India’s Directorate of Revenue Intelligence (DRI) has issued an alert over garments being imported via Bangladesh from other countries to take advantage of duty concessions offered under a free-trade agreement (FTA). DRI has asked the customs department to carefully check the origin certificates that Bangladesh trade bodies issue for such consignments.
The move follows a DRI show-cause notice in early August to Future Enterprises on 83 garment consignments, allegedly imported from other countries and routed via Bangladesh to take advantage of zero import duty. The agency suspects that the route could be abused, according to a report.
The South Asian Free Trade Agreement mandates 30 per cent local value addition in least developed countries for import by other nations. Local value addition norms are incorporated in the trade agreements to both protect the importing partner and to ensure contribution to the exporting partner’s economy and local job creation through stringent value addition criteria.
Such imports using the FTA route without any value addition don’t just defeat the objective of the agreement but also hurt the ‘Make in India’ initiative; the report quoted an anonymous Senior Government official as saying. DRI has written to the Finance Ministry to take up the matter of origin certificates issued in Bangladesh without adherence to local value addition norms.