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Selling bulbs to India: WB moots Philips tie-up

The World Bank has asked Bangladesh to cut costs and improve product if they hope to sell light bulbs to India.

india Updated: Dec 15, 2006 13:40 IST

The World Bank has asked Bangladesh's entrepreneurs to cut costs and improve product if they hope to sell light bulbs to India, especially the latter's market in the north-east.

''Cost reduction and productivity improvement of the light bulbs industry of Bangladesh are needed to brighten the prospects for exports of the item, " the WB said in its recent report on Studies on India-Bangladesh Trade, Trade Policies and Potential of FTA.

The WB has been advising Bangladesh, through consultations and studies, on how to trade under FTA that New Delhi has proposed but Dhaka's response to it has been cold.

Export potential of Bangladesh's light bulbs to its neighbouring Indian market would not appear promising under a free trade agreement (FTA), if cost reduction and productivity improvement of the industry are not ensured, said the World Bank (WB).

The bank said it was hopeful of the capability of the Bangladeshi light bulbs' competing in India in the event of a FTA if these two preconditions are met.

WB study said that Bangladesh could have a distinct edge over the Indian counterparts in the northeastern markets of that country since transport cost of bulbs from other parts of India to this part is very high.

Taking advantages of the geographic proximity, Bangladesh could capture a sizeable part of the Indian market, the WB report observed.

India-Bangladesh trade is heavily weighed in the former's favour and the two sides have been constantly exploring avenues for striking a relative balance.

India has proposed a number of projects and joint ventures and massive investment, like in the case of Tata, who have a three billion dollar investment proposal pending, to improve economic ties.

Citing an example, WB suggested that Phillips India could subcontract production to local Phillips in Bangladesh to cater to the needs of a wider market following enforcement of an FTA.

According to the light bulb firms in Bangladesh that came under the WB survey, if the duties on raw materials and interest rate on working capital were lower, there would be immense potential for Bangladesh to emerge as a competitive supplier of light bulbs in the region, The Daily Star said.

There are some 50 manufacturing plants producing light bulbs in Bangladesh, while only one firm named Transcom Electronics Ltd producing Phillips and two other brands claims 60 percent market share, the WB survey found.

An India-Bangladesh FTA would mean that the bulbs could be imported duty-free from India but that light bulbs imported from the rest of the world would still be subject to a 66 percent protective tariff, the bank said.

Likewise, light bulb inputs could be imported duty-free from India but would remain subject to the general most favoured nation (MFN) tariffs, averaging about 33 percent, if imported from rest of the world, the study said.