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Indian devaluation to encourage smuggling

By Moazzem Hossain
Export competitiveness of many Bangladeshi items will be lost In the International markets because of a major devaluation of the Indian currency.
Fears loom large in some exporter circles that trade through informal channels, or smuggling across the border, will be encouraged because of a 20 per cent devaluation of Indian rupee recently in two quick successive dose*
The Bangladesh taka has meanwhile depreciated tn value in US dollar terms by 1.95 per cent.
Exporter circles tn Dhaka said the Bangladeshi export Items which are competing with India in the International markets are likely to be priced out. Indian exports will be more attractive in US dollar terms because of the devaluation. they said.
In the informal markets, the Bangladesh currency has registered some gains over the Indian rupee, but the gains are still low compared to the extent of devaluation of the latter. the sources said.
Some industrial associations have already moved the government pleading for some corrective steps to help overcome the effects of the devaluation of the Indian currency on Bangladesh export operations.
Fears have been expressed by the same circles that items like frozen food, hides and skin, jute and tea might find large outlets through smuggling to India. This will affect foreign exchange earnings of the country adversely, they said.
Another fear by the same circles is that imports would become costlier in local currency in India following the devaluation. This is likely to encourage smuggling of imported goods, at cost in hard currency for Bangladesh, in exchange for Indian manufactured goods and all and sundry items, they said
Meanwhile, the country’s new export policy which was earlier due for announcement on July 1 still awaits the approval of the council of ministers.
An inter-ministerial meeting discussed only recently the operational aspects of the proposed export policy. Some problems cropped up earlier over the provisions of incentives under the policy, according to Informed sources. This necessitated more reviews. Besides, the prolonged Illness of Commerce Minister M Keramat All caused some delays in finalisation and approval of the export policy. Shipping Minister M K Anwar has now been given the additional responsibility of Commerce Ministry because of latter’s inability to resume responsibilities for sometime more on health grounds.
Sources said that the new export policy would be announced next week. Incentives like concessional rates of Interest on bank credits for financing exports and tax-exempted Incomes In export sector arc likely to be Included in it.