Bangladeshi exporters start feeling pinch of India's new customs rules

With the new customs rules becoming effective late last year, India has now started seeking different types of documents from the Bangladeshi exporters and authorities in the name of checking the country of origin (CoO) certificates.

To avail duty-free facility in the Indian market under the South Asian Free Trade Area (SAFTA) deal, Bangladeshi exporters need to produce the CoO certificates before the Indian customs authority.

Later, the customs officials recheck the authenticity of the certificates and the content of the origination from Bangladesh's designated authority, particularly Export Promotion Bureau (EPB).

Sources said the Indian High Commission in Dhaka last week forwarded some country origination rules to the EPB for verification of their "genuineness and correctness."

At the same time, the mission added a questionnaire seeking details of the raw materials and the manufacturing process, saying this info "would assist in comprehensive verification of the CoOs."

Besides, it sought a copy of the application and the supporting documents the exporter had submitted to the EPB while obtaining the CoOs.

In case of CoO certificates verification for refined soybean oil from Bangladesh, the Indian mission has asked for clarification of why the cost of packaging materials and indirect/neutral elements have been incorporated into the calculation of value addition.

Officials concerned said the Indian Customs Rules-2020 have made many things complicated and those act as a "weapon" for customs officials to obstruct ways to obtain tariff preference by other countries.

A senior commerce ministry official said before the new customs rules came into force, the India did not ask for such documents and has never forwarded the questionnaire in detail.

In the name of verification, they did not seek the copy of the application and supporting documents submitted by the Bangladeshi exporters to the EPB, he said.

"This is a new kind of non-tariff barrier (NTB) to hinder Bangladesh's export to India," he said.

In November last year, Bangladesh requested India to withdraw its new customs rules, fearing the same will create difficulties for getting tariff preferences.

Bangladesh made the appeal after thorough examination of the new customs rules, which were passed for administration of rules of origin under trade agreements, and will ultimately govern all tariff preferences India offers to all its trade partners.

Research director of the Centre for Policy Dialogue Dr Khondaker Golam Moazzem had earlier told the FE the MoC officials need to verify whether India is following similar checking process in case of other trading partners for providing tariff preference or not.

"As I said earlier, due to such heightened procedural difficulties, Indian traders may feel discouraged to avail tariff preference, which may make Bangladeshi goods less competitive in their market," he said.

Thus, he said, import cost of Indian traders will increase and they will look for alternative sourcing options to save time and money.

"It will cast a negative impact on the overall bilateral trade," Dr Moazzem said.

In this case, the commerce ministries of the two countries can sit together to determine a standard operating procedure to avoid such complications, he added.

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