According to Export Promotion Bureau (EPB) data, Bangladesh's exports to India stood at $1.25 billion, up by 42.91%, which was $873.27 million in the previous fiscal
Bangladesh’s exports to India, a non-traditional potential export destination, for the first time have reached the billion dollar mark, with goods worth $1.25 billion sold to the neighbouring country in the just concluded fiscal year.
According to Export Promotion Bureau (EPB) data, Bangladesh's exports to India stood at $1.25 billion, up by 42.91%, which was $873.27 million in the previous fiscal.
Of the total amount, apparel sector earned $499.09 million in 2018-19 fiscal, which is 79.09% higher compared to $278.67 million in the previous year while knitwear products accounted for $369.43 million and woven items $129.66 million.
Among other major products, Bangladesh exported to India vegetable textile fibre and paper yarn worth $141.84 million and animal and vegetable fat worth $158.57 million. It also earned $84.60 million and $33 million by exporting jute and jute goods and leather and leather goods respectively.
Currently, there are 11 countries — the USA, Germany, the United Kingdom, Spain, France, Italy, Canada, Japan, the Netherlands, Poland and India, whose imports from Bangladesh is over $1 billion. India and Poland joined the club this year.
What pushed up exports to India
Ease of non-trade barriers, incentives for non-traditional markets, production cost rise due to implementation of Goods and Services Tax (GST) in India and presence of global retailers in India have been attributed to the sharp rise.
Besides, duty-free market access is another reason.
“Bangladesh offers apparel goods at reasonable prices, while global retailers are opening more outlets in India, who buy products from here. Production costs in India increased due to implementation of the Goods and Services Tax (GST) in India,” Shahidullah Azim, a former vice president of BGMEA, told Dhaka Tribune.
As a result, demands for Bangladeshi goods increased in the country, which pushed up the export earnings, said Azim, also managing director of Classic Group.
Besides, transportation cost from Bangladesh was low, which encouraged importers to buy goods for both local brands as well as foreign brands, he added.
The economist noted that exports to India rose as the non-tariff barriers were eased, while cash incentives encouraged exporters.
“India is a growing market for Bangladesh, where non-tariff barriers were hindering exports to the neighbouring country. In recent times, these barriers are relaxed to some extent,” World Bank Lead Economist in Bangladesh Zahid Hussain told Dhaka Tribune.
In addition, exporters enjoyed cash incentives in exporting apparel goods to a non-traditional export markets, which was another big reason for the sharp rise in export earnings, said the economist.
Currently, Bangladesh government is providing a 4% cash incentives against export of apparel goods to non-traditional export destinations. India is a non-tradition export market.
“As a friend of Bangladesh, India has also given duty-free market access to all Bangladeshi goods except alcohol and tobacco. This has given opportunities to Bangladeshi exporters to attain a leap in export earnings,” former commerce minister Tofail Ahmed told Dhaka Tribune.
"During my regime, I increased cash incentives from 3% to 4% to increase performance to non-traditional export destinations," he added.
More scope to grow
Population-wise India is the second largest country after China with better purchase power. So, there is huge scope for Bangladesh to grow exporting consumer goods.
“India has become a billion dollar exports market for Bangladesh. It is a good sign, which indicates that regional market is becoming more potentials,” Centre for Policy Dialogue (CPD) research director Khondaker Golam Moazzem told Dhaka Tribune.
“But there are challenges to sustain the export growth and to grow further,” he said.
Since the Indian economy was big and had a huge population, Bangladesh should concentrate on consumers goods beyond the RMG, said the economist.
Meanwhile, Zahid Hussain suggested that the Bangladesh government negotiate with the Indian government to remove the remaining non-tariff barriers and launch join initiative to develop harmonized standard of goods.