India has increased anti-dumping duties on jute products imported from Bangladesh and Nepal, a move expected to protect domestic producers but likely to affect Bangladeshi exporters. India is also considering imposing countervailing duties on such imports over alleged government export subsidies.
The increased duties have already taken effect, according to Indian media outlet The Hindu BusinessLine. India’s jute industry is expected to benefit during the second half of the current financial year through higher demand for domestic jute products and improved capacity utilisation at jute mills.
India’s Finance Ministry issued a notification on the additional anti-dumping duties after the Directorate General of Trade Remedies (DGTR) conducted a mid-term review. India first imposed anti-dumping duties on the products in 2017 and extended them for another five years in 2022.
The DGTR review found that the effectiveness of the previous duties had substantially declined. Imports of jute yarn, hessian cloth and sacking products from Bangladesh and Nepal rose by nearly 50% over the past four years.
Nearly one out of every seven tonnes of jute products used in India is now imported from Bangladesh and Nepal, according to the report.
The new duty structure replaces the earlier fixed rate with separate duty rates for each exporting jute mill. Rates have been determined based on the actual prices at which individual mills export their products.
Exporters that did not cooperate with the investigation have been assigned significantly higher duty rates.
India’s jute industry welcomed the decision, saying it was not intended to close the border but to restore fair competition between jute products from the two countries.
“The government’s measure is extremely positive,” said Raghavendra Gupta, chairman of the Indian Jute Mills Association (IJMA). “It will increase demand for domestic jute products in the Indian jute industry. Higher demand for jute products will also improve capacity utilisation at jute mills and create more jobs.”
Separately, the DGTR has completed an investigation into government subsidies received by exporters in Bangladesh and Nepal. The investigation was initiated following an application by the Indian Jute Mills Association.
The DGTR found that Bangladeshi jute mills receive cash incentives through Bangladesh Bank against each export consignment, along with income tax benefits. Jute mills in Nepal also receive similar benefits, including export grants and tax concessions.
Following the investigation, the DGTR has recommended, for the first time, the imposition of countervailing duties on jute products imported from Bangladesh and Nepal.
The proposed duty is intended to offset the impact of export subsidies received by jute mills in Bangladesh and Nepal. Under such a measure, India would collect duties from exporters equivalent to the additional income they receive through subsidies.
The DGTR investigation stated that subsidised imports had caused serious injury to India’s domestic jute industry. Jute products from Bangladesh and Nepal were sold in India at lower prices than products made by Indian jute mills, forcing domestic mills to reduce their prices.
The investigation said Indian mills had also suffered declines in production, capacity utilisation, sales and profits. The DGTR said the injury continued even while anti-dumping duties were in force.
Protecting India’s jute industry is directly linked to public interest, the DGTR said, noting that Indian jute mills employ around 400,000 workers and that about 4 million raw-jute farming families depend on the sector.
The countervailing duty has not yet taken effect. Following the DGTR recommendation, the proposal is awaiting approval and notification by India’s Finance Ministry.
“The industry has won every trade-remedy case for nearly a decade, yet imports have continued to rise,” said Sanjay Kajaria, former chairman of the Indian Jute Mills Association. “That is because anti-dumping duty sought only to address product pricing, without addressing the government subsidies behind it.”
“The countervailing duty investigation marks the first time the Indian government has directly challenged the export incentives provided by Bangladesh,” Kajaria said. “The DGTR’s findings have also confirmed what jute mills and farmers have been saying for many years.”
Kajaria said the Indian jute industry would receive a fair market for the first time since 2017 if the new anti-dumping duties and countervailing duties were both implemented.
“We are not seeking protection,” Kajaria said. “We want jute products to compete on the basis of cost and quality, not on the basis of how much money a country’s government provides to its exporters.”