Taking the trade route to cement bilateral ties, Prime Minister Manmohan Singh has announced duty-free import of 61 items from Bangladesh that were barred from entering India.
A majority of these items - 46 to be precise, relate to textiles, particularly readymade garments.
Dr Singh, who on his maiden bilateral visit to Bangladesh, said India was “fully alive to the problem of trade imbalance between India and Bangladesh.”
Bangladesh has long complained that trade with India was grossly unequal with India selling about $ 3 billion in goods to Bangladesh against the latter’s export of about $ 400 million business in jute, ammonia and garments.
Dr Singh said India has embarked on a series of measures to improve border infrastructure for trade and this will facilitate Bangladesh’s exports to India and provide it greater opening to India and other neighbouring countries.
He said India is also addressing issues relating to non-tariff barriers raised by Bangladesh for entry of its goods into Indian market.
Bangladesh’s request list for duty-free goods includes all the garment items where it enjoys the advantage of cheaper cost of production compared to India, Indian textile industry sources said.
Bangladesh had for the last one year been pressing India for permitting all the 61 items to be taken off the list of protected goods India maintains under South Asian Free Trade Agreement (SAFTA) because Dhaka is keen to sell them in a bid to reduce a massive gap in bilateral trade.
Bangladesh’s industry chambers claim they face high Indian non-tariff barriers, including compulsory testing of all exports, delays and poor infrastructure at border crossings, limited transport routes and hassles in obtaining Indian business visas, which increase business costs for them.
Earlier attempts to accede to Dhaka’s request had been stalled by the Indian textile mills, most of them located in the Tirupur-Coimbatore-Salem-Erode in Tamil Nadu and Ludhiana in Punjab.
D K Nair, Secretary General of Confederation Indian Textile Industry, said India is going to be affected in a “major” way especially in lower-end garment items if Indian government allows the 48 apparel items free of duty.
However, officials said India was generous today in economic dealings with Bangladesh in order to give a major boost to the current “unprecedented” momentum in bilateral relations to help bring about a paradigm shift during Dr Singh’s visit.