Bangladeshi jute, jute goods may face fresh Indian blow

Jute and jute goods exporters could come under more pressure in India as New Delhi plans to impose countervailing duty (CVD) on their shipment, at a time when they are already facing an anti-dumping duty (ADD) in the market.

India has started investigation to levy CVD as it thinks that its domestic industry is being hurt by the subsidies provided by Bangladesh.

The Indian government has sent a letter to the commerce ministry of Bangladesh on August 4 seeking a meeting with Senior Commerce Secretary Tapan Kanti Ghosh today as part of the investigation.

The ministry has sought two more months to hold the meeting, Ghosh told The Daily Star yesterday.

India has started investigation to levy CVD as it thinks that its domestic industry is being hurt by the subsidies provided by Bangladesh.

CVDs are tariffs on imported goods that are imposed to offset subsidies given by the exporting country's government, while an ADD is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value.

The Indian Jute Mills Association (IJMA) has complained to the Directorate General of Trade Remedies (DGTR) that Bangladesh's subsidies on jute and jute goods are affecting Indian jute industries.

The DGTR is a quasi-judicial body that independently undertakes investigations before making its recommendations to the Indian central government.

Currently, Bangladesh gives a 12 percent cash incentive on the export of jute goods such as hessian and sacks and a 7 percent incentive on jute fibres like yarn and twine.

A 20 percent subsidy is extended against the export of carbon and jute particle board produced from the natural fibre.

In the letter, the IJMA mainly indicated that the export of a large volume of locally made jute sacks, which are used in the packaging of rice, and similar bags is affecting its jute industries.

The association informed the DGTR that Bangladesh is giving a lot of subsidies for the import of capital machinery used by jute industries.

The cash incentives and subsidies are making Bangladeshi jute and jute goods industries more competitive and are affecting the Indian jute industries, it said.

In a reply to the DGTR, Ghosh said it would take time to investigate the matter and needs research and consultations with local jute and jute goods making industries and other stakeholders before holding the bilateral meeting.

Dhaka is expected to discuss the ADD issue with New Delhi during the bilateral meeting between Prime Minister Sheikh Hasina and Indian Prime Minister Narendra Modi during the former visit to the country next month.

Earlier, Bangladesh proposed several times that India refrain from retaining any ADD once it ceases to exist on December 31.

Commerce Minister Tipu Munshi, during his visit to India in December, called for removing the ADD.

In response, India said the first 200,000 tonnes of Bangladeshi jute and jute goods would be allowed to enter the country duty-free annually and any additional amount would be subject to duties.

Jute and jute goods shipment to India stumbled for the ADD, which ranges from 5 percent to 30 percent.

In 2017, India imposed anti-dumping duties ranging from $19 to $352 per tonne for five years on jute exported from Bangladesh. It renewed the measure in 2022.

In October last year, the DGTR recommended its finance ministry reimpose the ADD for another five years, prompting Bangladesh to initiate discussions with exporters to determine the next course of action.

Bangladesh has enjoyed duty-free access to India for all goods except 24 alcoholic and beverage items under the South Asian Free Trade Agreement since 2011. As a result, exports to the country are growing steadily.

Garment items shipped from Bangladesh face a 12.50 percent CVD.