• Indian government has conducted a study to slap anti-dumping duty on Nepali jute products

Kathmandu, August 16

Nepali jute mill owners who have been operating their factories despite the power outages, lack of raw materials and other hassles have been worried about the market of jute products as the Indian government has conducted a study to slap anti-dumping duty on Nepali jute products.

The Directorate General of Anti-Dumping and Allied Duties (DGAD) under the Commerce Ministry of India had recently concluded a study of Nepali jute mills located in Sunsari-Morang Industrial Corridor.

The Indian government has not yet made any decision regarding slapping anti-dumping duty but carried out the study and also organised a public hearing on this.

There is anxiety among Nepali jute mill owners because India is the only market for Nepali jute products like hessian, sackings and twines and 80 per cent of the total production is exported.

There are only four jute mills — Raghupati Jute Mills, Arihant Multifibres Ltd, Baba Jute Mills (P) Ltd and Swastik Jute Mills — in operation. Providing direct employment to 12,000 individuals, these industries have strong backward linkages with jute farmers.

Many jute mills have pulled down their shutters as they failed to generate profit due to frequent power cuts, labour unrest and lack of market, among other reasons, according to Som Adhikari, director general of Chambers of Industries Morang. “Only half of the capacity has been utilised even in the four mills that are in operation.”

Jute mills have sought the government’s favour to treat them as sick industry and provide subsidised loans and export subsidy, among others. However, the government has not addressed their demands and seven jute mills closed down only last year.

“The government has not extended any type of subsidy on jute, whether during farming or manufacturing,” said former commerce secretary Purushottam Ojha. “The government of India can only slap anti-dumping tariff if the Nepali jute mills are found to be selling their products at a rate that is lower than the cost of production in the Indian market.”

Nepali jute mills export jute products worth around Rs four billion in a year, which has been gradually declining in recent years as many jute factories have closed down.

According to Adhikari, Nepali jute products are slightly competitive in the Indian market but they cannot compete with Indian jute products if the government of India slaps anti-dumping duty.

Nepal’s export to India is nominal as compared to the production of the Indian jute factories. In recent years, jute mills have been flourishing in India. The jute mills of India had complained to their government that cheaper jute products that have been entering the Indian market from Bangladesh and Nepal have been hurting them. Based on these complaints, the DGAD India started its investigation.

The issue of jute products was also raised during the commerce secretary-level talks between Nepal and India, which was held in June. During the meeting, the Nepali delegation had clarified that Nepal government had not provided any subsidy on jute be it farming, manufacturing or export.

“We have explained about the strong backward linkages of the jute mills to the farmers and it has been generating employment, especially for the marginalised groups and women,” said Commerce Secretary Naindra Prasad Upadhyay.

“I do not believe that neighbouring India, with whom two-third of the country’s trade takes place, will slap such duties without any valid reason, when Nepal is struggling to revive its economy after the earthquakes and disruptions in supply lines last year.”