Dhaka clarifies stance about India’s new customs rules on Bangladeshi export

Dhaka has requested New Delhi not to impose its new customs rules on Bangladeshi exports, rather to comply with regional agreements for bilateral trade.

On 28 October this year, the commerce ministry sent a letter in this regard to India as per Delhi's request at a secretary-level meeting in March this year to "clarify the stance officially".

"In that letter, we have clarified how the new rules contradict the regional trade agreements and will hurt Bangladeshi exports to India," a commerce ministry official who is privy with the matter told The Business Standard Sunday.

"There are no reasons that support the customs rules to be effective on Bangladeshi exports though India defends the enforcement, terming Bangladesh as one of its Most Favoured Nations. Bangladesh does not enjoy duty-free market access to India under any bilateral trade deal, rather the facility comes as part of regional trade agreements," the official said in Dhaka's arguments.

Bangladesh, as a least developed country, gets duty-free facilities for all exports to India, except for 25 liquor and tobacco goods. The facilities come as part of agreements including the Saarc Preferential Trading Arrangement (Sapta), the South Asian Free Trade Area (Safta), and the Asia-Pacific Trade Agreement (Apta).

Under these agreements, the Export Promotion Bureau (EPB) issues and verifies certificates of origin for products exported to India. It also assures that the rules of origin of the products are being adhered to.

But as per India's new customs rules that came into force on 21 September last year, the power of verification rests with India's customs officials. They will decide whether or not to grant duty-free facilities by collecting information about the goods in question from Bangladeshi exporters (via importers in India).         

In the recent letter, the commerce ministry official said India has been requested to follow the trade provisions including the rule of origin stipulated in the regional agreements.               

"Bangladesh expects a written assurance from neighbouring India that regional trade agreements will override if any provision of the new customs rules contradicts the multilateral deals," added the official.       

After the issuance of India's Customs (Administration of Rules of Origin under Trade Agreements) Rules 2020 in September last year, Dhaka sent a letter to Delhi in October last year requesting not to enforce it on Bangladeshi products.  

As the request was not acted upon, Dhaka sent a diplomatic note to Delhi in December last year with the same request. But the request too did not meet with any response.   

At a secretary-level meeting between the two neighbours in Dhaka in March this year, Dhaka again raised the issue. India then recommended clarifying Bangladesh's stance officially.    

The commerce ministry official said, "We have requested India multiple times but to no avail. The country has enforced the new customs rules completely. However, Bangladeshi businessmen so far did not complain to the ministry over any newly emerged export issue."  

According to the Bangladesh Bank, Bangladesh's import from India was around $5.79 billion in the 2019-20 fiscal year. On the other hand, Dhaka's export to Delhi was $1.26 billion in the 2020-21 fiscal year.