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Minutes of the 9th Meeting of the Bangladesh-India Joint Working Group on Trade held in Dhaka on 12-13 March 2014

The 9th meeting of the India-Bangladesh Joint Working Group on Trade was held in Dhaka on 12-13 March 2014.

Indian delegation was led by Shri Arvind Mehta, Joint Secretary, Department of Commerce, Ministry of Commerce and Industry, Government of India and the Bangladesh delegation was led by Mr. Md. Shahabuddin Patwary, Joint Secretary, Ministry of Commerce, Government of the People's Republic of Bangladesh. List of participants on both sides is attached at Annex-A and agenda is at Annex-B.

The leader of the Bangladesh delegation, Mr. Md. Shahabuddin Patwary extended a wann welcome to the Indian delegation. He reiterated the excellent bilateral relation existing between the two countries since 1971 and highiighted the development particularly during the tenure of the present government since its first tenure from 2009. He expressed satisfaction at the fact that gradually over the years several non-tariff barriers have been removed and hoped that through continued engagement further expansion of trade can be achieved. " .

Shri Arvind Mehta thanked the Bangladesh side for the warm hospitality extended to him and his delegation. He referred to the excellent bilateral relation between Bangladesh and India, which is reflected in the engagements of these two countries in both bilateral and multilateral fora. Referring to the positive trade relations, he expressed satisfaction that trade has expanded dramatically over the last 3 years. There has been increase in the sector of RMG export of Bangladesh to India by 20-25%. He drew the attention of the Bangladesh delegation to the fact that cost of doing business in South Asia is high as compared to international levels. These costs can be easily reduced by removing the existing bilateral tariff as well as non-tariff barriers. He stressed on the necessity to develop infrastructure which is a prerequisite for expansion of trade and reducing the transaction costs. At the same time he reflected on the need for synergising value chains. He stressed that the present HVDC infrastructure can be upgraded with small investments to supply additional 500 MW from India, pricing of which can be negotiated based on market rates in India. Ministry of Power and Energy of both countries can take this initiative forward to utilise the 1000 MW trade potential.

Issues ( India lead) 1. Container Train service between india and Bangladesh: Indian side stated that direct containerised cargo through Railways can resolve issues related to handling of goods and reduce transaction costs. Pursuant to the decision taken in the Inter-Governmental Railway Meeting (IGRM) held between India and Bangladesh in New Delhi on 14-16 January, 2013, a joint team made recommendations including (i) developing Ishurdi PQRS depot as the suitable intermodal exchange yard for transhipment containers from Broad Gauge to Meter Gauge or to road (ii) setting up of a container

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handling terminal at Singia station (iii) the possibility to containerise most of the cargo which is being handled at present by rail. The Indian side requested that the detailed study is required to be undertaken for preparation of DPRs. Bangladesh side stated that it is a technical issue and has to be dealt by the relevant authorities.The feasibility committee has already submitted its report and the next meeting of the IGMR to be held in Dhaka this year will take this issue forward .

2. Coastal shipping Indian side stated that both countries should take advantage of low transaction costs of waterways mode of transportation, and emphasized on the early conclusion of the Agreement on Coastal and maritime Shipping and the Standard Operating Procedure. As an interim arrangement for a limited period of about 3 years, the Bangladesh maritime authority may select a few vessels (say 10 in number to begin with) from the coastal fleet which they would certify to be fit to operate in coastal water on the east coast of India during fair weather period. With regard to insurance issues, Indian side suggested that the Bangladesh Authorities may provide sovereign guarantee or alternately the ships can buy a P&I insurance cover from any of the IG approved insurance companies or non-IG Insurance companies approved by Government of India. Bangladesh side..meI\tioned that Bangladesh has already proposed for a meeting with India on 12-14 April 2014 for £inalisation of the draft Agreement on Coastal and Maritime Shipping between Bangaldesh and India and Standard Operation Procedure (SOP), trial run of the coastal ships etc.

