India hints at lifting 12 per cent CVD on BD RMG soon

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Syful Islam Neighbouring India is likely to withdraw the 12 per cent countervailing duty (CVD) it charges on apparel imports from Bangladesh, official sources have said. Indian revenue secretary Sumit Bose in New Delhi recently assured a high-level Bangladesh delegation of positively considering the issue, when his attention was drawn to it by the latter. "We'll verify the issue and may give a positive decision in the bilateral meeting of the joint working group on customs in late October," he was quoted as saying to the Bangladesh delegation. The joint working group meeting is scheduled for October 20-22 in Dhaka where Bangladesh will raise the issue again. Mr Bose is likely to head the Indian delegation in the meeting. Officials said last year India granted duty-free access to its market for all but 25 goods from least developed countries (LDCs) under the SAFTA (South Asian Free Trade Area) accord. As an LDC, Bangladesh is also enjoying the facility. However, readymade garments (RMG) from Bangladesh are facing a tough competition in the Indian market as New Delhi imposes CVD at a rate of 12 per cent on the apparels. Sources said India was charging 12 per cent excise duty on its domestic apparel production. So to ensure a level-playing field for both local products and imports, it imposed the 12 per cent CVD after granting the duty-free access for all but 25 goods from the LDCs. However, in the last fiscal budget India withdrew the excise duty on the local apparel production, but it did not withdraw the CVD creating an uneven competition for the exports to Indian market, the sources said. Sources said during the meeting the Bangladeshi delegation informed Mr Bose that the 12 per cent CVD reduced competitiveness of Bangladeshi exporters and hindered the level-playing field. Resultantly it has emerged a barrier to reducing the trade gap between the two countries. Referring to Bangladesh's trade gap with India, the sources said even the duty-free access facility could hardly reduce the imbalance. The Bangladeshi delegation told Mr Bose that such discrimination would further widen the gap since export of apparels, Bangladesh's major export item, face the CVD barrier. They also said the CVD went against the spirit of SAFTA which was aimed at creating a duty-free regional trade bloc. Abdus Salam Murshedy, president of the Exporters Association of Bangladesh (EAB), told the FE Sunday that when India granted the duty-free access for almost all LDC goods, it should not create such an obstacle to export of any specific goods. "Our competitiveness is being eroded as India is realising CVD," he said, adding the obstacle should be removed through discussion at the government level. "India itself is a big apparel producer. It should be transparent on what facilities it is offering to small neighbours. These small barriers should be removed," Mr Murshedy opined. Statistics shows that in the last fiscal year (FY) Bangladesh exported goods worth US$563 million to India, while it imported goods worth over $4.8 billion widening the trade gap further.