India’s 12% countervailing duty on imports from Bangladesh actively hinders the ability of Bangladeshi businesses to export to the Indian market. Bangladesh is supposed to have duty-free access to India. However, one-sided non-tariff and para-tariff barriers are still keeping mutual trade grossly uneven, contrary to the aims of all recent trade talks between the two countries. Bangladesh’s trade deficit with India exceeds $5 billion annually despite mutually agreed policies to open up borders and markets. The commerce minister is right to have pointed out that the countervailing duty not only harms Bangladeshi exporters but is against the interest of Indian businesses. Speaking at the Bangladesh India Cotton Fest 2016, attended by business organisations from both countries, he noted that India is by far the largest supplier of cotton used by Bangladesh’s garment industry. Bangladesh’s imports of cotton topped 6.1 million bales, worth about $2.2bn in 2015. Demand is growing as garment exports increase, and India has a strong geographical advantage over suppliers from other nations. However, if RMG makers are hampered by remaining non-tariff barriers from growing exports of finished goods to India, diversification of imports may become seen as more advantageous. It is in the interest of both Bangladesh and India’s economies to prevent the possibility of tit for tat trade disputes and to free up barriers which limit mutual trade. As prominent members of Saarc, our two countries should be leading the way in lowering non-tariff barriers. More effort should be put into standardising certification and duty requirements, allowing mutual recognition of testing certificates for exports, and improving connectivity. A level playing field is imperative to allow both countries to properly benefit from free trade.
