Duty free export to India: Only 650,000 out of 80 lakh pieces despatched

Syful Islam

Only 6.5 lakh out of 80 lakh pieces of Readymade Garment (RMG) so far could be exported to India with duty and quota free facilities that the neighbouring country allowed under the South Asian Free Trade Area (SAFTA) deal.

The Export Promotion Bureau (EPB) so far allocated quota of 21.78 lakh pieces RMG in favour of 32 factories. The rest 73.74 lakh pieces of RMG quota is yet to be allocated.

Only 5 months of the quota year is left to export the rest of the pieces to India.

Sources in the EPB said some strict regulations of the government have created obstacles to the export of RMG to India with duty free facilities.

According to the regulations, exporters have to collect 'Confirmed Irrevocable Letter of Credit' to get export order to India under the SAFTA facilities. Besides, quota of no more than 2 lakh pieces of RMG can be allocated in favour of an exporter.

Sources said some of the exporters already have exported 2 lakh pieces of RMG to India and they are waiting for more quota allocation. But the EPB could not allocate more quotas in favour of them due to the existing rules.

EPB's quota monitoring committee at a recent meeting has proposed the government to change the regulations allowing repeat/performance quota in favour of exporters after they export 2 lakh pieces.

Besides the committee also recommended allocation of quota to the exporters based on purchase order or contract alongside the 'Confirmed Irrevocable Letter of Credit'. They said it will ease the export procedure, expedite RMG export and free the exporters from hassle.

An official of the Ministry of Commerce said India should allow more RMG from Bangladesh with duty and quota free facilities. He said 80 lakh pieces of RMG are so little for RMG giant Bangladesh.

On September 16, 2007 Bangladesh signed a deal with India for exporting 80 lakh pieces RMG with zero-tariff access facility.The memorandum of understanding (MoU) was signed between the Commerce Ministry and the Indian High Commission in Dhaka under the purview of the SAFTA deal among the SAARC member-countries.As per the Safta agreement, developing countries in SAARC -- India, Pakistan and Sri Lanka -- will bring down their customs duties to 0-5 per cent by 2013, while the Least Developed Countries (LDCs) like Bangladesh, the Maldives, Nepal and Bhutan will implement it by 2018.