CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. Bangladesh Challenges Indian Trade Policies

Bangladesh Challenges Indian Trade Policies

by Mary Swire,, Hong Kong

20 April 2010

Bangladesh has called upon India to make good its commitments to freer trade, and remove barriers that have created a significant trade imbalance favouring Indian exports.

Following amicable talks between the two countries' leaders, the Bangladeshi government is urging the removal of measures which they say are preventing Bangladesh's exports from entering the Indian market. Officials from Bangladesh’s Ministry for Commerce have estimated that trade with India, if barriers were removed, could increase two-fold immediately. Bangladesh has a trade deficit with India of more than USD3bn.

The Bangladeshi government has argued that India’s current trade practices contravene provisions of the South Asia Free Trade Agreement (SAFTA), and has said that India should hold true to its commitments to support Bangladesh as a Least Developed Country, in accordance with the rules of the World Trade Organization.

In a document obtained by the Financial Express, the Bangladeshi authorities cite a recently imposed 18% tax and other levies on clothes of Bangladeshi origin, in defiance of SAFTA which stipulates that these items must be imported duty-free.

The letter also identifies several non-tariff barriers, which it is said have halted the export of products such as food items, toiletries, leather and textile products. Of these barriers, Bangladesh has identified requirements by Indian customs authorities for costly laboratory tests and import permits, among other onerous reporting rules. Indian food importers for instance are required to pay INR3,000 (USD67) laboratory test fees for every food type imported, and for every consignment imported.

Furthermore, the Bangladeshi government called on India to improve physical facilities for dealing with imports from Bangladesh, which, the government says, inhibits trade flows.

In efforts to reverse the trade flow imbalance between the two countries, Bangladesh is attempting to encourage Indian entrepreneurs to invest in export-orientated companies in Bangladesh.

According to Bangladeshi trade officials, to encourage this, Bangladesh is to allow prospective investors the permission to establish 100% foreign-owned enterprises with incentives, namely tax exemptions on the import of capital machinery and parts for export-orientated industries, and beneficial terms when remitting capital, profits and dividends under the double tax agreement the two countries share. Also noted were the affordability of labour, plans to establish Special Economic Zones, and the availability of subsidized domestic loans.

TAGS: tax | business | India | law | tariffs | agreements | Bangladesh | trade

To see today's news, click here.


Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »

Stay Updated

Please enter your email address to join the mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.

To manage your mailing list preferences, please click here »