The Indian move to slap import duty will hit Bangladesh's apparel exports, thus widening further the ballooning bilateral trade gap, officials say.
The duty imposition will also go against the provisions of the South Asian Free Trade Agreement or SAFTA under which India granted duty and quota-free access of the goods from the least-developed member countries of the regional trade bloc to its market, they added.
New Delhi moved to impose import duty on Dhaka's clothing export pressed by the lobby group the Clothing Manufacturers Association of India or CMAI.
Against this backdrop, the Bangladesh ministry of commerce has asked the Export Promotion Bureau to examine the possible impact of the duty imposition. The Bureau has recently forwarded its opinion to the ministry.
Bangladesh exported goods worth US$1.096 billion to India in the fiscal year 2019-20, of which $420.72 million or almost 47 per cent was textiles products.
The EPB study reveals that Bangladesh, despite being the second-largest apparel exporter in the world, has only 13.71 per cent share in the Indian import of clothing from rest of the world.
On the other hand, Dhaka imported goods worth $7.645 billion from New Delhi in fiscal year 2018-19, which was 13.66 per cent of Bangladesh's total global imports.
The EPB said the balance of trade between Bangladesh and India has always been skewed in favour of the latter. Bangladesh has been trying for a long to enhance its exports to India with an eye to slashing the gap-the effort has seen modest success in recent years.
The demand for Bangladesh's textile and apparel goods in India has recently been rising since many international retailers are directly sourcing readymade garment from Dhaka, the EPB said.
Contacted on Friday, EPB vice-chairman A H M Ahsan said the bilateral trade gap between the two countries is high historically.
"If any tariff is imposed on the textile articles of Bangladesh, the trade gap will widen further," he told the FE.
The EPB suggested that Dhaka should convey New Delhi its concern about the move to impose duty/tax on any article of textiles imported from Bangladesh.
It also suggested reminding the giant neighbour that any move to impose duty/tax on any commodity imported will increase the trade gap. The unilateral imposition of the duty out of the SAARC Forum will contravene to the provisions of the SAFTA.
"Bangladesh may also inform India that as Bangladesh imports large quantity of yarn and fabrics from India, any fall in export from Bangladesh will also have a negative impact on the import from India," it said.
The EPB also suggested informing the Indian side that in the event of imposition of any tariff on any item of import from Bangladesh to India, the country will be left with no choice but to reciprocate with similar/appropriate protection safeguard measures.
Vice president of the Federation of Bangladesh Chambers of Commerce and Industry Siddiqur Rahman told the FE on Friday Bangladesh's apparel export to India is meagre compared to the large volume of raw materials imported from that country for its clothing industry.
"The bilateral trade imbalance is exceptionally high, thus the Indian government should easily overlook the less than half a billion-dollar apparel export there instead of imposing a duty," he said.
"Indian is now using our ports to carry goods to its seven sister states where its vessels get priority berthing instead of us," said Mr Rahman who is an apparel exporter.
Mr Rahman said Bangladesh's relations with India are now friendly, thus the government of the two countries should sit together to resolve the issue through discussion.