Bangladesh’s import dependence on India backfires

India’s recent move to slap a ban on the export of jute seeds has alerted the government since Bangladesh imports 80 per cent of its requirement of the seeds from its large neighbour.

The Bangladesh Agricultural Development Corporation which is responsible for marketing jute seeds on the local market has written to the National Seed Corporation of India requesting not to impose ban on the export.

Md Mostafizur Rahmanm, BADC director (Seed and Horticulture) told New Age on Tuesday that India did not execute the plan of imposing ban on the export of jute seeds.

Still, the BADC had to dump a plan to import 800 tonnes of jute seeds due to the lapse of the sowing season, he said.   

Not only for jute seeds, Bangladesh depends on India for many other items ranging from sensitive commodities to medicines, automobiles and pharmaceutical raw materials.

‘But a heavy dependence

[on India] for certain goods often backfires,’ said Centre for Policy Dialogue distinguished fellow Mustafizur Rahman.

Bangladesh imported dozens of items from India worth $5,793.6 million during the Covid-hit 2019–20 fiscal year compared to $7,647.5 million in 2018–19.

According to Bangladesh Bank statistics, the goods are imported under 30 board categories, many of which the importers prefer from India because of lower price and proximity.

The country imported cotton worth $1,343.2 million from India in FY20, accounting for almost 20 per cent of the country’s annual demand for the basic raw material for yarn.

Most yarn spinners of Bangladesh meet 70 per cent of their cotton requirement with imports from Central Asia, mainly Uzbekistan and Turkmenistan.

Besides, the country imported steel worth $307 million from the neighbour in the past fiscal year.

Chemicals imported from the country in the fiscal year were worth $220 million.

The chemical items included soda ash, an essential item for the local chemical, textile and glassware factories.

But the delay in the shipment of soda ash by Indian exporters for the past four months has put local manufacturers into problem as they outsource over 70 per cent of their need from India — mainly because of a shorter lead time and lower price.

India-Bangladesh Chamber of Commerce and Industry president Abdul Matlub Ahmad has recently told New Age that they would look into the matter.

He noted that disruptions in the supply chain for various reasons in the exporting nations and delay in the shipment must create crises of relevant products in importing countries.

Rises in prices of those items in the importing countries are not unusual, said Matlub, also a former president of the Federation of Bangladesh Chambers of Commerce and Industry. 

Since 2019, Bangladesh’s consumers have been spending more than Tk 100 on a kilogram of onion during the September–November period due to bans on onion exports by India.

More than threefold hike in the price of onion in the period compared to the normal time invited a lot of criticism for the current government and put its agencies concerned under pressure to import the commodity from alternative sources even by costly air freighters.

Bangladesh also heavily relies on India for spices like turmeric, chilli, ginger, cardamom, raisins and mace javitri.

According to traders at the city’s Moulvibazar wholesale spice hub most of the spices available on the local market are imported from India.   

Any disruption in the supply of spices from India naturally leads to crisis and high price of many essential spices, they said.

Matlub said that the country’s traders should diversify their import sources.

Depending on single sources is not a viable business option, he added.      

The recent suspension of the liquid oxygen import from India has caused a shortfall of the life-saving item in local hospitals amid its high demand due to surging Covid patients.

Since April 26 the government has suspended its first-dose Covid vaccination for an indefinite period on the back of the uncertainty over the supply of vaccine from the Indian manufacturer Serum.

Former director for disease control at the Directorate General of Health Services Professor Be-Nazir Ahmed said that they had warned the government not to rely on a single source for the vaccine.

In November 2020 Bangladesh signed a deal with the Serum India and its local vendor Beximco Pharma to buy three crore doses of the Oxford-AstraZeneca vaccine the Serum produces.

Bangladesh has already paid Tk 1,455.08 crore to the Serum for the vaccine but received only 70 lakh doses before India has reportedly put a temporary hold on all major exports of vaccines to meet the country’s own demand.

At least 30 per cent of the active pharmaceutical ingredients worth about Tk 5,000 crore are imported from India by local drug makers.

But unlike many other raw materials, the local pharmaceutical industry will not face much problem in the event of any disruption in the import from India, said Bangladesh Association of Pharmaceutical Association secretary general SM Shafiuzzaman.

He noted that local drug manufacturers had already found alternative import sources, China and South Korea, for raw materials.

Backing the strategy of the drug makers, CPD’s Mustafizur Rahman, also a trade expert, noted that import sources of many other essential raw materials like chemicals and industrial ingredients should be diversified to deal with any unwanted supply situation.

He also noted that the import-substitute industries should grow here with active support from the government.

Supporting Mustafiz’s views, Matlub suggested that the government should identify the sensitive items imported from India and provide low-cost funding to promote import-substitute industries.    

Referring to the country’s attainment of self-reliance on cattle in recent years following a ban on the export of cows from India, he said that nothing was preferable to self-reliance.

The government policy makers have, however, realised the consequence of excessive reliance on India for jute seeds.

Textiles and jute minister Golam Dastagir Gazi said that a project had been undertaken jointly by the jute and agricultural ministries to achieve self-sufficiency in jute seeds by 2026.    

More than 8,700 hectares of land would be brought under jute seed cultivation from the current fiscal year with the target of producing around 5,000 tonnes of seed against the annual demand for some 6,000 tonnes.

News Courtesy:

https://www.newagebd.net/article/138552/bangladeshs-import-dependence-on-india-backfires