3. Motor Vehicles Agreement

Indian side sought to know the status of the revised Indian Draft of the Agreement for the Regulation of Passenger and Cargo Vehicular Traffic shared with Bangladesh side in May 2013. Bangladesh side informed that the draft Agreement is in the process of inter-ministerial consultation because there is a reference of transit issues in the agreement. Indian side, in response, urged for an early conclusion of the agreement for improvement of connectivity facilitating bilateral trade, and that Bangladesh may prepare a counter draft of the agreement as per the outcome of the inter-ministerial consultation process. Bangladesh side took note of it.

4. Renewal of Protocol on Inland Water Transit and Trade

Indian side pointed out that the Protocol on Inland Water Transit and Trade is being renewed at present for short periods of time. Due to this, there is not much private sector interest for investment in this sector. To encourage greater investment in this sector, Indian

side requested for signing of this protocol for a longer period of not less than 10 years. Bangladesh side responded that the PIWTT being coterminous with the Bangladesh-India bilateral Trade Agreement, the issue would be taken up with concerned Ministries, including the Ministry of Shipping.

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5. Approval of 22 new Border Haats along the Meghalaya border

India requested for the status of the proposal of setting up of Border Haats(BH) at 22 places of BD-Meghalaya Border, as discussed during the last JWG on Trade meeting held in New Delhi in June 2013. Bangladesh side informed that considering the reports of Bangladesh agencies, an inter­Ministerial meeting has recommended for setting up BHs at following 04 places: a. Bholagonj-Bholagonj: (Kompanijonj,5ylhet- East Khasi Hills,MeghaIaya) b. Saidabad-Nalikata:(Tahirpur,5unamgonj- South West Khasi Hills, Megalaya) c. Vhuyiapara-Shibbari:(Dhubaura, Mymanshinj- South Garo Hills,Megalaya) d. Ryngkua (Sunamgonj- East Khasi Hills Megalaya)

6.Issties related to Petrapole-Benapole

a. Construction of link road from Benapole to Petrapole;

The Indian side conveyed that the infrastructure at Petrapole would be ready for soft launch by May,2014 and a 4-lane link road is required to be constructed on Bangladesh side.As informed by the local Bangladesh LPA authorities, presently a 2-lane link road could be constructed on the Bangladesh side, and the same could be widened to 4 lanes subsequent to

land acquisition. Bangladesh side was requested to expedite the land acquisition process for construction of the 4-lane road to avoid future bottle-necks. Bangladesh side informed that, initiatives have already been taken to acquire 0.97 acre of land for this purpose. Once the land has been acquired, the 4-lane link road would be constructed. '. .

b. Withdrawal of holiday charges levied by LPA at Benapole:

Indian side stated that trade at the LP is suffering because of the holiday charges being levied at Benapole. This results in most of the cargo to wait for the next working day. Subsequent to the decision taken to increase the working days at the LP to seven days a week, the holiday charges are a hindrance to trade. They requested for withdrawal of holiday charges at Benapole. Bangladesh side took note of it.

c. Improvement in cargo handling capacity at Benapole to ensure that trucks return on the same day to India.

Indian side stated that presently, Indian trucks take 2-3 days to return due to delays in unloading the cargo at Benapole and requested for improvement of cargo handling capacity at Benapole. Bangladesh side informed that the handling capacity at Benapole port seems to be sufficient and up to the mark to meet its present demand. Notably, the Port AuthOrity always reserves sufficient number of labour and equipment to handle the cargoes. As soon as the Indian cargo trucks arrive at the port's shed/yard and the C&F Agents produce all valid import documents, the cargoes are unloaded as per direction of the shed/yard in<ilarge. Depending on the size of the consignment, it takes only maximum two to three hours to

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complete the unloading. Once the unloading is complete the trucks are free to leave the port area.

