Exporters wait for C4CS’s action on trade and transit issues

Rinzin Wangchuk 

A queue of 10-wheeler trucks bearing Bhutanese and Indian registration numbers waiting to exit Phuentsholing is a common sight between 7pm and 11pm every day.

Trucks loaded with boulders and aggregates are bound for Bangladesh and Cooch Behar. Truckers have to register and clear customs requirements from the second gate at Bau Bazaar, which is located between the bordering towns of Phuentsholing and Jaigaon. The mini dry port functions as a two-way entry and exit from both sides.

Exporters say that the numerous cross-border trade and transit issues are affecting their export businesses. One of the main bottlenecks in exporting boulders is the Suvidha Fee imposed by the West Bengal State government at Changrabandha Land Custom Station (LCS) in Cooch Behar.

“Exporting boulders to Bangladesh via India is becoming expensive as we have to pay INR 5,000 for a 10-wheeler truck with a carrying capacity of 16.5 metric tonnes (MT) of boulders,” said one member of the Bhutan Exporters Association (BEA) in Phuentsholing.

The online vehicles facilitation system, “Suvidha”, was implemented in Behar’s Changrabandha LCS on September 26 last year with a uniform rate of INR 2,000 for both non-perishable and perishable goods. The West Bengal government, however, revised the fee of INR 2,000 to INR 5,000 for boulders on January 4 this year.

Any exporter ferrying goods to Bangladesh has to register in the system from eight LCS, including Jaigaon, Changrabandha, and Fulbari, which are used by Bhutanese exporters for trading with Bangladesh.

Bhutan exports boulders and aggregates from Phuentsholing, Pasakha, Samtse, Gomtu, Pugli, and Rinchenthang gates.

One exporter, who is also dredging river boulders along the Amochhu river banks in Tading, Samtse said that after deducting the Suvidha fee of Nu 303 per MT of boulders, they are left with a profit margin of only Nu 227 per truck.

“To avoid fees and losses, both exporters and transporters have resorted to transporting boulders through Fulbari LCS near Siliguri, which is 40 kilometres more than traveling to Changrabandha,” he said. The distance between Phuentsholing and Fulbari is 138 kilometers and 98 kilometers to Changrabandha.

“We heard that the West Bengal government is going to roll out the Suvidha system in Fulbari soon,” another exporter said. “By then we will have to discontinue our boulder exports as it may not be viable to continue trading with Bangladesh,” he said.

Recommendations to C4CS

To address some of the challenges from Suvidha fee and letter of credit (LC) to the restriction of border timing issues and port capacity, members of BEA submitted a long list of recommendations to the Committee for Coordinating Secretaries (C4CS) recently.

The exporters recommended to remove the Suvidha system since it contravenes with the free trade agreement (FTA) signed between the two countries.  They recommended Bhutanese Consulate General office in Kolkata to be made responsible for resolving this issue and the Ministry of Foreign and External Trade (MoFET) should monitor the issue until it is resolved.

As the current port capacity at Banglabandha, India and Burimari on Bangladesh’s side is not able to handle vehicles more than 300 and 500 respectively, the exporters recommended the C4CS to meet authorities both in Banglabandha and Burimari and upgrade port capacity.  “The C4CS could also look into stationing a customs office representative in all important ports to help exporters when they face challenges with the officials from India and Bangladesh,” the exporters stated in their recommendations.

They also requested C4CS to direct the relevant government agency to reopen Daurpani border immediately, specifically for the export of goods from Samtse and the opening of two additional land ports at Mankachar and Golakganj in Assam to expedite the export business from Gelephu region.

Due to restrictions on the timing at borders, according to exporters, transporters have to wait hours to open the borders. There is a need to increase border timing at Dalu in Bangladesh and Nakugoan in Assam. Currently, Bhutanese vehicles entering Bangladesh are stopped at 12pm.

“This needs to be taken up with Border Security Force (BSF) and customs to extend the timing from 6am to till 6pm similar to Changrabandha,” one exporter said.

For exports from Gelephu, Samdrupjongkhar, and Nganglam, there is a need to obtain a 1:1 export ratio in Nakugaon border, similar to Changrabandha and Fulbari.

“This will provide a level playing field for all exporters and increase export volume in the long run,” they submitted.

In their recommendations, exporters stated that the LC payment was being delayed for four to five months and requested the Royal Monetary Authority (RMA) to take up the matter with the Bangladesh Central Bank to provide either Reimbursement Clause or Confirm LC for execution of the business smoothly. Currently, there are numerous banking issues with the LC Opening Banks in Bangladesh, where payments are not made on time despite no discrepancy in documents.

RMA should monitor delays in LC payments to ensure the problem is resolved. “Explore re-institution or formation of an Internal Sub-Banking Committee between the central banks of Bhutan and Bangladesh to address issues around payment delays,” another exporter said.

The BEA also wrote to the Prime Minister on January 17 this year to take up the issue with the authorities concerned.

Exporters said that they are waiting for C4CS’s action on their recommendations. Members of C4CS were not available for comment.

Lucrative business?

Considered one of the most exported products for Bhutan, the boulder business resumed in 2022 after the relaxation of Covid-19 protocols.

There were 150 boulders and aggregate exporters in 2022, according to the Ministry of Finance. During the same year, Bhutan exported 2,132 million MT of boulders and aggregates to India and Bangladesh and contributed Nu 2,897 million equivalent of hard currency to the government exchequer as revenue.

According to the daily report maintained by the BEA, this year in April the amount generated from boulders at Phuentsholing and Pasakha was USD 1,670,298. USD 4,320,351 was made from boulder export in March this year.

Last year, a total of USD 9,569,568 was made from exporting boulders to Bangladesh, and Nu 15,845,664 was made from exporting to India.

Officials from the finance ministry said that the Department of Revenue and Customs (DRC) is responsible for monitoring and facilitating the export of boulders and aggregates in accordance with the laws and regulations of the country.

Customs officials inspect the boulders and aggregates to ensure that they comply with the relevant standards and regulations.

“This may involve sampling as per the invoice,” an official said. “Once the necessary procedures have been completed, the customs officials will provide clearance for the export of the boulders and aggregates,” an official said.