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| Dhaka, Thursday, 18 January 2018

Nuruzzaman Tanim

The Report

Bangladesh jute industry at risk from Indian duties

2016-02-03 17:31:30
Bangladesh jute industry at risk from Indian duties

India is taking decisions on after another to impose duties on export of jute products from Bangladesh on the allegation that Bangladeshi traders are dumping the products in Indian market and on the excuse that the government of Bangladesh is providing cash subsidy to the sector. This will affect the whole jute industry while some industrial units in Bangladesh will be closed, fear the Bangladeshi traders.

The jute mill owners in India allege that the export of jute goods there from Bangladesh at prices lower than fixed (dumping) is affecting the Indian jute industry. At the same time the cash subsidy being provided by the government of Bangladesh to the traders on production of jute goods is leaving its negative impact on the jute business in that country. So, the Indian government has communicated its decisions to impose anti-dumping duty and countervailing duty to cope with the situation.

If any product of a country is exported at a lower price than that in the market of the exporter country, then the duty that is imposed on the product in the importing country to protect its industry there is called anti-dumping duty.

On the other hand, the tax or duty that is imposed by the importing country on a product, on which the producing country provides subsidy is called countervailing duty (CVD). The reason for imposing such tax or duty is that in the wake of such subsidy the production cost and export price of the item fall and in that case the product becomes cheap in the importing country. In such a situation the CVD is imposed on it to bring its price at par with the market price in the importer country. Any country can do it, when it comes to its justification.

Of late, the Indian jute millers appealed for imposing the countervailing duty on the jute goods from Bangladesh because of the subsidy being provided by the government of Bangladesh. On the basis of that appeal the Indian government is going to impose the countervailing duty, it has been communicated to the High Commission of Bangladesh in a letter. The letter has also mentioned that India wants to sit with Bangladesh to discuss the issue.

Earlier on October last year India made an announcement on imposing anti-dumping duty on jute and jute goods from Bangladesh. Before taking any initiative by Bangladesh to get it lifted, India again made the announcement of imposing the countervailing duty.

In such a situation a delegation has gone to India to discuss the issue so that India does not impose the countervailing duty. A meeting was scheduled to be held at the Commerce Division of the Indian Ministry of Commerce and Industry in Delhi on Wednesday (January 3). The anti-dumping issue was also scheduled to be discussed in the meeting. In the meeting the Bangladesh side was set to be led by the commerce ministry’s additional secretary (FTA) Monoj Kumar Roy and the Indian side by the Indian Commerce Ministry’s director general AK Valla. The Bangladesh side also comprised representatives from the Jute Directorate, Bangladesh Tariff Commission and Bangladesh WTO Cell.

On the other hand, a four-member delegation of the Indian Importers’ Association has come to Bangladesh this week to discuss the issue of anti-dumping duty. They are Rishi Jalan, Shib Khitan, Basat Agarwal and Sandwip Saraf.

The delegation met Textile and Jute Minister Muhammad Imaj Uddin Pramanik on Tuesday. On behalf of the Indian businessmen, they said some of the businessmen in India were concerned over imposition of the countervailing duty while some others were favouring it. But if the duty is imposed, the import price of the goods will increase. In that case, the businessmen in Bangladesh and also in India will be affected. The Indian businessmen called for solving the problem soon through talks between the two countries, it has been confirmed by reliable sources at the textile and jute ministry.

About this, the commerce ministry’s additional secretary Monoj Kumar Roy told The Report, “India will consider the issue of cash subsidy in the case of export of jute goods. The cash subsidy issue will be handled as per the international trade-related rules. Now efforts are on to stop the existing investigation into it.”

Recently India decided to impose duty on jute goods on the allegation of dumping of the products. The Indian government has started assessing how much anti-dumping duty can be imposed, the extent of the financial amount involved and the impact of it. At the same time India has also started looking into whether the jute and jute goods are entering into the country at the subsidised rates. At present the investigation is going on. If India can prove it to the World Trade Organisation, they will impose the anti-dumping duty on jute and jute goods from Bangladesh. In that case, the future of Bangladesh’s jute will come under threat, think the stakeholders.

About this, Bangladesh Jute Goods Association chairman Kamrul Islam Khan Momen told The Report, “We’re facing a problem with anti-dumping duty. India alleges we are selling goods at prices less than fixed. This is affecting their traders. So, they are adopting an anti-dumping policy or taking an initiative to impose tax. If it happens, our export will be affected. Already a delegation of the Indian Importers’ Association has arrived in Bangladesh. They are discussing the issue with the people concerned. With the issue of anti-dumping duty yet to be resolved, the countervailing duty is being imposed. So, they pose a threat to our jute industry.”

He also said, “The biggest market for our jute goods is India. In that case, if the duty is imposed, that will leave its impact on the jute industry, because the Indian traders are now importing our products at cheap prices. If the duty is imposed, the Indian traders will have to import the products by paying that duty. Then they will be disinterested in importing jute goods from Bangladesh. In that case many jute mills may be closed in the country.”

Earlier in a meeting on September 30 in New Delhi, Indian Commerce Minister Nirmala Sitaraman, Bangladesh Commerce Minister Tofail Ahmed called upon the former to withdraw the countervailing duty (decision).

According to available information from Bangladesh’s Export Promotion Bureau (EPB), during the period of July to December of the current fiscal year Bangladesh earned $ 42.37 crore by exporting jute and jute goods against the target of $ 44.84 crore. In the previous fiscal year 2014-15 the sector fetched export earnings to the tune of $ 86.85 crore. In the previous fiscal year 2013-14 the earnings stood at $ 82.84 crore and in 2012-13 $ 103 crore.

From November 3 last the export of all types of raw jute had been banned for the sake of enforcement of the law making the use of jute bags mandatory for packaging of goods. The Textile and Jute Ministry issued a circular in this connection on November 2 last. This order will remain in force until issuance of any further notice.

Ends/ 3, 2016

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