Cleaning the Import-Export Tracks

Cleaning the Import-Export Tracks

Government secures export and import of several restricted commodities

At various intervals, the Bhutanese media is filled with news about Bhutanese exporters and importers facing problems at the Phuentsholing gate; while importing and exporting. Vegetable export through Jaigaon came to an abrupt halt when it was the peak time for farmers to export using Phuentsholing as the route in 2020.

The Government of India (GoI) refused to buy ginger from Bhutan, as India does not allow ginger imports from any country other than Nepal in 2021. Silicon export to India stopped. There have been several cases of this kind.

However, these will all be things of the past as said by the Minister of Economic Affairs (MoEA), Loknath Sharma. “The Royal Government of Bhutan (RGoB) was able to negotiate the removal of certain restrictions and secure exemptions for the export of several commodities successfully on account of the excellent and special relationship that exists between the two countries, Bhutan and India,” the Minister said, adding that the commodities include potato, ginger, areca nuts, apple, sugar, wheat flour, wheat grains, ferrosilicon and coal amongst others.

    The Economic Minister, Loknath Sharma said, “Bhutan’s export of agriculture products such as Potato, Ginger, Areca nuts and Apple among others were restricted to India due to their domestic regulations during the year.”

However, the Economic Minister said that the export of potatoes from Bhutan into India is now permitted freely without an import license until June 2023. “Export of ginger is also now allowed and there is no time limit. Despite the time limit, the Government of India (GoI) has assured us that the export of potatoes even in the future will not face hindrances.”   

   Similarly, sugar, wheat flour, wheat grains, and coal among others from India were also restricted from export by India due to their own internal shortages and domestic regulations. On this issue, the Minister said that the Government has successfully secured exemptions and specific allocations of sugar, wheat flour, wheat grains, and coals for Bhutan to ensure that the general public and private sector were not severely impacted by these export restrictions.

“Besides the exemptions and allocations of those commodities, the Government has also successfully secured exemptions to export Ferro silicon to India which is one of the top ten exports of Bhutan amounting to around Nu 17bn per annum,” the Economic Minister said. 

For instance, GoI had earlier restricted the export of several commodities and import restrictions due to changes in the global food chain and internal shortages; however, GoI has given the concession to import and export such commodities and the government was also able to secure the restriction to import and export the commodities.

Similarly, the Economic Minister said that in terms of certification matters, a proposal has already been tabled to the GoI to have mutual recognition of certificates issued by national agencies like the Bhutan Standards Bureau (BSB) and Bhutan Agriculture and Food Regulatory Authority (BAFRA).

A Memorandum of Understanding (MoU) between BAFRA and their counterparts, Food Safety and Standards Authority of India, and a Mutual Recognition Agreement between BSB and their counterpart Bureau of Indian Standards (BIS) are under formulation.

Meanwhile, the average annual export of Bhutanese potatoes is around 20,000MT and accounts for around 0.04% of India’s domestic production.

Ferrosilicon is Bhutan’s top export commodity. In 2021, Bhutan exported ferrosilicon worth Nu 15bn, the highest so far. In 2020, Bhutan exported Nu 7bn worth of ferrosilicon, Nu 9bn in 2019, Nu 13bn in 2018, and Nu 9bn in 2017.

In 2020, records show India imported the highest share of ferrosilicon from Bhutan- a 16.6% worth USD 101mn. Though there is a free trade agreement between Bhutan and India, critics say that everything is not free. There are several restrictions imposed. It is sometimes the local politics in India, too. 

According to the Royal Bhutan Embassy, New Delhi’s official website, the objective of the Free Trade Agreement (FTA) is to further strengthen the age-old ties and enhance bilateral trade and economic cooperation for the mutual benefit and development of the two countries.

The most important features of the Free Trade Agreement are the provision for free trade between the two countries and transit rights for Bhutan’s trade with Third countries. The rapid growth of trade between the two countries is attributed to the free trade arrangement which allows the free flow of goods into each other’s territory without any import duty.

In addition, the transit right granted through the FTA enables Bhutan to trade with the rest of the world, India has been the largest and the most important trading partner for Bhutan since the start of the development plans.

In 2020, overall trade with India has recorded at Nu 94.89bn (including electricity), which accounted for 82% of Bhutan’s total external trade, and the figure without including electricity was recorded at Nu. 67.18bn, which accounted for 77% of Bhutan’s total trade.

The overall import from India accounted for 87% of the total import value with or without taking into account trade in electricity. Exports to India account for 90% of total exports including electricity and 77% without electricity.

Bhutan’s major exports to India includes electricity, ferrosilicon, dolomite, semi-finished product of iron or non-alloy steel, Portland pozzalana cement, cardamoms, pebbles gravel, gypsum, carbide of silicon, ordinary Portland cement, etc. The total export value in 2020 including electricity was Nu 43.51bn and excluding electricity was Nu 27.52bn.

Bhutan’s major imports from India comprise of diesel, petrol, motor vehicles for the transport of goods(dumper), ferrous products, telephones, electrical distribution panel board, coke and semi-coke, soya-bean oil, passenger cars, and petroleum bitumen. The total imports from India including electricity was Nu.51.37bn.

Sherab Dorji from Thimphu