7.Permission for developmental works within 150 yards of zero-line to be given by BGB/BSF deployed at the LCS

Indian side stated that during the 8th meeting of the India-Bangladesh jWG on trade held in New Delhi on 13-14 june, 2013, both sides noted that construction is now being aIlowed within 150 yards of the zero line for LCSj lCP purposes and had agreed to drop the agenda item. However, it was stated that in certain instances the construction work is still being stopped by BGB-BSF. In this regard, both sides agreed that this decision may be reiterated to BGB - BSF, which may resolve the issues through their appointed nodal officers and avoid further delays in developmental work at 150 yards of zero line of any LCS.

8. Shifting of Sabroom Ramgarh LCS to new location near Srinagar Border Haat. Indian .side requested to relocate Sabroom-Ramgarh LCS near to Srinagar border Haat as this would have the following distinct advantages:

• Construction of Bridge not required.

• Srinagar is only 2 km away from Chhagalnaiya-Muhurigunj Road, which connect to Viswa Road at a distance of 10 km only.

• Srinagar is located on the alternate National Highway from Bishalgarh to Belonia to

Sabroom on Indian side.

• Proposed Belonia Railway station will be just 20 km away from Srinagar. Bangladesh side recaIled the joint Communique issued during the visit of the Bangladesh PM to India . in january,2010 where both the PMs agreed to operationalize the LCS at Subrum-Ramgarh. Besides, according to the MoU of Border Haats (BH),any Border Haat has a command area of 5 Square kilometre ,and so there cannot be any LCS within 5 Sqkm area of the Border Haat .

9. Construction of bridge linking Zakiganj (BangIadesh)-Karimganj(India): Indian side informed that there is Kushiara river between Zakiganj and Karimganj. Currently, trade is being conducted through country boats and manually. They proposed construction of a bridge over the river to facilitate future enhancement of trade through this point.

Bangladesh side took note of it.

10. Restoration of Sunday as weekly off at Dawki-Tamabil LCS.

Indian side stated that the decision of jGOC in October 2013 to observe weekly holiday on Fridays had resnlted in closure of the LCS on two days i.e Friday and Sunday. It is understood that the local stakeholders were in favour of Sunday as a weekly closure, as it was before. Bangladesh side opined that in view of recent implementation of the jGOC decision, it is premature to reschedule the timing.

It was agreed !hat the present dispensation of closure on Friday would continue.

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11. Bilateral Cooperation Agreement between BIS and BST!

Indian side referring to the proposed Cooperation Agreement between BSfI-BIS requested for a response on their draft at an early date. Bangladesh side informed that a draft of the agreement was received by BSfI from BIS in September, 2013 in response to the previous comments of Bangladesh, and is being forwarded to the Indian side through their Ministry of Foreign Affairs.

12. Lifting of ban on export of Hilsa fish. Indian side requested for lifting of ban on the export of Hilsa fish.

Bangladesh side informed that due to insufficient supply of fish and abnormal hiking of price of fish in the local market during last Ramdan, ban was imposed on export of all types of fish except Shrimp/Prawn in Aug,2012 and it was withdrawn in September,2012 except for Hilsa. Now the withdrawal of ban from export of Hilsa is under consideration.

13. Formation of a permanent sub-group on LCS infrastructure. Indian side reiterated the importance of conducting regular meetings of the sub-group on LCS infrastructure. Both sides agreed to hold the meetings of the sub-group at regular intervals.

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14. Removal of 225 items from Bangladesh sensitive list of SAFfA.

Indian side reiterated its request for removal of 225 items from Bangladesh sensitive list under SAFfA and stressed on the need to develop a long term plan for mutual benefit and wider stakeholder acceptance.

Bangladesh side stated that internal consultations are underway with stakeholders under the 3'" phase and the status is expected to be given in the forthcoming meeting of the Working Group for Reduction of Sensitive Lists under SAFfA.

15 .Confirmation on the SAFfA proposal

Indian side urged the Bangladesh side to respond positively to the proposal put forward in the last SAFfA meeting by Bhutan, India, Maldives and Pakistan, that peak tariff on all products be reduced by all member countries to 0-5% by the year 2020, excluding a small number of about 100 tariff lines which may still remain in the respective sensitive lists of each member country.

