Agrochemical makers file complaint over raw material import restrictions

The Bangladesh Agrochemicals Manufacturing Association (BAMA) has filed a complaint with the Bangladesh Competition Commission, alleging that a seven-year-old policy restricting pesticide raw material imports to a "single country, single source" violates existing laws and undermines fair competition. A hearing on the complaint is expected on 22 July.

According to the association, the Department of Agricultural Extension (DAE) has been enforcing the restriction since 2018 following decisions by the Pesticides Technical Advisory Committee (PTAC), preventing local manufacturers from sourcing quality raw materials from multiple countries at more competitive prices.

Under the policy, manufacturers must import a specific raw material from a designated company in a designated country, even if the same material is available at lower prices or from alternative suppliers elsewhere.

The Agrochemicals Manufacturing Association said neither the Pesticides Act, 2018, the Pesticides Rules, 1985, nor the Pesticides Rules, 2010 contain any provision allowing such source restrictions.

The association also said the policy conflicts with the Import Policy Order 2022, which encourages imports from at least three suppliers in two source countries.

Association President Md Mostafizur Rahman told TBS that the restrictions had been imposed illegally to benefit a handful of multinational companies and importers.

"The single country, single source policy prevents local manufacturers from importing quality raw materials from the global market at competitive prices," he said.

"The agriculture ministry instructed the Pesticides Technical Advisory Committee and the Department of Agricultural Extension to remove these barriers years ago, but the directive has not been implemented. As a result, we have sought relief from the Competition Commission," he added.

Why the dispute

The dispute centres on decisions taken at Pesticides Technical Advisory Committee's 69th and 77th meetings, where the committee decided to restrict sourcing and require field trials before allowing changes in the source of registered pesticide raw materials.

According to the Agrochemicals Association, the Pesticides Technical Advisory Committee's recommendations were implemented by the Agricultural Extension Department without approval from the ministry, even though the committee's role is to advise the government.

In a letter sent to the Pesticides Technical Advisory Committee and the DAE in December 2021, the agriculture ministry said the existing legal framework contained no provision for permanently or temporarily closing import sources.

The ministry also questioned the Pesticides Technical Advisory Committee's decisions to restrict sources and require source changes only after two years of registration, saying such measures were difficult to justify.

It reminded that the Pesticides Technical Advisory Committee had been formed to make recommendations to the government and that its decisions should only be implemented after obtaining ministry approval.

The ministry also requested the authorities to take necessary steps to open up import sources used by domestic agrochemical manufacturers.

Agrochemicals Manufacturing Association further alleged that a decision taken at the Pesticides Technical Advisory Committee's 77th meeting in 2019 effectively blocked manufacturers from changing raw material suppliers by requiring field-level testing alongside laboratory tests.

Agrochemicals Manufacturing Association president said such field testing was impractical for raw materials, making it virtually impossible for manufacturers to switch suppliers despite higher-quality alternatives.

The association also alleged that although Bangladesh, as a least-developed country, is entitled to patent-related flexibilities under the TRIPS Agreement for pharmaceuticals and agrochemicals, domestic manufacturers are being denied similar benefits enjoyed by finished-product importers.

In the current fiscal year's budget, the government has reduced customs duties on the import of raw materials for the agrochemical manufacturing industry to zero for most items. However, local manufacturers say they are still unable to import quality raw materials at competitive international prices because the "single country, single source" policy remains in place for raw material imports.

Bangladesh's pesticide market is worth around Tk15,000 crore, of which multinational companies and importers of finished products account for about 92%. The government has approved 22 agrochemical manufacturing companies to produce pesticides domestically, but their combined market share is only 8%.

Previously, the total tax incidence on raw material imports for local manufacturers was 58%. In the latest budget, the BNP government retained a maximum 15% duty on only 36 items, while reducing duties on the remaining raw materials to zero.

However, local agrochemical manufacturers say the benefits of the supportive tariff policy announced in the budget will be limited unless the "single country, single source" requirement for importing raw materials is withdrawn. The restriction, they argue, prevents them from sourcing high-quality inputs at competitive prices from the global market.