India taking steps to ensure Bangladesh can't reroute jute exports via 3rd countries

India has decided to impose port restrictions with immediate effect on the import of jute and allied fibre/ products from Bangladesh. These restrictions shall apply to imports into India of Bangladesh jute and allied fibre/ products across all land and seaports, with the exception of the Nhava Sheva port.

The Government is also taking steps to ensure that exporters in Bangladesh do not circumvent the aforesaid restrictions by routing their jute exports through third countries, according to informed sources.

Under the South Asian Free Trade Agreement or SAFTA provisions, jute from Bangladesh enjoys a duty-free access to India. However, the Indian jute industry has, for long, suffered due to the adverse impact of dumped and subsidized imports of jute products—particularly yarn, fibre and bags—from Bangladesh, according to informed sources.

There is credible evidence that Bangladeshi jute exports continue to benefit from state subsidies extended by the Government of Bangladesh. In response to these concerns, the Directorate General of Anti-Dumping and Allied Duties (DGAD) conducted detailed investigations and imposed Anti-Dumping Duty (ADD) on jute/ goods originating from Bangladesh. However, the imposition of ADD has not yielded a substantial reduction in imports. Various large exporters from Bangladesh managed to circumvent ADD through technical exemptions, exports through exempted firms (whose exports go beyond their production capacity), and misdeclaration to secure higher subsidies within, according to informed sources.

Imports, which stood at USD 138 million in FY 2016-17 prior to the levy of ADD, marginally declined to USD 117 million in FY 2021-22 and have since risen to around USD 144 million in FY 2023-24. Consquently, prices of jute in India fell below Rs 5,000 per quintal for FY 2024-25, against the minimum support price (MSP) of Rs 5,335, creating a vicious payment/ liquidity cycle. Additionally, the influx of underpriced finished jute goods from Bangladesh has resulted in significant under-utilization of capacity in Indian mills, threatening their long-term viability, according to jute industry experts.

Raw jute imports into India from Bangladesh remains outside the purview of ADD and therefore jute farmers currently do not enjoy any protection from dumping practices employed by Bangladesh exporters.

It is estimated that the jute industry in India provides direct employment to over 4 lakh workers in organized mills and in diversified units including tertiary sector and allied activities, and supports the livelihood of around several lakh farm families. Artificially depressed prices caused by subsidized imports have had a direct and adverse impact on the income of jute farmers.

Last month the government announced that it was imposing major import route restrictions on goods including ready-made garments and processed food items from Bangladesh. According to a Directorate General of Foreign Trade (DGFT) notification, no ready-made garment products will be allowed in India via northeast-based integrated check posts (ICPs), in response to a similar move by Bangladesh in April.