The sharp rise in imports from Bangladesh has made Indian industry apprehensive. India’s agreement with Bangladesh doesn’t include the minimum value addition criterion. This loophole can be used for imports of Chinese man-made fiber based garments through Bangladesh.

Over the last 11 months, Bangladesh’s garment exports to India increased by 113 per cent. Add to this footwear, fish, beverages etc and India’s imports from Bangladesh increased by 30 per cent since July 2017.

The introduction of GST in July 2017 led to the withdrawal of 12 per cent countervailing duty (CVD) on textiles. Though Bangladesh was not the only beneficiary, this came as an advantage for Bangladesh, which is the world’s second largest exporter of readymade garments.

Bangladesh had a distinct cost advantage vis-a-vis Indian imports in 49 garment items. GST related benefits should help Bangladesh grab a higher share of Indian imports by replacing other destinations.

India offers duty-free and quota-free entry to Bangladesh’s goods under the South Asian Free Trade Area agreement in 2011. Further Bangladesh’s competitive edge should increase with the recent hiking of import duty on 328 textile products, which is not applicable to Bangladesh.

This year might prove to be a landmark in bilateral trade relations. Bangladesh’s exports to India will close near $900 million.