Traders in Bangladesh are calling for the dismantling of barriers that prevent them from writing direct letter of credit (L/C) business with India.

The calls follow news that Bangladeshi exports to India dropped substantially in the fiscal year just ended in June 2014.

Falling exports

Bangladesh exported goods worth about US$457 million to India in the 2013-14 fiscal year, a full 19 per cent down on the previous twelve months.

Exports to India were rising, reaching US$563 million in 2012-13 from just US$289 million in the 2006-07 fiscal year.

Trade barriers

Traders say that one major barrier to Bangladeshi goods reaching India is that the number of banks in north eastern India allowed to handle foreign currency transactions and open L/Cs is limited.

Even these are not authorised to carry out direct transactions with Bangladesh. This is seen in trade circles as a major impediment to Bangladeshi exports getting into the landlocked north of India.

Major obstacles

One trader described the tariff and non-tariff barriers imposed by India on shipments from Bangladesh as "major obstacles" and that these were "hindering growth of Bangladesh's exports to India."

He reckons Bangladesh's exports to India would increase up to threefold if the barriers were lifted.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.