India has requested Dhaka to allow duty-free export of their non-alloy steel billet to Bangladesh through a reversal of the recently levied regulatory duty and value added tax (VAT) on the item.
To back up their desire, the Indian High Commission in Dhaka in a letter to the Bangladesh government cited the South Asian Free Trade Area (SAFTA) rules.
The government has withdrawn the zero-duty benefit for the item under the SAFTA agreement in the budget for current fiscal year.
In the budget for fiscal year 2016-17, the government has introduced 20 per cent regulatory duty and 15 per cent VAT to protect the domestic industry. However, it has waived the customs duty (CD) on the product.
"This has effectively reduced the SAFTA benefits to Indian exporters to nil and is adversely affecting their exports. Since the duty structure has been imposed and adjusted with immediate effect, it has also led to a difficult situation to the Indian exporters whose goods are already in transit to Bangladesh," the high commission letter reads.
Customs officials said import of billet is subject to duty of Tk 11,500 per tonne for import from India under the current duty structure for both SAFTA and non-SAFTA countries. Until FY 2015-16, import of the item had required Tk 7,000 per tonne for other countries, apart from India.
In the recent letter, the Indian mission in Bangladesh requested the ministry of foreign affairs to take necessary steps for restoring the duty on non-alloy steel billets to the previous structure to enable Indian exporters to be covered under the SAFTA umbrella which facilitates free trade in the region, including between India and Bangladesh.
It has requested allowing the goods already in transit to be imported into Bangladesh under the previous duty structure.
Billet is a semi-finished steel product which is used as a raw material for producing MS rod, bar and other steel products.
Officials said some local industries have made huge investment in this industry to meet domestic demand. BSRM and Abul Khair steel mills are among the local industries producing billets.
Industry sources said local demand for billet is 4.0 to 3.0 million tonnes. Local industries said they can meet more than 60 per cent of the requirement.    
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Source: The Financial Express