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28 Dec 2016

Bhutan's orange exporters are worst hit

Demonetization's ripple effect felt in Bhutan

Demonetization has badly hit Bhutan's orange exports to India.

Orange growers have reported a massive increase in yield compared to 2015 but are deeply disappointed as they are unable to transport their produce to India.

Exporters of oranges are required to pay transport fees and "other unofficial bills" in Indian currency.

Bhutan has been exporting oranges to India for last ten years.

In context

Demonetization's ripple effect felt in Bhutan

Trade

Bhutan-India bilateral trade

Bhutan's largest trading partner is India: in fiscal year 2015-16, India-Bhutan bilateral trade touched USD 985 million.

Indian currency is legal tender in Bhutan and is easily convertible into the Bhutanese Ngultrums as monetary value of both currencies is at par.

Bhutan imports electricity, gypsum etc. and exports vegetables, fruits, spices to India.

Demonetization has in particular affected Bhutanese farmers and spice growers.

Upset in exchange value

As per Royal Monetary Authority of Bhutan, Indian rupee accounts for 30% of Bhutan's international exchange reserves. Since demonetization, currency conversion is skewed and in Bhutan's black market, the unofficial exchange value of 100 Rupees is now 130 Ngultrums.

Bhutanese farmers bear the brunt

Difficulties

Bhutanese farmers bear the brunt

Farmers and exporters in Bhutan's border town of Phuentsholing, are struggling to sell potatoes and cardamom.

Post demonetization, exports of cardamom have halted and more than 1,000 metric tons of potatoes is lying unsold as Indian buyers are unable to make payments given withdrawal limits.

Consequently, prices of cardamom and potatoes have slumped badly impacting Bhutanese farmers and Food Corporation of Bhutan.

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28 Dec 2016

Bhutan's orange exporters are worst hit

Demonetization has badly hit Bhutan's orange exports to India.

Orange growers have reported a massive increase in yield compared to 2015 but are deeply disappointed as they are unable to transport their produce to India.

Exporters of oranges are required to pay transport fees and "other unofficial bills" in Indian currency.

Bhutan has been exporting oranges to India for last ten years.

Why are exports so severely impacted?

Key reasons

Why are exports so severely impacted?

Orange exports from Bhutan start in November and continue till February.

According to Bhutanese officials, if there was a Motor Vehicle Agreement between Bhutan, India and Nepal, Bhutanese trucks would transport produce.

However, in absence of such an agreement, Bhutanese exporters are forced to pay inflated prices to Indian truckers.

Similarly, export of potatoes, ginger and cabbage has been impacted for the same reason.

Bhutanese pilgrims impacted too

Post harvest in Bhutan, the Bhutanese visit Buddhist monasteries in Sikkim, Varanasi, Bodhgaya, Kushinagar and Sarnath for pilgrimages. However, this year, given shortage of Indian currency, the Bhutanese have been asked to avoid travelling on pilgrimage to India.

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