The Bhutanese Leading the way.
A boycott to import all potatoes or cash crops from Bhutan from 5 September 2022 onwards announced by 23 major importers in Jaigaon went on for around seven to eight days before fizzling out.
According to sources the boycott fizzled out due to a combination of pressure from authorities in India and also local business factors.
There was pressure from the main buyers in Siliguri and other parts of West Bengal on the Jaigaon traders who are essentially middlemen to not stop imports when half the season was already gone.
Another local factor was a realization among the Jaigaon importers that this was a mistake they made which might end up benefitting the bigger players in Siliguri and other places who could directly import from Bhutan, cutting them out.
According to a source in Jaigaon there was some intrigue as the traders in the boycott group now allege that one of the main people who got the boycott letter drafted and instigated them was quietly in touch with the Siliguri traders.
They allege the master plan of sorts was to get them to do the boycott and if it worked they benefit, but if it did not work then it would have strengthened the hands of the bigger merchants in Siliguri to come in directly at the cost of the Jaigaon merchants.
There is no evidence for this but this is the story they are now going with to withdraw their boycott.
What also helped was the fact that Bhutan would be issuing a form to the importers which they can use at banks in India to send INR through the banking channel.
A major factor at play also was the fact that news of the boycott attempt reached New Delhi and it was not taken to kindly by the authorities in Delhi, and immediate pressure started coming from Delhi too and especially on the customs officials at the border.
There was concern from Delhi that Bhutanese officials may misinterpret a local traders issue as something else.
It was let known to the traders that what they were doing in trying to monopolize the market and attempting to to stop banking transactions in favour of cash was not right.
To add to matters the price of the prized Bhutanese potatoes in Jaigaon hit up to INR 45 to 50 per kilo.
A source said Jaigaon people prefer the better quality and tasting Bhutanese potatoes compared the other local options.
The fizzling out of the boycott was also due to the fact that the traders behind the boycott were being impacted with no business.
The seriousness of the Bhutanese authorities to not give into blackmail at the border also meant there was no point in continuing the boycott.
The boycott was over a Royal Monetary Authority (RMA) notification stating that Bhutanese Exporters under Section 24 of the Foreign Exchange Rules and Regulations (FERR) 2020, have to receive money from residents in India as INR and that too through the banking channel.
The importers had taken such a drastic boycott step as they wanted to continue paying in Ngultrum to protect their unofficial INR and Ngultrum exchange business generating 5% or more in commission, and paying in cash would also help them avoid taxes or charges in India by under declaring imports.
The Jaigaon importers would get INR for the potatoes and cash crops from their buyers in India, but then they would use it to buy up Ngultrum at a 5% or so profit rate and then use that Ngultrum to buy more vegetables from Bhutan.
However, one impact of the switching to a banking mode of payment for vegetable imports from Bhutan using INR instead of cash Ngultrum was a slight increase in the unofficial exchange of the INR and Nu exchange rate from 5% to 6%.
Once the border opens on 23 September Bhutan will have to find a way to exchange Ngultrum in Jaigaon for INR to bring down this unofficial rate. Bhutan so far has been ready to do this by taking Ngultrum in cash and paying INR through the banking channel or even in cash but there was objection from the counterpart Indian banks to the former and objections by the SSB to the latter.
The boycott also fizzled out in the backdrop of a lot of excitement in Jaigaon on the border opening on 23 September with people eagerly awaiting Bhutanese customers and some for a chance to visit Phuentsholing.
The Department of Revenue and Customs has announced that people can carry up to Nu 3,000 of shopping or baggage tax free.
It also said that unlike in the pre-pandemic period movement of the people across the border and into the country will be regulated and monitored by law enforcement authorities.
