The Bhutanese Leading the way.
Businesses in Phuentsholing are facing increasing challenges as more consumers head to India for cheaper goods. The lower prices and wider selection of products in nearby Jaigaon, just across the border, are drawing more Bhutanese shoppers, putting local businesses under pressure.
Phuentsholing’s economy has traditionally relied on cross-border trade, with local shops, restaurants, and markets benefiting from both local consumers and Indian visitors. However, the rise in cross-border shopping is having a noticeable impact, particularly in the town center, where foot traffic has sharply declined. Many businesses that once thrived are now struggling as fewer customers are visiting.
The main factor behind this shift is the price disparity between products in Phuentsholing and Jaigaon. Items such as electronics, clothing, and groceries are often much cheaper in India due to lower taxes and import costs. As a result, Bhutanese shoppers are increasingly crossing the border to take advantage of the savings, making it difficult for local businesses to compete.
This shift is affecting a wide range of businesses, from retail shops to restaurants and hotels. Local entrepreneurs are exploring various ways to stay competitive, such as offering unique products not available in India or focusing on better customer service. However, many feel that without government support, it will be difficult to survive the growing trend of cross-border shopping.
Some business leaders are calling for the government to take action to level the playing field. Proposals include subsidies for locally produced goods and reductions in import taxes to help local businesses compete more effectively with the lower-cost alternatives available in India. The Bhutanese government has recognized the challenges posed by the price differences and is beginning to take steps to address the situation. One key issue is the high taxes on imported goods, which make products in Bhutan much more expensive than in India.
The Ministry of Finance is tightening its monitoring of imports, particularly high-value goods like smartphones, to prevent misuse of Bhutan’s tax-free status. There are concerns that these goods are being diverted for resale outside the country, further undermining local businesses. To combat this, the ministry is working with the central bank to monitor foreign exchange transactions and detect any unusual patterns. Regular audits are being carried out to ensure that imports comply with Bhutan’s regulations and are not being sold abroad.
Additionally, the ministry is reviewing its taxation policies to ensure that tax exemptions are not exploited in a way that harms local businesses. Adjustments to import conditions or a reduction in some exemptions may be considered as part of this review.
By addressing these issues, the government hopes to support local businesses and prevent the unintended leakage of tax benefits. However, until these measures are fully implemented, Phuentsholing’s economy faces continued pressure from the growing trend of cross-border shopping. Local entrepreneurs are looking for swift government action to ensure the survival of their businesses and the future of the town’s economy.
