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Business News/ News / India/  India to review duties to curb subsidized jute imports from Bangladesh

India to review duties to curb subsidized jute imports from Bangladesh

The plan is aimed at boosting domestic production.

Towards the end of Last year, India started investigating the import of Bangladeshi jute goods to impose countervailing duty (CVD) or anti-subsidy duties. Premium
Towards the end of Last year, India started investigating the import of Bangladeshi jute goods to impose countervailing duty (CVD) or anti-subsidy duties.

New Delhi: India is considering tightening its duties on jute and jute products to check imports of cheap, subsidized goods from Bangladesh that are undermining local manufacturers, a senior official said.

Cheap imports, combined with high raw material costs, act as a disincentive and are blamed for a shortfall in domestic production of jute products.

India started investigating imports of Bangladeshi jute goods towards the end of last year, to look at imposing countervailing duty (CVD), which came up in a petition to the government by the Indian Jute Mills Association. 

CVDs are aimed at checking import of goods that benefit from subsidies offered by the government of the exporting country. Under global trade rules, such duties are allowed when the subsidies are so high that they undermined local producers in the importing country.

The import of raw jute from Bangladesh in value terms increased 19% on year to 5,359 million in the 2022-23 financial year despite anti-dumping duty (ADD) on imports of jute yarn, twine, sacking bags and hessian fabric being in place since 2017.

Dumping happens when goods are exported at prices lower than the cost of production and shipment.

The primary reason for this increase in import is that Bangladesh has circumvented ADD measures by exporting jute sacking cloth instead of jute sacking bag, which is not covered by the Indian ADD measure. Further, Hessian jute bags, commonly known as gunnysacks, are also being smuggled into India from Nepal.

India is one of the largest importers of jute and its products from Bangladesh, a country that provides a cash subsidy of 12% as export incentive on Hessian sacks and ‘carpet backing clothing’ (CBC); 7% incentive on jute fibres including yarn and twine; and 20% subsidy on jute diversified products including food grade bags and clothes.

“India's Jute industry is facing a looming threat of being labelled a sunset industry. Jute mills in Bengal and eastern India have reduced the production of jute products due to high procurement cost and decreasing demand, which in turn has affected the entire jute ecosystem, from farmers, traders to transporters," the official said. 

“The non-compliance of JPMA (Jute Packaging Materials Act), 1987 by the sugar industry to use jute bags for packaging of at least 20% of sugar production, has aggravated the situation for the industry."

The price of jute sacking bags, mainly used to pack foodgrains, has declined 5% year-on-year to Rs.95,489 per tonne in last December from Rs. 100,749 a tonne. The price of jute sacking bags in fair price shops has remained unchanged since 2016, despite a tariff commission report on jute bags, the official added. 

Queries sent to the spokespeople and secretaries of textile, agriculture, commerce & industry, consumer affairs, food and public distribution ministries remained unanswered at press time.

According to the official cited above, one of the major reasons behind the decreasing jute demand is the violation of the JPMA Act by the sugar industry that provides for packaging of all food grains and 20% of sugar production compulsorily in jute bags. Despite provisions for penalty and power to search and seize, the sugar industry has not complied with the JPMA and prefers to use cheaper plastic for packaging.

“One among many complexities of sugar mills not using 20% jute packaging is the standards for jute bags. Sugar mills say that jute mills don’t comply with quality standards as laid down by the Bureau of Indian Standards. Jute mills say that they are ready, but when sugar mills call for tenders, they don’t find adequate suppliers. The more basic issue is for the ministry of textile to reconcile these two opposing industries. The textile ministry must sit down with the two parties and discuss the problem and resolve it," said G.K. Sood, an industry expert.

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Puja Das
Puja Das is a New Delhi based reporter, covering food, farm, fertiliser, water, and climate change policies for Mint. Puja reports on food security, farmers' distress and how the agriculture sector is impacting India's rural economy along with policy initiatives to help meet the pledges made at COP21 in Paris. Puja holds a post-graduation degree in Broadcast Journalism from the Indian Institute of Journalism & New Media, Bangalore.
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Published: 03 Apr 2024, 07:04 PM IST
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