Trading getting tougher with a more formal and protectionist India

Recently there was some hype in the Indian media about seven additional entry and exit points for trade between Bhutan and India at a secretary level meeting, however, a senior official, on the condition of anonymity said these are not new and have been approved in principle and have been operating since 2019.

It was also not fully operational as on the Indian side they had not established customs facilities properly in some places.

So these are not new routes and are only their formalization.

On the other hand, Bhutan had requested India for two new trade routes to Bangladesh via India since last year which is at Gokalganj, and another at Haldibari for the train route, but it is not yet approved.

This is an example of how Bhutan-India trade may have all the hype and right words at the official level, but officials and traders say it is getting increasingly tougher to trade with India on the ground as it comes up with increasing restrictions on Bhutanese exports, some of which are even contrary to the free trade agreement between the two countries.

The senior official said, “At the ground level what is the function of the Indian Customs and SSB is itself not clear with sometimes the SSB blocking our exports and sometimes the customs, and this is despite having all the documents.”

He said when Bhutanese officials try and find out what is happening the customs blame SSB and the SSB blames customs.

The official said that SSB and Customs even check goods that are being sent to Bangladesh.

Giving an example, the official said that Bhutanese boulders could not be exported to Bangladesh for more than a month due to some internal issues in West Bengal.

He said that the local traders and officials deliberately got Bhutanese boulders stopped too, though they had no right to do so only because they were afraid that they will lose their market to the better quality Bhutanese boulders.

The senior official said that such vindictive behavior is not fair especially keeping in mind the country to country relations. The official said that local officials in West Bengal can stop the trucks for overloading or other legal issues and even penalize them, but to stop all Bhutanese trucks is not done.

The official also highlighted the barriers put up to Bhutanese vegetables and particular Bhutanese areca nut and ginger which could not be exported at all. He said they even had a policy of restricting the export of Bhutanese potatoes.

“They should not have done this for Bhutan as we have a free trade agreement with India and moreover given that Bhutan is a landlocked country there is no way Bhutan can import and re-export vegetables or mix our items with products of other countries,” said the official.

He said these items are grown in Bhutan by local farmers and there will be no other illegal trade from other countries.

The official said that the blocking of such exports ensures that Bhutanese farmers end up suffering.

He said that even local Indians across the border suffer as they use these raw products from Bhutan to value add to it and send it on or even re-export it back to Bhutan.

Areca nuts are sold at Nu 70 to 80 per kilo to India, but the locals at the border do value addition and send it back at Nu 180 to Nu 200 to Bhutan.

According to the official, the Indians in the border areas actually prefer these Bhutanese producrs as not only are they of a higher quality, but it is more natural and does not contain various chemicals.

The official said that a lot of problems started after COVID-19 as the Indian customs started strengthening their checks.

“Bhutan is India’s immediate neighbor and its entry and exit points for trade are only through India, and so there should be some local understanding based on the free trade agreement, but there are a lot of restrictions now,” said the official.

He said there is now plant quarantine and standards are imposed on Bhutanese products, but they did not recognize certificates given by BAFRA and BSB.

“Bhutan is a close partner of India and our exports are like peanuts and a drop in the ocean for them, and plus our products are naturally grown without various chemicals,” said the official.

India has also stopped accepting scrap from Bhutan even though Bhutan sends very limited metals and plastics to India.

He said that Bhutan and India are not only friendly countries with age old ties, but they have been trading smoothly for decades and India should at least consider not imposing various policy impositions on Bhutan and consider Bhutan more favorably if they really care about friendship and good relations.

The official said that many policies that had not been implemented earlier got implemented due to COVID along with GST and IGST that requires ICE gates, and as things going online everything coming into play.

He said these policies directly impacts Bhutan and some special consideration should be made for Bhutan as Bhutan’s exports are very limited.

Bhutanese traders are currently forced to run pillar to post in between SSB, Customs and also the local Police while exporting to India.

The official said traders are at the mercy of customs and SSB and in many cases are goods are sized and trucks are detained while imposing laws, but the officials across the border do not inform them in advance and there is no local level discussion.

The official said that what may also be a factor is that the general India economic policy has turned more protectionist over the last few years where foreign imports are discouraged by higher taxes and other means. He said Bhutan could also be suffering due to this policy shift.

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One comment

  1. Most Bhutanese take doma (betelnut), and so there is no need to export our doma but can be easily marketed locally.

    If there is no strong local demand for ginger, cardamom, etc. Bhutanese farmers should stop cultivating these temporariliy, and instead start cultivating those which are in higher demand in the country itself. Vegetables and fruits will sell well locally if marketed well.

    Our private sector should explore and invest in processing and in value-addition of our raw materials so that these can be sold in our country itself.

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