Jute export to India faces new hurdles

The Indian authority has initiated an investigation into the import of jute sacking cloth from Bangladesh following allegations that the item was being brought in large quantities to evade the anti-dumping duty (ADD) on jute sacking bags.

On January 5 last year, India had slapped ADD ranging from $19 to $352 a tonne on jute yarn/twine, hessian fabric and jute sacking bags brought from Bangladesh and Nepal after a year-long investigation. 

But the Indian Jute Mills Association alleged that a section of clever importers were bringing in jute sacking cloth in abundance from Bangladesh to get round the ADD.

Subsequently, the association filed an application with the Directorate General of Anti-Dumping & Allied Duties, which then opened the investigation.

The investigation would look to determine the existence, degree and effect of the alleged circumvention by poring through trade data from October 2016 to December 2017 and examine the need to extend the existing ADD to the circumventing product.

Until the investigation wraps up, the Indian importers of jute products have been instructed to give undertaking of payment of ADD if their consignment of sacking cloth is found to be circumventing the existing tariff, as per a notice on March 24.

The customs office also slapped bank guarantee at the highest rate of ADD on the import of jute sacking cloth from today as protective measure to safeguard the duty element.

This means that they have imposed barriers in such a way that none can export jute products from here, said Mohammed Mahbubur Rahman Patwari, managing director of Alijan Jute Mill.

"My buyer has already informed that it would not be possible to buy from us by paying such a high rate of bank guarantee."

There is also a possibility of imposing zero duty once the investigation concludes, but until then the bank guarantee has to be provided, he said.

Exports of jute products have declined after India imposed ADD on jute products from Bangladesh. As a result, mills are sitting on increased stockpiles of jute goods, according to the Bangladesh Jute Mills Association (BJMA).

Taking benefit of this situation, importers from different countries are offering prices at much lower than the production cost of mills.

And many mills are exporting even after incurring losses to pay bank loan, wages and salaries to workers, the BJMA said.

"If the Indian government slaps ADD on import of jute sacking cloth, this will add salt to injury," said Muhammad Shams-uz-Zoha, the BJMA chairman in a letter to state minister for textiles and jute yesterday.

Gopi Kishan Sureka, chief executive of Fiber 'N Fibre, a jute exporter, said no one in India will import under such uncertainty and the export of jute products to the neighbouring country will also come to a halt.

The requirement of bank guarantee will also block a large chunk of money of importers, he said.

"The Indian authority should have given some time as many importers have already made payment in advance and placed orders," Sureka added.

Exports of jute and jute goods to India fell 18 percent year-on-year to $109 million in the July-February period of this fiscal year, according to data from the Export Promotion Bureau.

During the period, shipment of jute bags fell sharply while exports of jute sacking cloth soared.

India accounted for 15 percent of Bangladesh's total export receipts of $741 million from jute and jute goods in the first eight months of the fiscal year, according to EPB data.