Bangladesh to ask India to lift quota system for RMG

April 7, 2010

Bangladesh has decided to urge India to lift the eight million pieces readymade garment quota, which exporters say hurt RMG shipments to the next-door neighbour.In the first year of the offer, the exporters could avail themselves of only 50 percent of the tariff rate quota (TRQ) due to the complex procedure.

A TRQ is a trade policy tool used by a country to protect a domestically-produced commodity or product from competitive imports. The quota allows a limited quantity of specified merchandise in.

At a recent meeting, the commerce ministry has decided that Bangladesh would soon ask India to withdraw TRQ for Bangladesh.

A meeting chaired by Mostafa Mohiuddin, additional secretary of the commerce ministry, focused on TRQ and how it was hurting exports to India.

It was decided that Bangladesh would explain its position first and then urge India to withdraw the ceiling on RMG exports.

Abdus Salam Murshedy, president of Bangladesh Garments Manufacturers and Exporters Association (BGMEA), said: “Export under the TRQ involves a long procedure, which sometimes discourages exporters.”

“If India really wants to make the offer meaningful it must relax rules.”

Demand for Bangladesh RMG products is high on the Indian market, but India imposes 8 percent countervailing duty, 4 percent special additional duty and some extra duties in other categories.

Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Director Md Nurul Hasan said the TRQ offer is not viable for Bangladeshi manufacturers.

With no quota ceiling in place, Bangladesh could make about $1 billion worth of garment exports a year, he hoped.

Bangladesh signed an agreement with India in September 2008 to export eight million pieces duty-free garment items a year to narrow the trade gap between the two countries.

In line with the agreement, New Delhi asked Dhaka to send the garment products by December 31 every year to reach the target.

However, India put 158 apparel products on its sensitive list of South Asian Free Trade Agreement to hinder Bangladesh apparel exports to India.

Bangladesh to ask India to lift quota system for RMG

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