Bangladesh wants India to lift countervailing duty (CVD) on goods coming from Bangladesh. CVDs are tariffs levied on imported goods to offset subsidies made to producers of goods in the exporting country. The duties are meant to level the playing field between domestic and foreign manufacturers of the same product. Bangladeshi businesses have been facing challenges in exporting to India due to the CVD.

Currently the highest rate of CVD on Bangladesh’s products destined to India is 20 per cent. Garments, Bangladesh’s main export item, have been facing 12.5 per cent CVD since April 2013. The duty reduced the competitiveness of Bangladesh’s products in India and caused exports to fall. This is after India allowed duty-free entry to all products from Bangladesh except 25 alcoholic and beverage items in November 2012.

With CVD, Bangladesh’s exports to India declined 19 per cent year-on-year in fiscal 2013-14, mainly due to a slowdown in shipment of garment items. Bangladesh’s exports to India have not increased despite measures to reduce the huge trade gap between the two neighbors. Major impediments are a lack of product diversification in Bangladesh, non-tariff barriers, and inadequate banking facility along the border areas of the two countries.

Bangladesh mainly imports basic commodities from India like rice, cotton, onion, fabric, chemical products and dye, limestone, cattle, electricity, machinery and pulses.