IT is high time to simplify
the existing Bonded Warehouse (BWH) policy for export diversification
and reduction of dependency on a single sector, experts and businesses
said.
During the Covid-19 situation, the nation saw the risk of
dependency on a single sector because there was a sharp decline of total
export earnings due to the cancellation of export orders in the
ready-made garment (RMG) sector.
On an average, the RMG contributes
more than 80 per cent in the country's export earnings, while all other
export sectors contribute 20-23 per cent. In the year 2018-19, only
$6.40 billion total export was $40.53 billion, of which non-RMG sector
contributed. Similarly in 2019-20 FY, RMG earned $27.93 billion while
the non-RMG $5.74 billion.
There are 4,000 RMG bonded warehouse
licences compared with 200 licences for non-RMG categories. The message
is more pronounced when among 1,600 items exported to the world market
in FY 2018, 1,400 were in the non-RMG category. Only 250 of the export
items that belonged to the RMG category were blessed with the bonded
warehouse benefits, while the rest had to make do without the facility.
That there is a pressing need for export diversification away from
single item reliance is often talked about, but hardly acted upon in
creating conditions and infrastructures congenial to the expansion of
the export trade.
If the privilege of duty/tax exemption on raw
materials/other inputs import under the bonded warehouse provision could
also be extended to the rest, non-RMG exporters, the picture of our
export basket would look not only more equitable but the income from the
exports would also multiply significantly.
Also the delivery system
of NBR, especially its relevant wing dealing with the bonded warehouse
facility, is circumscribed by outmoded, mostly manual, paper-based
operation, complex set of rules and redundant documentation process. It
also has a systemic revenue leakage problem. So, it is hardly surprising
that the present service delivery mechanism is not suited to meet the
needs of the ever-growing number of prospective beneficiaries. That
calls for modernising the delivery system in a time-befitting manner.
The first step to that end would be to replace the existing primitive
system with a smarter, automated one. The imperative is that the
policymakers have to be more sensitive towards the emerging market
needs.