Hurdles along the free trade route

Indian ambassador recommends intensive dialogue to resolve the issues

Trade: Despite a free trade agreement between Bhutan and India, the ground realities are different, and not always favourable for the Bhutanese. This is according to business leaders.

The business sector sought the help of the Indian government to remove non-tariff measures (NTM) and non-tariff barriers (NTB) on exports to India and beyond at an event the Embassy of India and Bhutan Chamber of Commerce and Industry (BCCI) organized on March 22.

BCCI deputy secretary general, Kesang Wangdi said the NTMs and NTBs are the major factors affecting trade between the two countries.

For instance, when Bhutanese export fruit juice, the Indian customs in Jaigaon do not accept the product certification from Bhutan Agriculture and Food Regulatory Authority (BAFRA) and demand a certificate from their certified laboratory in Kolkata under the Food Safety and Standard Regulation of India.

“The problem is the perishable product laden truck is stopped in front of the customs office until the certificate comes through, which usually takes a week,” Kesang Wangdi said.

There are huge implications for the exporter: sample testing fee, demurrage cost, product damages, and the time lost in doing business.

“For the same reason BAFRA ensures the product standards and accordingly issues the certificate to exporters,” he said.

The problem could be resolved if there is mutual recognition of the certificate issued by BAFRA.

The SAARC Free Trade Agreement (SAFTA) enables Bhutan to trade with other neighbouring countries, but most of the notified points of exit through India to other countries do not have the necessary infrastructure, those in the trading sector pointed out.

Former BCCI chairperson Ugen Tsechup Dorji said, “Recently more than 100 trucks loaded with boulders for Bangladesh were stranded at the Changrabandha gate for a week which has only one weighbridge.”

One of the bottlenecks of doing trade with India is the cost of transportation. Railroad until the industrial estates in the Bhutan and better road conditions could also help the business sector.

The document requirements to export via air are different mainly from a lack of understanding the customs officials have of the existing trade agreements such as SAFTA and free trade.

Indian ambassador to Bhutan, Jaideep Sarkar said problems exist when two countries share a close relationship. “The issue is not the problems but how we deal with them,” Jaideep Sarkar said.

“To resolve the issues, a structured and intensive dialogue is necessary,” he said.

He said the BCCI and the Indian embassy should have more detailed dialogue on the issues and raise them to the government of India.

Ugen Tsechup Dorji said investors should look at Bhutan as a gateway to India, which has more than 720 million people in the north-east states alone.

Trade statistics show that in 2015, Bhutan imported goods worth Nu 53.7 billion (B) from India which makes up 79 percent of the country’s total imports worth Nu 68B.

Bhutan’s export to India consists largely of electricity, minerals, cement, cardamom, and fruits among others. From the total exports of 35.2B in 2015, 90 percent of the exports worth Nu 31.8B went to India.

“That way India had been always enjoying the favourable trade with Bhutan, by Nu 21.9B in the 2015 alone,” Kesang Wangdi said.

Over the years the trade volume between the two countries have increased.

Government initiatives for developing three new industrial estates in a strategic location in Motenga in Samdrupjongkhar, Dhamdum in Samtse, and Jigmeling in Sarpang will open new avenues for doing business between the two countries.

Kesang Wangdi said while the market in Bhutan is small; it does not mean there are less business opportunities.

“India imports hugely from countries as far as Europe whereas these products can be produced close at your doorstep in Bhutan,” Kesang Wangdi said.

He said there are other business opportunities in Bhutan like tourism, power intensive manufacturing units, information technology and in the agriculture sector.

Another businessman said that they would like to see things move on the ground after numerous rounds of similar discussions.

“What will help is change on the ground,” he said referring to the hurdles even with a free trade agreement. “While the political will and bureaucracy exists, the administrative machinery takes time.”

Tshering Palden

1 reply
  1. srinivas
    srinivas says:

    It is better to take these problems of transportation to the notice of Mr Nitin Gadkari, Transport Minister and to the notice of Nirmala Sitaraman to stream line the transactional hurdles. They will act quickly and we can expect that these problems will be solved to promote trade.

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply