The Federation of Bangladesh Chambers of Commerce and Industry today urged India to do away with certain taxes such as the value added tax imposed on duty-free garment exports to facilitate greater bilateral and regional trade.
Under the South Asian Free Trade Area agreement (SAFTA), India and Bangladesh had in 2007 inked an MoU under which Bangladesh is to export eight million garments to India duty-free each year.
"Although the import duty is nil, there are some levies such as education tax and VAT which are being imposed. This is impeding exports under the scheme," FBCCI President Annisul Huq said.
Under the MoU, Bangladesh started sending consignments from January last year.
Speaking on the sidelines of a conference on India- Bangladesh Economic Relations, organised by FICCI, Huq added, "We have been given 8 million pieces of duty-free garments but although the customs duty is nil, there are almost 18 per cent taxes. So the benefit of the scheme is not being fully utilised."
Given these issues, Huq said, a mere 10 per cent of the total volumes were currently being met.