Indian exporters are blaming institutional inefficiencies for a 30 per cent fall in exports to Bangladesh.

Eastern regional chairman of the Federation of Indian Export Organisations (FIEO), S K Jain, says non-payment of letters of credit (L/Cs) and a racket involving undue delays on shipments passing through Petrapol Land Custom Station in India are to blame for the decline in trade.

Payments withheld

"Non-payment against irrevocable letter of credit (L/C) by various Bangladeshi Banks, including the Mutual Trust Bank, Janata Bank, Agrani Bank, National Bank Limited and others means Indian exporters have suffered a loss of almost 100 crore rupees (around US$23 million)", Jain told India's Business Standard.

The business spokesman went on to tell India's well regarded business daily that these banks, in connivance with some Bangladeshi traders, issued no-objection clearance certificates for goods without collecting the money from the traders for those goods. Payments to Indian exporters were then delayed or withheld on the basis of minor flaws in the documents, he said.

Customs complicit

Jain alleges that Bangladeshi customs also play a role in this matter by not recording delivery of goods, thus removing evidence that the goods had entered Bangladesh.

Traders most affected by these practices are Indian exporters of food grains, whose business according to Jain has declined by around 80 per cent.

Costly wait

The business spokesman added that trucks were being delayed at the border and faced heavy demurrage charges for every day of delay.

Trucks were being made to wait up to 20 days at the border. During the wait the trucks are subject to a daily demurrage charge of Rs500 (US$11) according to Jain.

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