Why is India Restricting Jute Imports from Bangladesh?
Click to start listening
Synopsis
India takes decisive action against unfair jute imports from Bangladesh, aiming to protect local farmers and jute mills from economic harm. This move highlights the ongoing struggle between domestic production and subsidized foreign competition.
Key Takeaways
- Immediate port restrictions on jute imports from Bangladesh.
- Protection of local farmers' incomes and jute mills.
- Efforts to combat unfair trade practices.
- Significant impact on jute prices and mill operations.
- Government strategies to avoid circumvention of restrictions.
New Delhi, June 28 (NationPress) On Saturday, India announced immediate port restrictions on the import of jute and related fibre products from Bangladesh. This decision aims to curb the influx of cheap, subsidized imports that have adversely affected local prices, farmers' earnings, and led to reduced operational capacity in Indian jute mills, resulting in factory closures and rising unemployment.
The newly imposed restrictions will apply to all imports of jute and allied products from Bangladesh at land and seaports, except for the Nhava Sheva seaport, according to an official statement.
The purpose of these measures is to combat unfair trade practices, support the Atmanirbhar Bharat initiative, and protect rural incomes linked to India’s native jute industry.
The government is also taking steps to ensure that imports from Bangladesh do not circumvent these restrictions by passing through third countries.
Under the SAFTA agreements, jute from Bangladesh enjoys duty-free access to India. However, this goodwill has been exploited to undermine India's economic interests. The Indian jute sector has faced prolonged challenges due to the negative effects of dumped and subsidized jute imports—especially yarn, fibre, and bags—from Bangladesh, as detailed in the statement.
There is credible evidence that Bangladeshi jute exports continue to profit from state-imposed subsidies offered by the Government of Bangladesh. In light of these issues, the Directorate General of Anti-Dumping and Allied Duties (DGAD) conducted thorough investigations and has implemented an Anti-Dumping Duty (ADD) on jute products from Bangladesh.
Despite the ADD, there has been no significant drop in imports. Some large exporters have successfully navigated around the ADD through technical loopholes, exports via exempted firms (whose exports surpass their production capacity), and misrepresentation to secure larger subsidies.
Imports, which were $138 million in FY 2016-17 before the ADD was introduced, saw a slight decline to $117 million in FY 2021-22 but have surged back to approximately $144 million in FY 2023-24.
This influx has led to a drop in jute prices in India, falling below Rs 5,000 per quintal for FY 2024-25, compared to the minimum support price (MSP) of Rs 5,335, creating a detrimental payment and liquidity cycle. Six mills are currently closed, accumulating dues of Rs 1,400 crore, alongside an additional Rs 400 crore in legacy debts.
Moreover, the arrival of underpriced finished jute goods from Bangladesh has caused significant underutilization of capacity in Indian mills, jeopardizing their sustainability.
Although Bangladesh has made minor adjustments in response to complaints, the government continues to promote exports, especially of value-added jute products. Importantly, raw jute imports from Bangladesh remain exempt from the ADD, leaving Indian jute farmers vulnerable to dumping practices employed by exporters from Bangladesh.
Conversely, the Indian jute sector is vital for sustaining rural livelihoods, particularly in West Bengal, which contributes 78 percent of national production. Raw jute is predominantly cultivated in West Bengal, along with Bihar, Assam, Orissa, Andhra Pradesh, Tripura, and Meghalaya.
The jute industry is estimated to directly employ over 400,000 workers in organized mills and diversified units, including tertiary sectors and allied activities, supporting the livelihoods of several lakh farming families.
Additionally, many individuals are engaged in the jute trade. Almost 90 percent of India’s jute production is utilized domestically, primarily procured by the government. The artificially low prices caused by subsidized imports have severely impacted the income of jute farmers.
Point of View
I believe that these restrictions are essential in safeguarding India's economic integrity and the livelihoods of millions dependent on the jute industry. The government must ensure that farmers receive fair compensation while addressing the challenges posed by subsidized imports from Bangladesh. This initiative reflects a commitment to enhancing domestic production and bringing fairness to international trade.
NationPress
28/06/2025
Frequently Asked Questions
What are the new restrictions on jute imports?
India has imposed port restrictions on the import of jute and allied fibre products from Bangladesh to prevent the influx of cheap, subsidized goods that harm local farmers and mills.
How do these restrictions affect local farmers?
These restrictions aim to stabilize jute prices and protect farmers' incomes by limiting the market access of subsidized imports that have depressed prices.
What is the impact of Bangladeshi jute imports on Indian mills?
The influx of underpriced jute products from Bangladesh has led to underutilization of capacity in Indian mills, resulting in factory closures and job losses.
What measures is India taking against circumvention of these restrictions?
The government is implementing strategies to prevent imports from Bangladesh from being rerouted through third countries to evade the restrictions.
How has the Indian government responded to the ongoing challenges in the jute sector?
The Directorate General of Anti-Dumping and Allied Duties has conducted investigations and imposed an Anti-Dumping Duty on jute goods from Bangladesh, though its effectiveness has been limited.
