Bangladesh unhappy over tax on ‘duty-free’ garment exports

The industrial lobby of Bangladesh on Monday urged India to do away with certain import taxes imposed on Bangladesh garments even though these are supposed to be duty-free under the South Asian Free Trade Area (SAFTA) agreement. Under the agreement signed in 2007, Bangladesh can export eight million garments to India every year duty-free.

''Although the import duty is nil, there are some levies such as education tax and VAT which are being imposed. This is impeding exports under the scheme,'' Annisul Huq, president of the Federation of Bangladesh Commerce and Industry, said during a conference in Dhaka.

Speaking on the sidelines of the conference on India-Bangladesh economic relations co-organised by the Federation of Indian Chambers of Commerce and Industry, Huq said, ''We have been given 8 million pieces of duty-free garments, but although the customs duty is nil, there are almost 18 per cent taxes. So the benefit of the scheme is not being fully utilised.'' He added that thanks to the additional imposts, a mere 10 per cent of the total quota was currently being met.

Trade expansion and reduction of the current trade imbalance in favour of India were the agenda-topping subjects at the conference. A 48-member FICCI delegation arrived in Dhaka on Sunday morning for the conference.

In FY08, Bangladesh exports to India stood at $358.08 million against import of $3.375 billion, according to the statistics compiled by the FBCCI.

Bangladeshi business leaders are also seeking investments, particularly in the energy and infrastructure sectors from Indian investors aiming to strengthening bilateral trade relations.

Bangladesh mainly exports chemical products, raw jute, agro-products, jute goods, frozen fish, leather, woven garments, tea and knitwear, toilet soap to India. It imports textiles and textile articles, vegetable products, mineral products, prepared foodstuffs, beverages, sprits and vinegar, vehicles, aircraft, vessels, live animals and associated transport equipment.