India's anti-dumping duty on jute import 'adversely impacts' trade with Bangladesh

By Samara Ashrat* 
Will the proposed Comprehensive Economic Partnership Agreement between India of Bangladesh be a comprehensive economic framework and an instrument to optimize the advantages of their strategic geographical landscape? 

Bangladesh is crafting strategies to start negotiations with India on the long-awaited CEPA. Indian high commissioner to Bangladesh Pranay Verma, too, recently said CEPA could be a game-changer for both the countries in terms of trade. 

However, concerns remain.
The imposition of anti-dumping duties on jute goods has had a negative impact on Bangladesh’s exports to India, as the country’s export items were already limited. Such a duty has a negative impact on our exports of jute goods as we exported more than 1.45 lakh tonnes of jute goods to the Indian market earlier. After the imposition of anti-dumping duty, the exports of the items have fallen to about 35,000 tonnes.
India is of the view that a dual policy has been implemented in the import of jute and jute products from Bangladesh for the benefit of the Indian jute mills. On the other hand, Bangladesh  demanded withdrawal of this dual policy or the imposition of additional duty tax on the import of raw jute from Bangladesh. 

According to the notification of the Indian Finance Ministry, signed on December 30, the anti-dumping duty will be effective for the next five years. The duty is required to be paid in Indian currency. The new announcement imposes different rates of anti-dumping duty on jute products exported from Bangladesh till 2027. 

According to the sources in the Ministry of Finance of India, under to the new policy, the duty of 6 dollars 3 cents to 351 dollars 72 cents per ton will be applied on the jute products of Bangladesh and Nepal.
The private jute mill owners of Bangladesh have expressed their disappointment at this decision of India. They say, as a result of this new decision, there will be another crisis in the export of jute products from Bangladesh to India. 

This may lead to closure of some more jute mills. India's jute exports will face a major threat due to the extension of the new anti-dumping duty. For the last five years, exports to India have been falling due to the imposition of tariffs. Now if we extend the term again we will lose the market completely.
Nearly 60 percent of the jute products exported from Bangladesh go to India. Since the imposition of anti-dumping duties in 2017, exports have started to decline. Many private jute mills were closed due to this.
Additionally, the decision may also affect the livelihoods of jute farmers, as well as workers in the jute manufacturing industry in Bangladesh, which relies heavily on the Indian market for its exports.

It may be ideal if the issue can be resolved through diplomatic or bilateral means before taking the matter to the WTO

It is also worth noting that this decision by India could also prompt other countries to impose similar measures, further exacerbating the negative impacts on the Bangladeshi jute industry. Also, despite India and Bangladesh considering each other as important and closest neighbours, the trade gap between the two countries will widening significantly.
In FY 2021-22, Bangladesh imported commodities worth US$14.58 billion from India, while its exports to that country were valued at only US$1.8 billion. In the fiscal year 2020-21, the figures were US$9.69 billion (import) and US$1.09 billion (export) respectively.

What remedial measures can be undertaken?

As a member of the World Trade Organization (WTO), any country can challenge the imposition of anti-dumping measures through the Dispute Settlement Understanding (DSU) mechanism. This allows for the raising of all issues related to compliance with the 

Anti-Dumping Agreement’s requirements before a panel established under the DSU. Considering the close relationship between Bangladesh and India, it may be ideal if the issues can be resolved through diplomatic or bilateral means before taking the matter to the WTO.

The commerce ministry was planning to impose restrictions on raw jute exports to India last year after India did not withdraw anti-dumping duties despite repeated requests. In this, an initiative was taken to determine the minimum export price for the export of raw jute. But that decision was not taken because of the high price of jute and the fear of loss to the local farmers.

The author

The Government of India has not taken any initiative even though the request has been made from the higher level to withdraw this duty. Only jute raw materials are exempted from this duty. Because the entrepreneurs of the jute sector of Bangladesh supply a part of the raw material required by the Indian mills. 

Due to this duty, the cost of exporting jute products in India has increased, the country's jute industry is losing Indian buyers due to the high cost of importing the product. As a result, the export of jute products from Bangladesh to India is decreasing. many mills are now closed due to lack of orders and limited production is going on in some places.
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*PhD fellow, International Relations, University of Bucharest