India offers duty concessions to Bangladesh under a free trade pact. A close watch will be kept on garment imports under the South Asian Free Trade Area agreement entering the country via Bangladesh. Cheap imports from other countries are coming to India via Bangladesh. Now checks are being done to ensure only Bangladesh origin imports enter India. Origin certificates issued for such consignments by Bangladesh trade bodies will be carefully examined. Such imports using the FTA route without any value addition don’t just defeat the whole objective of the agreement but also hurt the Make in India initiative.
The South Asian Free Trade Agreement mandates 30 per cent local value addition in least developed countries for import by other nations. Local value addition norms are incorporated in the trade pacts to not just protect the importing partner but also to ensure contribution to the exporting partner’s economy and local job creation through stringent value addition criterion. A show-cause notice was issued in early August to Future Enterprises on 83 garment consignments, allegedly imported from third countries and routed via Bangladesh to take advantage of zero import duty. The fear is that the route could be abused by other importers.