Professor Mustafizur Rahman on Bangladesh’s obstacles to avail duty-free access

Published in The Daily Observer on Thursday, 7 August 2014.

BD yet to tap India’s ‘seven-sister’ market

Saifunnahar Sumi

Bangladesh is yet to tap potential of a huge market of over 100 million people in the ‘seven-sister’ states of neighboring India to raise the country’s export volume, despite Delhi’s duty-free access for Dhaka products since 2011.

The country’s exports to the neighbouring country are very poor, though it enjoys the zero tariff benefit for 25 products, including apparels. India has a huge market of US$ 30 billion.

Bangladesh’s electronic items, motorcycles, dry food and apparels are in high demand in India. One and half years ago, Bangladeshi company Runner and Walton wanted to export 50- 90 cc motorcycle and the government gave a green signal to such exports through Agartala-Benapol port but the exports yet are yet to be seen, a commerce ministry official said.

Though the volume of trade between the two countries increased over the years, proportionately it declined.

Export Promotion Bureau data show Bangladesh exported products worth US$ 456.63 million in the 2013-14 financial year (FY), $563.96 in FY 2012-13 and $498.42 million in FY 2011-12, while it imported products worth $5513.23 million in FY 2013-14, $4740.65 million in FY 2012-13, and $ 4755.00 million in FY 2011-12.

Trade analysts attributed the failure of Bangladesh’s taking advantage of the duty-free access to Indian market to lack of leadership, coordination, infrastructure bottlenecks and cumbersome export procedure.

Center for Policy Dialogue (CPD) Executive Director Professor Mustafizur Rahman in a recent study report identified four hurdles in this case, such as poor infrastructure, inadequate customs and port facilities, non-tariff barriers and cumbersome export procedures and documentation.

“But the bottom line is that lack of initiative and coordination are the stumbling block to boosting exports to India,” he said.

A large volume of Bangladeshi apparels are being sold to Indian markets through giant international buyers. If those can be sold directly to the Indian market, then both the delivery time and cost can be saved, according to people close to the trade.

Basically, Bangladeshi garment businesses could not meet the demand due to lack of capacity as the fashion of Europe and India are not the same and profit margin is less than Europe. It needs time to build capacity, sources at the commerce ministry said.

Abdul Awal Mintoo, former president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said: “Still we’ve a long way to go. We don’t have enough exportable products, causing yawning trade gap between the two nations.”

He said besides infrastructure and non-tariff barriers, there is political problem.

Mintoo also pointed out that Bangladesh’s exports to India account for only 0.13 per cent of the global imports by the neighboring country, while India’s exports account for 16 per cent of Bangladesh’s total global imports.