Food exports to India hit a rough patch

Sohel Parvez

Processed food exporters find it hard to access the northeastern states of India as the region's customs authorities have set a new rule asking its traders to store the imports in bonded warehouses.

The Office of the Commissioner of Customs (Preventive) of India's North East Region made the storage of nonperishable food items in bonded warehouses mandatory from June 1.

Indian businessmen will have to keep imports in bonded warehouses until the completion of laboratory tests on shipments.

The delay in getting the test results from Indian labs has deepened the problems, said Bangladeshi exporters. Some say these problems are eroding competitiveness of Bangladeshi food items on the Indian market.

Exports of food products through Akhaura-Agartala and Tamabil-Dawki are slowing, mainly because of the new rule, said customs officials and exporters.

Exports through other land ports such as Sheola-Sutarkandi are continuing, but on a limited scale after some Indian importers were able to comply with the bonded warehouse rule.

"We are unable to book orders for exports after the customs authorities of North East India imposed the rule of keeping food products in bonded warehouse instead of importers' warehouse," said Khurshid Ahmad Farhad, manager (export) of Square Consumer Products Ltd (SCPL).

The official of SCPL, a new entrant to the Indian northeast, said the sanction has forced the company to stop exports for the last few months.

To comply with the bonded warehouse condition, an importer needs to show bank solvency certificate of up to Indian Rs 50 lakh (Tk 74.42 lakh), according to the exporters.

"It is discouraging for our importers. The volume of their trade with us is not too big to deposit such an amount," said Farhad.

Ahsan Khan Chowdhury, deputy managing director of Pran-RFL Group, also expressed concern over the new rule.

Before the imposition of the new rule, the importers in North East India were allowed to store imported items in warehouses till the receipt of the lab test reports.

Due to geographical proximity, the northeastern states have become a captive market for Bangladesh's goods.

Fruit-flavoured drinks and snacks such as chanachur are the main export items.

"Our products enjoy competitive advantage in the northeastern region due to its remoteness to mainland India. But this bonded warehouse rule hurts competitiveness of our products," said Farhad.

At present, two-way trade favours India heavily.

Kamruzzaman Kamal, director of marketing for Pran-RFL, a leading food products exporter to India, has said various rules are affecting exports of Bangladeshi food products to the northeastern states.

"Our exports have been suspended for almost two months," he said.

Kamal claimed that their food products face newer rules such as coding and recipe requirement by Central Food Laboratory (CFL), Guwahati.

In addition, in absence of any authorised food lab near the land ports in the northeast, the traders wait for three to six weeks to get the test results from the CFL.

The introduction of rules to send test results by post instead of fax has also widened the time period. The customs authorities of the ports in northeastern India do not clear products until receiving the test results from the central food laboratory.