Loading...
The Financial Express

Bangla-India trade: NTBs more stringent than tariff barriers?

Published: May 22, 2017 19:05:23 | Updated: October 24, 2017 09:24:21


Bangla-India trade: NTBs more stringent than tariff barriers?

Since the signing of the South Asian Free Trade Agreement (SAFTA) there has been a series of meetings at different levels and visits of heads of state and political leaders with the express aim of increasing regional trade, specially between Bangladesh and India. However, the process did not get much of a momentum.  Trade has remained mostly one-sided.
Although there has been progressive liberalisation of tariff, diversified non-tariff barriers (NTBs) are still in place. The NTBs prove much more stringent than tariff barriers. The standard and certification regime has been a dominating factor of which private sector is not adequately informed, let alone trained on.
The trade between Bangladesh and India stands at US$6,142.12 million and import from Bangladesh to India at US$689.62 million. India has a positive trade balance with Bangladesh standing at US$5,452.90 million (2015-16).
One of the fastest growing economies in the world, India is avowedly committed to South-South cooperation and ensuring greater access to the Least Developed Countries (LDCs). It has also extended duty-free tariff preferences (DFTP) to products originating in LDCs and decreased the number of sensitive products from LDCs under the SAFTA.
While tariff has been reduced to zero across all the major export items of Bangladesh, countervailing duty has somewhat neutralised the duty-free benefits. Standards framework to ensure conformity to a quality mechanism for a variety of products also limits entry of goods and services into India.
In view of addressing the non-tariff barriers, BUILD, a private-sector think tank,  has taken an initiative and entered into an agreement with the Chemonics International Inc. under its  Asia Middle East Economic Growth (AMEG) best practices project funded by the USAID. It has been identified that among NTBs, conformity assessment, rules of origin, anti-dumping and trade facilitation are some of the important ones. BUILD plans to lead a big delegation to New Delhi where a number of government and private sector participants from both Bangladesh and India will have an opportunity to exchange points of view and clear some misunderstandings about the Conformity Assessment Standard and technical regulations issues.
BUILD, along with its counterpart CII, identified five sectors: Agro and agro-processing, jute and jute goods, plastics, RMG and clothing, leather and leather goods -- all of which have tremendous potential for export to India. Private entrepreneurs believe that if the standards and technical regulations are addressed properly, they are quite capable of increasing exports to India.
CERTIFICATE OF TEST ANALYSIS: The Food Safety Standard Authority India (FSSAI), a statutory body established under the Food Safety Act, 2006, issued a gazette notification on April 03, 2017 that authorised the Bangladesh Standard of Testing Institute (BSTI) to issue certificate of test analysis for 21 food products. These products are now being exported from Bangladesh to India. This order will definitely help Bangladeshi exporters to raise their exports.
Bangladesh requested for 27 export products, in which soap, cement, MS Rod, MS angle & plate, G.I. pipe, textile were to be included. If these six important items are included, it will boost export from Bangladesh to India. In the gazette notification, the time for which the certificate is issued was not mentioned but the BSTI usually certifies a product for three years. This also needs to be clarified through a revised notification.
Also, there can be a separate notification to the effect that if a product consecutively passes the standard test for five times, there will be no need to request for further certification for the same product of the same configuration.   
SIGNS OF IMPROVEMENT, NAGGING PROBLEMS: Bangladeshi exporters have noticed some improvement in recent times. In the past, trucks were kept waiting for long but now instant unloading of the products are possible and storage facilities are available. Tests are mostly done in Kolkata. They informed that there is a new warehouse in Karimganj. However, they want to see more infrastructural developments of land ports.
Exporters are sending solar panels to India for long. Under a MoU signed between the Bureau of Indian Standards (BIS) and the BSTI, they now need no certification and testing at ports. But the exporters are facing different types of charges, C&F charge per container in India is rational (Rs. 400) but labour tips are more than the C&F charge, which sometimes vary from Rs.650 - 700 per container. There are a labour and vehicle syndicates in almost all ports in India. So importers cannot use labour and vehicles to carry goods from the port to warehouse smoothly on their own choice. Thus businesses need to pay high amount for vehicle and labour.    
Warehouse shed is not always available. Loading and unloading are done in the no man's land. It sometimes happens that the products are very heavy. For example, lead acid battery, some of which weigh between 80 to 100 kg. Trans-shipment is one of the serious requirements for these types of products.
For some renowned exporters obtaining certificate from the National Accreditation Board of Testing and Calibration Laboratories (NABL), Standardisation, Testing and Quality Certification (STQC), Bureau of Indian Standards (BIS), Controller of Certifying Authorities(CCA), National Certification Corporation (NCC), National Accreditation Board for Certification Bodies are not very difficult. But for small and new entrepreneurs it becomes really difficult to get certification from all these organisations. Even getting information is a problem for them. Testing parameters set by the BSTI would need to be accredited for getting acceptance to the Indian market. As it has not been done so far, entrepreneurs have to get accreditation from a third country/party which increases costs for local entrepreneur. Mutual Recognition Agreement (MRA) with the representatives of organisations is important to address the conformity assessment issues. Business entrepreneurs believe that there is a serious need for harmonisation of Sanitary and Phytosanitary Measures (SPS) and Technical Barriers to Trade (TBT) in line with the SAARC standard.
The two-lane roads on both sides of the border are not enough for transportation of goods. During the rainy season long delay occur both in loading and unloading and a good number of products (carton) are damaged due to rain. Moreover, if any vehicle develops mechanical problem/fault, all vehicles behind it get stuck up. There is no place for manoeuvre. There should be vehicle loading-unloading shed for imported goods. For exports and imports, car permission up to importers' warehouses 20 km inside needs simplification.
Transshipment of export goods starts from around 10 am. Transshipments stop after 5-00 pm. So, everyday on an average 6-7 hours' time is available for both import & export. Within this time at the best 70-80 vehicles can cross the border by completing all the export formalities. This creates a big problem and increases waiting time and costs. Working hours for both ports should be round-the-clock. If required, there should be a system of alternative duty by the Land Customs Officers and their teams. At least the clearing and forwarding formalities should be started early in the morning (may be from 7-00 am) so that vehicles can be ready to cross the border by 10 am. Friday is the port closing day in Bangladesh side whereas Sunday is the port closing day in India. Thus the ports closing days reduce the working hours further. The ports should remain open on both sides for seven days a week under special arrangement.    
If trucks delay in reaching a port due to some mechanical problems, the port authorities in India do not consider receiving the shipment by importers. Thus vehicles get demurrage on the port for one or two days and it is an additional cost for exporters and importers. Loading and unloading are still done manually, causing delay and increasing cost. All products of each consignment are checked manually which is time consuming. Mechanized system for loading-unloading can avoid delay and costs. Scanning of trucks or random check should be done.
The NTBs are numerous and stand in the way of smooth expansion of bilateral trade between Bangladesh and India.
ceo@buildbd.org

Share if you like