Non-tariff barriers hindering Bangladesh-India trade growth

Trade experts on Sunday blamed non-tariff barriers for impeding Bangladesh-India trade growth.

Historical trade barriers between Bangladesh and India should be removed for the acceleration of trade growth, they said at a dissemination workshop titled ‘Bangladesh – Leveraging Growth Opportunities in the Neighbourhood’.

The Policy Research Institute of Bangladesh and the World Bank Group jointly organised the event at the PRI conference room in capital Dhaka.

Former Dhaka Chamber of Commerce and Industry president Asif Ibrahim said that although India extended duty-free market access for Bangladeshi products under a regional agreement, the trade and business between the two countries were hindered due to bureaucratic bottlenecks and non-tariff barriers.

Despite having opportunity for Bangladesh to export food items to northeast India, huge quantity of food items including vegetables is wasting in Bangladesh as the country lacks enough facilities to preserve the items, he said.

Asif urged the government to enhance cooperation between Bangladesh and the states of northeast India in the area of tea plantation.

He also urged Bangladesh Bank to rethink the foreign exchange regulation to keep the country competitive in the global export market.

Kamran T Rahman, president of Bangladesh Employers’ Federation, said that non-tariff barriers were playing a vital role in raising the cost of business between Bangladesh and India.

‘It’s a big impediment to Bangladesh business growth,’ he said. He termed the imposition of anti-dumping duty on Bangladeshi jute products by India unfortunate and said that along with the private jute mills workers, the workers of state-owned mills were suffering for the duty imposition.

Mentioning the issue of regional connectivity, Kamran said, ‘We want connectivity with the northeast region of India but it should not be one sided. We have to be informed how much Bangladesh would get from an Indian lorry for transit.’

Bangladesh can leverage the growing connectivity of northeast India and its emerging value chains for its own growth and consumers welfare through access to cheaper and greater variety of products, Sanjay Kathuria, lead economist of World Bank South Asian region, said in a presentation.

He said Bangladeshi consumers would be benefitted from emergence of another competing source of product imports as northeast India produces a variety of fresh fruits and vegetables and spices.

To secure a steady supply of raw materials Bangladeshi firms could explore investment opportunities in northeast India to strengthen competitiveness, Sanjay said.

He suggested revisiting the outward foreign direct investment policy and said FDI policy in Bangladesh needed to go beyond case-by-case approval towards gradual expansion of limit to allow mature Bangladeshi farms to grow beyond their borders.

Prime minister’s private industry and investment affairs adviser Salman F Rahman said that the government had taken a very ambitious plan to go to the next level of economic growth.

‘We have to achieve double digit growth and to continue with a certain period to go to the next level,’ he said. Salman said that the dependency on only readymade garment was the basic weakness of Bangladesh and the government had decided to diversify its export basket.

In the coming budget the government would provide same benefits for all export sectors, he said. ‘We have taken initiatives to improve doing business situation and in certain area work had been done,’ Salman said. He hoped that the rank of doing business would improve to 150 from existing 176.

Bangladesh’s economic growth could be 1-2 percentage points higher through regional integration but policy barriers and lack of harmonisation of trade regulation with global partners were hindering the opportunity, said PRI chairman Zaidi Sattar. He said that anti-export bias of trade policy would have to minimise in order to ensure traction in export diversification with robust export growth in RMG and many non-RMG products.

‘Modernising and mainstreaming trade policy is now a national imperative,’ he added. Bangladesh Enterprise Institute president Farooq Sobhan said that time had come for Bangladesh for negotiating free-trade agreement with India.

He stressed strong lobby with India to fight for market access saying that historical trade barriers should be removed.

‘We need to widen the range of products and it is possible to increase Bangladesh’s export to India to $6 billion from existing one billion within next five years,’ he said.