Bangladesh side responded that they are now in the process of consultation with the stakeholders for reduction of sensitive list under phase III, and once the process is done Bangladesh will sit with the stakeholders to discuss the above mentioned proposal.

16. Finalisation of dates for the visit of team to exchange information on Betel Nut/Sarees export from Bangladesh Indian side expressed concern on the possible mis-declaration of 'country of origin certificate' for betel nuts imported from third countries and exported to India after they are re-packed / re-invoiced without any major value addition. India proposed the visit of an Indian team to exchange information on Betel Nut export from Bangladesh. Indian side also

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conveyed that they have received information from EPB regarding export of Sarees from Bangladesh and requested the issue to be dropped from the agenda.

Bangladesh side informed that EPB is the authority for issuance of Certificate of Origin and the certificates are issued following necessary procedure. However, the Indian team is welcome to visit EPB at a convenient date in April 2014.

Issues (Bangladesh lead)

17. Recognition of certificates issued by BST!:

Bangladesh recalled the decisions taken in the 6"' meeting of JWG on Trade held in New Delhi on 27-29 August, 2009 and Commerce Secretary level meeting in New Delhi on 28-29 March, 2012 regarding India to make necessary arrangements for accepting certification issued by BSTI for the purposes of clearance of the import consignments. In this context, Bangladesh requested India to accept the certificates issued by BSTI for which accreditation has been provided by NABL and allowing exports of the items certified by BSTI laboratories a1rE,adyaccredited by NABL for such items and consider issuing necessary notifications.

Indian side apprised the Bangladesh side of the statutory requirements under the Indian law and proposed that Bangladesh traders could utilize the facility provided under a notification permitting consignments to be imported without testing, if 5 previous consignments of the same product by the same exporter have been released with the testing certificates.

After detailed discUSSion. it was decided that a) Bangladesh will sensitize it's business community to avail of this opportunity of

using the green channel after clearance of goods of previous 5 consignments. b) Bangladesh will submit a list of BSTI test certificates which are accreditated by

NABL ,in order to enable India to issue necessary notification for acceptance of those certificates.

18. Removal of CVD on RMG

Bangladesh side referring to Government of India notification dated 1" March, 2013 exempting excise duty on domestic manufacture of RMGs, Bangladesh side requested for withdrawal of CVD on RMGs as it is adversely affecting their exports. The Indian side stated that in the Budget 2013-14, an option was made available to Indian manufacturers to either pay duty on the manufactured garments by availing cenvat credit or clear them at zero rate by not availing Cenvat credit. Thus, the manufacturers contribute

to the exchequer either by way of duty on finished garments or by way of input duties. Thus, to maintain a level playing field, CVD is levied on imported goods.

At present the excise duty (CVD) is 6.18 % of 30% of MRP in case of cotton garments and 12.36% of 30% of MRP in case of garments of other textile material, which effectively works out to 1.85 % of MRP in case of cotton garments and 3.71% of MRP in case of garments of

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other textile materials. Indian side pointed out this component may not be a major factor adversely impacting Bangladesh's exports to India.

Bangladesh side took note of it and agreed to revert back in the next meeting.

19. Visa Issue

Bangladesh side mentioned that to get an Indian visa one should apply online. However, for the last few months Bangladeshi applicants have been finding it very difficult to submit on-line application successfully with an appointment date.

Indian side informed that due to a large number of applicants it is difficult for applicants to get appointment. Indian side informed that nearly 3000 visas are being issued per day and measures are being undertaken to meet the increased visa demand.

20. Lilliput kidswear Issue Bangladesh side appreciated the efforts made by Indian side in addressing the settlement of LC of Ulliput, pending for a long time. However, as of now, only U5$21,52O out of U5$ 2.8 million has been released. In this respect Bangladesh side requested the Indian side to take further initiative to settle this issue. Bangladesh side mentioned that in-fact the Indian banks had not honoured the LC. Therefore, banks should be made accountable for non­payment of LC amount.

