India to reassess duties to limit subsidised jute imports from Bangladesh

India is contemplating stricter duties on jute and jute products to curb the influx of inexpensive, subsidised goods from Bangladesh, which is undercutting it's local manufacturers, according to a senior Indian official.

The combination of low-cost imports and elevated raw material expenses serves as a disincentive and is cited as a contributing factor to the decline in domestic production of jute products in India, reports Mint.

India initiated an investigation into the imports of Bangladeshi jute goods towards the end of last year, with the intention of considering the imposition of countervailing duty (CVD). This action stemmed from a petition submitted to the government by the Indian Jute Mills Association.

According to Mint, despite the imposition of anti-dumping duty (ADD) on imports of jute yarn, twine, sacking bags, and hessian fabric since 2017, the import of raw jute from Bangladesh saw a year-on-year increase of 19% in value terms, reaching ₹5,359 million during the 2022-23 financial year.

Currently, India stands as one of the largest importers of jute and its products from Bangladesh.

Bangladesh offers a cash subsidy of 12% as an export incentive on Hessian sacks and 'carpet backing clothing' (CBC), a 7% incentive on jute fibers, including yarn and twine, and a 20% subsidy on jute diversified products, including food-grade bags and clothing.

"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 Indian 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."

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.