Bhutan’s export affected as taxes revised in India

According to the agriculture minister, Bhutan’s trade has been mostly informal till now

With the latest tax revision in India by the Government of India, export of goods from Bhutan has been affected, according to Agriculture and Forests Minister Yeshey Penjor. 

The minister said that the government faces challenges in exporting goods and marketing farmers’ produce to India as the tax revision in India has added burden for the government to export goods.

“We export apples at Nu 60 per kilogram and there was a high demand before, but with the tax addition it reaches to 75-80 per kilogram in India, where the buyers go for cheaper rates. It is directly impacting our exports,” Lyonpo explained. 

Lyonpo added that there will be an increase in prices of all the RNR products with the tax implementation and buyers in India will have lesser choice in buying Bhutanese RNR products.

“This is going to impact our exported goods and even if they are of best quality,” he said.

However, the government has also looked beyond India to export goods, but taxation will be implemented when the goods are exported through India by roads. 

“If we use to export goods by flight, the expenses will also get higher than the roads,” Lyonpo Yeshey Penjor said, adding that even if farmers’ produce have a high demand in Bangkok, the government is not able to export by flights.

According to the minister, Bhutan’s trade has been mostly informal till now, where farmers directly take their produce to the Phuntsholing auction yard and sell their goods.

“Now, the Covid-19 has taught us that export and import have to be systemized,” Lyonpo said. “Till now, we don’t have any registered buyers and once the goods are sold from the auction yard we are not able to trace them. Till now, we don’t have any data or system to formalize the trade; so everything so far is informal till now,” Lyonpo said. “With this way of trade, we are not able to compete in the global market,” he added.  

Meanwhile, with the implementation of the Plant Quarantine Order (PQO) in India for which a Pest Risk Analysis (PRA) needs to be conducted, Lyonpo said that the vegetables export dropped drastically.  

He said that summer vegetables export to India had been disturbed due to additional requirements like PRA, PQ and other restrictions. 

“Importers in India need an import license and those vegetables being imported need to be notified under the PQO of India for which a pest risk analysis needs to be conducted,” Lyonpo said. 

In addition, with the introduction of the Goods and Service Tax in India, there have been several new digital developments especially at the entry points (borders) that require documentation and adherence to domestic laws and regulations, according to Lyonpo. 

Lyonpo said that there are also other import conditions that need to be fulfilled while importing vegetables into India such as sanitary and phytosanitary conditions, volume restrictions, and the minimum import price.  

“The importers there aren’t aware of such requirements and in particular importers in the bordering areas,” he said, adding that despite the challenges and situation, effort is being made to sustain exports.

Lyonpo shared that the RGoB has liaised with GoI and obtained PRA for almost all cash crops (areca nut, ginger, mandarin, cardamom, potato and asparagus) and additional PRAs for other vegetables are being pursued.

“Besides the PRAs, there are import conditions as mentioned above for which the RGoB is continuously following up. It is important to keep this export channel proper and streamlined,” Lyonpo said. 

The minister explained that the buy-back scheme is introduced to support farmers through an assured market and is an option when export or value addition is not possible.

“Due to the storage and warehouse shortage it could not be implemented as envisaged and efforts are to streamline further with storage facilities being considered,” he said.

Kinley Yonten from Thimphu