Indian side mentioned that despite the effort made by Government of India Lilliput could not pay the full amount because of insolvency. Indian side stated that the issue is in-fact a private commercial dispute which should normally be resolved through legal means. The Indian side also informed of several cases where payment was not made by Bangladesh importers to Indian exporters and cited the case of non-payment of the performance guarantee and retention money to BHEL.

It was decided that BangladeSh will submit a list of the banks wltich allegedly had not honoured ~ LCs along with relevant documents so that Indian side can take up the matter with the concerned banks. As regards return of goods to Bangladesh, held up by the customs of India due to inability of Lilliput to release theSe goods, Indian side informed that necessary steps will be taken at the earliest to facilitate return of those goods.

21. Development of Infrastructure at Dhalu, Gujadanga and Changrabanda

Bangladesh side informed that they have already started development of infrastructure in Nakugaon, Bhomra and Burimari and requested India to start development of infrastructure on their side.

Indian side responded that they have prioritized the development of LCS's on the basis of the volume of trade. They also mentioned that as per their priority list they have nearly completed the ICP at Petrapole and are about to start the development of HilH and Dawki LCSs. Thereafter, all the LCSs would be gradually developed as per priority list.

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· . 22. Office Timing at Petrapole

Bangladesh side mentioned that there is a demand from the Bangladesh Business Community to start the clearance of goods across the Border from 07:00am as the Officials at Benapole and Petrapole are available at 07:00am whereas the stakeholders at Petrapole are not available till ll:OOam. Indian side assured that the matter would be taken up with the relevant authorities.

23. Bridge on the Feni River Bangladesh side mentioned that Bangladesh received the report of the technical committee on April, 2013 and sent views thereon in May,2013. However, Bangladesh is still awaiting the response from Indian side. Indian side responded that the bridge on the river will not be needed if the LCS at Sabroom-Ramgarh is relocated to Srinagar. Bangladesh side mentioned that as per the provisions of MoU of BH, the command area for a border haat is 5 sq km, and hence there is no scope for shifting the LCS to Srinagar where there is a BH. Bangladesh also recalled the Joint Communique issued during the visit of the Honourable Bangladesh PM to India in January 2010, where both the Prime Ministers directed that necessary steps should be taken to expedite the construction of a bridge over the river Feni as per the alignment agreed between the two sides, and hence suggested that both the sides should work accordingly.

24. Phyla Sanitary Officer at Changrabanda

Bangladesh side informed that no Phyto Sanitary Officer is posted at Changrabanda. As a result export through the LCS is being hampered. .

Indian side requested Bangladesh to provide a list of products along with the information on volume of export through this LCS so that they can take necessary steps in this regard.

25. Miscellaneous items

aJ Export restrictions/ban on essential items by India.

Bangladesh side mentioned that India impose restrictions/ban on the export of essential commodities, which threatens the food security of Bangladesh, and requested India to consider relaxing the restrictions /ban for Bangladesh.

Indian side responded that at present the Government of India discourages the export restrictions on any commodities. Occasionally there arises a need to take recourse to such restrictions which become applicable on MFN basis.

bJ Both sides noted that the BGB-BSF retreat ceremony at Benapole-Petrapole everyday by closing the main thoroughfare impedes the movement of trucks hampering trade through Benepole-Petrapole and agreed to take up this matter with their respective relevant authorities.

cJ The Indian side stated that Department of Commerce, Government of India, through EXIM bank of India offers a Line of Credit upto USD 1 billion to neighbouring

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· . countries in South Asia for project exports in infrastructure sector. This Line of

Credit could be utilised by Bangladesh for undertaking projects identified by them in infrastructure sectors like roadsl railways, solar water pumps for irrigation etc. Bangladesh took note of the available LOC.

Both sides agreed to hold the next meeting at mutually convenient time by the end of this

year.

The meeting was held in a very cordial atmosphere.

