Garment exporters yet to reap benefit from India deal

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Doulot Akter Mala
The country's garment exporters could not reap benefit in the past two years from the agreement signed with India in 2007 that allowed duty-free export of 8.0 million pieces of readymade garments annually due to non-tariff barriers.
RMG exporters take the burden of 18 per cent hidden taxes slapped by Indian government, which is having a dampening impact on the buyers there.
Garment exporters said they exported only 20 per cent of 8.0 million pieces of RMG in 2008 and 50 per cent in 2009.
Of the quantity, woven and knitwear exporters have exported 1.5 million and 4.2 million pieces of garments in calendar 2008 and 2009 respectively.
They have blamed Indian provincial taxes, major barriers, for drop in the volume of export to India.
"We have to take the burden of some hidden taxes in exporting products to India. It is not absolutely tax-free although the agreement allows us a tax-free export," said a Bangladesh Readymade Garment Exporters' Association (BGMEA) official.
There provincial taxes include Central Value Added Tax (VAT), Education Tax Secondary (ETS), Education Tax Higher Secondary (ETHS), Special Central VAT (SCVAT), he said.
The hidden taxes of about 18 per cent have discouraged Indian buyers to import garments from Bangladesh, he said adding that many of them have stopped importing the items.
RMG export might face further blow in the current fiscal as Indian budget has imposed countervailing duty on imports of garments, the official said.
RMG importers there have been paying 3.0 to 8.0 per cent additional taxes from October, 2009 after introduction of new fiscal measure.
"A business delegation of BGMEA has discussed the matter with the Indian government. Main agenda of the team was to get Bangladesh RMG exempted from payment of countervailing duty," he said.
The team returned today (Tuesday) from India. It will review the outcome of the meeting in India within a short time, he added.