Exporters fear more trade barriers over India’s new customs rules

Jasim Uddin | Published at 10:29pm on July 08, 2020


India’s move to introduce a stringent customs provision empowering customs officials to administer rules of origin under preferential trade agreement may appear as a new non-tariff barrier to Bangladesh’s export to the country, experts and trade leaders said.

They said that Bangladesh’s export which had been facing numerous NTBs, including testing, standardisation and product specific barriers, to India might face a blow due to the new provision called administration of rules of origin under trade agreement.

Indian move came at a time when Bangladesh’s export, particularly readymade garment products, to the country is set to get momentum and the overall export to India for the first time exceeded the $1-billion mark and stood at $1.25 billion in the fiscal year 2018-2019, they said.

Such provision which ultimately would turn into an NTB will further widen the existing huge trade imbalance worth more than $7.5 billion against Bangladesh, they added.

India through the Finance Act-2020 introduced the provision empowering the customs officials to reject and suspend the preferential benefits and take other administrative measures if they believe that the country of origin has not been met.

The provision also set a number of conditions, including making a declaration that goods quality for the benefit and exercise reasonable care as to accuracy and truthfulness of information related to country or origin criteria, for claiming for preferential rate of duty under trade agreement.

India’s commerce and industry ministry has requested the finance ministry to introduce stringent provisions related to rules of origin, to empower customs officers for checking the abuse of FTAs, and stricter scrutiny of goods coming from Bangladesh, Sri Lanka, South Korea and the ASEAN bloc amid fears of Chinese imports increasingly being routed through these countries, according to a report of the Economic Times.

Bangladeshi goods, except 25 items related to liquor and tobacco, get duty-free market access to India as a least developed country. India has offered the benefit under the South Asian Free Trade Area.

Former Bangladesh Knitwear Manufacturers and Exporters Association president Fazlul Haque told New Age that the implementation of the measures would affect Bangladesh’s export which had already been facing many others non-tariff barriers.

‘Apparently, India may adopt the measures to stop entering Chinese goods through the countries, but it will ultimately shrink Bangladesh’s export as importers will feel discouraged to import from Bangladesh due to the barrier,’ he said.

It will be added as new hindrance along with existing obstacles to the bilateral trade, he said.

Bangladesh Chamber of Industries president Anwar-Ul-Alam Chowdhury Parvez said that it would discourage Indian importers to import products from Bangladesh as there would be no guarantee that customs would release goods.

Customs may suspend the benefit showing numerous reasons including country of origin and value addition, if they wish, he feared.

It will create uncertainty among importers, he added.

He said that Bangladesh commerce ministry with Bangladesh Garment Manufacturers and Exporters Association should take the issue with Indian side to halt the move.

South Asian Network on Economic Modeling executive director Selim Raihan said that India often raised such issue whenever export of any product from Bangladesh to the country increased.

A country can check violation of any condition such as country of origin of trade agreement but it is against the international norms to introduce additional measures to create hindrance to trade under the FTAs, he said.

The proposed provision will give huge discretionary power to Indian customs officials to create hurdle to Bangladesh export, he said.

‘Bangladesh’s export will face a new blow,’ he said.

Such protectionism for neighbouring countries is also not positive for India amid discomfort with China as it would also breach the confidence of neighbours, he observed.

India should remove existing NTBs for Bangladesh’s export, not create any new problem, he added.