ARVIND MEHTA MD. SHAHABUDDIN PATWARY JOINT SECRETARY JOINT SECRETARY MINISrRY OF COMMERCE MINISTRY OF COMMERCE AND INDUSTRY GOVERNMENT OF TIiE PEOPLE'S

REPUBUC OF BANGLADESH

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·. Annexe·A

Delegation for 9'" Ioint Working Group on Trade

Indian Delegation 1. Shri Arvind Mehta, Joint Secretary, Department of Commerce, Leader of the

delegation.

2. Shri Sandeep Chak!1;vorty,Deputy High Commissioner, High Commission of India,

Dhaka

3. Shri Valeti Premchand, Director, FT (SA), Department of Commerce.

4. Shri Gopalakrishnan. Director, Ministry of Railways. 5. . Shri S.P. Roy, Joint Director General of Foreign Trade.

6. Shri Mayank Joshi, Deputy Secretary, Ministry of External Affairs.

7. Shri Bijay Selvaraj, First Secretary, High Commission of India, Dhaka. 8. Mr. Winfred Warshong, Assistant Director, Commerce and Industries Deptt. Govt.

of Meghalay.

Bangladesh Delegation

1. Mr Md. Shahabuddin Patwary. Joint Secretary, Ministry of Commerce.

2. Mr Md. Delwar Haider, Deputy Secretary, Ministry of Commerce. 3. Mr. Chandan Kumar Dey, Deputy Secretary, Roads DiVision, Minsitry of

Communication 4. Mr. Md. Mokabbir Hossain, Deputy Secretary, Ministry of Commerce 5. Ms. Waheeda Rahman Chowdhury, First Secretary, Customs International Trade and

Agreement, National Board of Revenue.

6. Ms. Wahida Ahmed, Director, South Asia, Ministry of Foreign Affairs. 7. Dr. Mostafa Abid Khan, Director, Program, Research and Policy Advocacy, BFTI

8. Mr. Md. Abdul Mannan, Deputy General Manager, Foreign Exchange Policy Department, Bangladesh Bank, Dhaka.

9. Ms. S. M. Sumaiya Zabeen, Research Officer, Bangladesh Tariff Commission

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, Annexe-B

Agenda for 9'h Meeting of Bangladesh-India Toint Working Group on Trade

Issues Undia Lead):

1. Container Train service between India and Bangladesh 2. Coastal shipping 3. Motor Vehicles Agreement 4. Renewal of Protocol on Inland Water Transit and Trade S. Approval of 22 new Border Haats along the MeghaJaya border 6 . . Issues related to Petrapole-Benapole.

a. Construction of link road from Benapole to Petra pole. b. Withdrawal of holding charges levied by LP A at Benapole, opening it on all seven days a week and improvement in cargo handling capacity. c. Improvement in cargo handling capacity at Benapole to ensure that

trucks return on the same day to India. 7. Permission for developmental works within 150 yards of zero-line to be given by

BGB/BSF deployed at the LCS 8. Shifting of Sabroom Ramgarh LCS to new location near Srinagar border haat. 9. Construction of bridge linking Zakiganj (Bangladesh)-Karimganj(India). 10. Restoration of Sunday as weekly of on Dawki-Tamabil LCS. 11. Bilateral Cooperation Agreement between BI.S andB5TI 12. Lifting of ban on export of Hilsa fish. 13. Formation of a permanent sub-group on LCS infrastructure. 14. Removal of 225 items from Bangladesh sensitive list of SAFT A.

15. Confirmation on the SAFTA proposal 16. Finalisation of dates for the visit of team to exchange information on Betel

Nut/5arees export from Bangladesh

Issues (Bangladesh Lead): 17. Recognition of Certificates issued by B5TI 18. Removal of CVD on RMG 19. Visa Issue 20. Liliput kidswear Issue 21 . Development of Infrastructure at DhaJu, Gujadanga and Changrabanda 22. Office timing at petrapole 23. Bridge on the Feni River 24. Phyto Sanitary Officer at Changrabanda 25. Misc.

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