Major Impediments to export to India:

Things that are understandably creating the yawning trade imbalance between Bangladesh and India are productivity issues and structural factors. India has productive advantages both in agriculture and industry as compared to Bangladesh because of its sheer size and scale of economies. Structurally Indian economy is much larger, more diversified and technologically advanced. All these factors have made Indian products very competitive, both in terms of price and quality in Bangladesh’s markets. On the other hand, India’s imports from Bangladesh are limited to a few items, as Bangladesh does not have a large supply base to offer a wide variety of products to India. The obvious result is an increase of trade imbalance between the two nations. But if one could assume that market competitiveness and technical/technological sophistication are the only factors that have been denying Bangladesh’s goods and services in India’s large growing market, he/she would be missing the larger part of Indo-Bangladesh trade relations. The other important factors causing this imbalance are the tariff and non-tariff regimes as described below:

Tariff barriers

Duty structure imposed by the Indian authority on the products from Bangladesh is complex and difficult to interpret as the duty varies not only from category to category but also differs from product to product belonging to the similar category. In some cases, basic duty may be nil but other forms of duty, in aggregation, may ultimately precipitate to a substantial figure which is at all not encouraging for exports from Bangladesh. The following tables indicate different type of duties one has to pay to export his/her products from Bangladesh to India:

 

                                        Tables 5: Food products

Items drinks juice chips crackers Milk Fruit

                                                                                                   Candy   flavored

                                                                                                                      candy

BASIC

DUTY       0%                     0                  0%              0%            0%            0

CVD        8.24%                  0               0.00%         8.24%        14%       8.24%

CESS        3%                    0                  0%              3%            3%          3%

ACD          4%                     0                  0%              4%            4%          4%

 CVD- Countervailing duty, CESS- kind of local taxation, ACD-Additional Custom Duty

 

Table 6: pvc, plastic & light engineering products

ITEMS       PVC               Plastic                  Plastic household          Hand tube

                    pipes             Furniture             items                                 well

BASIC

DUTY        12.5%                 0                        12.5%                                0%

CVD          8.00%                8%                      8.00%                                8.00%

CESS         3%                     3%                     3%                                      3%

ACD          4%                     4%                     4%                                      4%

 

It is observed also that there are different types of duty structures for similar types of products from which one may conclude that the duties are randomly imposed/calculated in terms of Bangladesh’s export to India. The following tables reflect the same.

 

                            Table 7: Drinks

ITEMS                         Litchi Drink                       Junior Juice

BASIC DUTY                     0%                                         0

CVD                                  8.24%                                       0

CES                                     3%                                         0

ACD                                    4%                                        

 

                               Table 8: Chips/Crackers

ITEMS                              CHIPS                           CRACKERS

BASIC DUTY                      0%                                      0%

CVD                                     0%                                    8.24%

CES                                     0%                                      3%

ACD                                    0%                                      4%

Interaction between Bangladesh and North-Eastern part of India

The major business/investment destinations in the north-east fall within 20 km perimeter from the Bangladesh capital, Dhaka which gives an exclusive attraction for business between Bangladesh and North-East India. Apart from the distance, the cultural affinity and similar needs and demands of their people also facilitate their bondage in many areas including trade and commerce. The table furnished below explores the competitive advantages of North-East India: