India and Bangladesh yesterday decided to find a solution to the problems arising out of New Delhi’s ban on export of cotton that has threatened spinning mills in Bangladesh.
“We will find a solution to it. I cannot disclose to you right now what decision an Empowered Group of Ministers will take on this,” said Indian Commerce Secretary Rahul Khullar in reply to a question at a joint media interaction with his Bangladeshi counterpart Ghulam Hussain here.
Answering a question before Khullar’s remarks, Hussain said he had raised the issue at the two-day meeting of the commerce secretaries which concluded yesterday afternoon.
India’s recent imposition of ban on cotton export had raised concerns in Bangladesh where a large number of spinning mills are dependent on the raw material export from India.
The Bangladesh delegation at the meeting expressed concern over ensuring uninterrupted export of cotton by India and said the country would require at least 15 lakh bales every year.
“It was decided that a contractual agreement between the Cotton Corporation of India and its counterpart organisation in Bangladesh needs to be worked out,” a joint statement said, adding that both sides would hold further discussions before end of May on this matter.
Bangladesh brought up the problems faced by its jamdani sari and soap exporters, to which India responded by saying that a notification for setting up a testing lab would be set up in Kolkata to test the dye used in jamdani saris made in Bangladesh.
The Indian side also agreed that necessary arrangements would be made to allow import of soaps through all land customs stations.
Bangladesh also pointed out that 22 garment consignments were cleared by Indian clearing and forwarding agents on the basis of “non-valid” documents leading to payment problems for exporters in Bangladesh and Indian side assured Bangladesh of considering the issue.
Bangladesh assured India that it will favourably consider India’s request for substantial reduction of its sensitive list of goods before the next meeting of the Safta Committee of Experts scheduled in May.
On the issue of India’s concern on imposition of supplementary duty over 60 percent on import of plastics, Bangladesh agreed to examine this issue and revert expeditiously.
On business visas, India said validity of visa should be co-terminus with work permits.
Both sides affirmed that reputed businesspersons should normally be granted long-term, multiple entry visas.
On the opening of branch office in India by Bangladeshi companies, India assured early resolution of the issue.
It was agreed to re-visit the present restrictions, if there is any, on investments from Bangladesh.
Bangladesh cited a specific instance of a company not being allowed to open its branch in India. They said the Reserve Bank of India had rejected the application after two years without giving proper justification.
On banking problems faced by Indian companies, which have invested in Bangladesh, the joint statement said Bangladesh assured that the matter would be conveyed to the appropriate authority for early resolution.
India also gave details about payment defaults by Bangladeshi importers arising out of non-honouring of irrevocable letters of credit (LC).
Further, India pointed out two particular problems being faced by Indian exporters including that of remittance of converted dollars (from taka) and that there is a ceiling on the repatriable amount.
“This is creating problems for knowledge-process intensive operations like software, IT and telecom and architecture.”
“The Indian side requested for allowing LC for services similar to LC for goods with no caps on the limit of remittance,” the statement said.
The two countries agreed to renew the bilateral trade agreement, which expires on March 31, for three years and agreed to further liberalise two-way flow of goods and investments.
“We have come to an agreement that the trade treaty, which was due to expire on March 31, will be extended for a period of three years,” Khullar said at the joint press briefing. The existing trade agreement between the countries came into force on April 1, 2009.
Hussain said some changes may be made in the trade agreement so that “these are capable of responding to the needs of the trade…year old agreement and protocols need to be addressed afresh.”
Khullar said India-Bangladesh relationship “is at its peak and it is a very vital and strategic partnership. We must carefully nurture this relationship.”
He said, “We have a clear plan of action of what has been done and what is to be done and we will deliver on time as far as boosting bilateral trade is concerned.”
Hussain said free flow of goods between Bangladesh and India would definitely help eliminate poverty in the two countries.
He also said he was not very concerned over the imbalance in bilateral trade heavily tilted in favour of India arguing more than 67 percent of Bangladesh’s imports from India are necessary for its own exports.
“We are not very concerned over the balance of bilateral trade. What is important is the quality of imports from India. They are not luxury goods but more than 67 percent of the goods imported from India are required by us for our exports,” he pointed out.
Besides, Bangladesh’s exports to India are also growing very fast but the gap in bilateral trade would perhaps never be narrowed, Hussain said.
Khullar said Indian investment in Bangladesh is expected to go up in time to come as India has allowed duty-free and quota-free access to garments from Bangladesh.
Some Indian companies are bound to think of the facility and take advantage of this by setting up, for example, fabric units in Bangladesh.
The two sides decided to set up four border haats along north-eastern Indian state of Tripura and are examining a proposal for four more along the border with another north-eastern Indian state of Mizoram.