NEWS report said the Indian government has demanded scrapping of duty on import of non-alloy steel billets under South Asian Free Trade Area (SAFTA) deal although it will seriously affect local industry. As per National Board of Revenue (NBR) Bangladesh private sector has made enormous investment in this sector and capable to supply 90 percent of the product locally. The removal of the duty may only make local industry vulnerable to cheaper Indian exports and cause huge financial loss to the government.
The budget for 2016-2017 scrapped the duty-free benefit for the product and imposed a 20 percent regulatory duty and 15 per cent VAT in a bid to protect the domestic industry. Until June 2, customs duty on import of the product was Tk 7,000 a tone from which the Indian exporters were exempted under SAFTA deal. The Commerce Ministry reduced the import duty of the product to zero in case of import from India, which came into effect from January 2016. But since the NBR favoured fresh duty to protect local investment the new budget introduced import duty and VAT that India now wants to go. It is a precarious situation to hit the local market. The Indian High Commission in Dhaka has sent letters to Foreign Ministry and the Ministry of Commerce to make a positive decision in this respect.
Billet, is a semi-finished steel product used in producing MS rod, bar and other steel products. Import from India experienced sudden increase due to zero duty-benefit. The NBR wanted to rein in the situation. Now any duty-free benefit may pose a threat to huge domestic investment. Local companies including two major steel mills have added their capacity to produce billet. The production may start soon and the removal of import duty may throw them to stiff competition. Their investment may face threats. The Indian High Commission however claimed that the new duty structure has reduced SAFTA benefit to Indian exporters to zero and was adversely affecting their exports. Many exporters may face difficult situation as their goods were already in transit to Bangladesh.
In our view trade is a two-way traffic and the question is whether or not India is offering similar benefit to Bangladesh in case of products under duty-free list. We know that India is charging 20 percent Countervailing Duty (CVD) in case of major duty-free exports and apparel products have to pay 12.5 percent CVD in entering Indian market. Export fell 19 percent down last year from previous year. When India wants to benefit why Bangladesh not is the big question.
