Why in the News?

India has decided to ban the import of jute products and woven fabrics from Bangladesh through all land routes.

What’s in Today’s Article?

• Import Curb on Jute (Background, Items Covered, Impact, Fallout, Policy Response, Way Forward)

Background

• In June 2025, India imposed strict restrictions on the import of jute products from Bangladesh through all land routes, restricting entry only through the Nhava Sheva seaport in Maharashtra.
• This policy shift, announced via a Directorate General of Foreign Trade (DGFT) notification, excludes Bangladeshi goods in transit to Nepal and Bhutan.
• This move comes amidst rising concerns about Dhaka’s growing strategic proximity to Beijing and persistent trade malpractices by Bangladeshi exporters, including circumvention of anti-dumping duties (ADD).
• These factors have combined to harm India’s domestic jute industry, especially in states like West Bengal and Bihar.

Items Covered Under the Import Curbs

• The restrictions apply to a wide range of jute-related goods, including:

• Jute products, Flax tow and waste, Jute and other bast fibres, Single yarn of jute or flax, Multiple folded woven fabrics, Unbleached woven jute fabrics

• These categories previously enjoyed duty-free access under the South Asian Free Trade Area (SAFTA) Agreement.

Impact of Subsidised Imports on the Indian Jute Industry

• India’s jute sector has long suffered due to dumped and subsidised imports from Bangladesh. According to official sources, Bangladeshi exporters continue to receive direct subsidies from their government, undermining Indian manufacturers.
• Although India imposed anti-dumping duties following investigations by the Directorate General of Anti-Dumping and Allied Duties (DGAD), these measures were circumvented through:

• Technical exemptions
• Export through firms exceeding production capacity
• Mis-declaration and under-invoicing

• Despite the ADD, jute imports from Bangladesh rose from USD 117 million in FY 2021-22 to USD 144 million in FY 2023-24.

Fallout for Indian Farmers and Mills

• The increased influx of low-cost jute goods has disrupted the domestic market. In FY 2024-25, jute prices in India fell below Rs. 5,000 per quintal, lower than the Minimum Support Price (MSP) of Rs. 5,335, triggering liquidity crises and mill closures.
• Six jute mills remain shut with Rs. 1,400 crore in unpaid dues, including Rs. 400 crore in legacy liabilities.
• Over 4 lakh workers are employed in the organised jute sector, with rural livelihoods in West Bengal, Bihar, Assam, and Odisha heavily dependent on the crop.
• The availability of under-priced Bangladeshi products has also led to under-utilisation of Indian mills, threatening their viability and disrupting local procurement.

Policy Response and Strategic Signals

• The Indian government’s decision to channel imports exclusively through Nhava Sheva port is a calibrated move aimed at:

• Ensuring better quality checks (especially hydrocarbon oil-free status)
• Preventing misdeclaration and fraudulent labelling
• Closing loopholes that allow routing through third countries

• India's response is not limited to trade concerns. It signals dissatisfaction with Bangladesh’s interim government’s increasing tilt towards China and its inadequate response to repeated trade violations.
• While Bangladesh has made minor adjustments under diplomatic pressure, it has continued to incentivise the export of value-added jute products, further exacerbating the trade imbalance.

Long-Term Outlook: Revival of the Indian Jute Sector

• India's jute industry is poised for regulatory protection, with more streamlined import monitoring and potential policy reforms on the horizon.
• Officials indicate a willingness to enforce tighter scrutiny and push back against trade practices that destabilise domestic production.
• Moreover, the government may explore extending protection mechanisms to raw jute, which currently remains outside the ADD regime, to protect the incomes of Indian farmers.