh’s exports to India grew 15 percent year-on-year in the last fiscal year and 22 percent year-on-year in the first six months of the current fiscal year, Shringla said.

“Sustainable supply of Indian cotton is very important for Bangladesh.” Bangladesh has more than 400 spinning mills and the domestic cotton users imported 6.1 million bales of cotton at a cost of $2.2 billion in 2015, said Tapan Chowdhury, president of BTMA. One bale weighs 480 pounds, or 218kg. Cotton imports rose to 6.1 million bales in 2015 from three million bales in 2006, according to data from BTMA.

The rise in cotton import is attributed to the establishment of new spinning mills and capacity expansion of the old plants, he said. At present, BTMA’s mills can produce 2,250 million kilograms of yarn with over 11 million spindles.Bangladesh’s cotton import will grow further as Bangladesh will need to consume more cotton to achieve the $50 billion garment export target by 2021, he said.India has the potential to continue being the major cotton supplier to Bangladesh, as it the biggest grower of cotton and enjoys natural advantages over the neighbors because of its geographic location, he said.

In recent years, cotton import from India has grown significantly largely because of improvement in cotton quality, improved supply chain management and shorter lead-time, Chowdhury said.Sometimes, the foreign suppliers put importers in an adverse situation by withholding their suppliers citing different reasons, supplying cotton in small quantities and with variations in quality, Chowdhury said.“I strongly feel that such impediments should be avoided at any cost to build a strong and long lasting trading relationship between the cotton traders of our two countries.”Badsha Mia, president of BCA, and Mahesh Sharda, president of ICA, also spoke.

Source: The Daily Star

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