It is unprofessional and highly irresponsible by any standard and especially by a government to abruptly cancel the licenses of its importers engaged in doing their businesses for years without assigning any reason. That’s exactly what has happened in India last week when the raw jute and jute goods importers were abruptly informed without any prior warning that their licenses have been cancelled with immediate effect and that they were now to apply afresh for new permit for the same job.
According to media reports, the licenses of the Indian importers of raw jute and jute products were cancelled and they were asked by the concerned authorities to register their firms afresh. In addition, they were also asked to ensure that those firms who buy raw jute or jute products from them will also have to be registered with the authorities concerned. In addition, the importers will also have to procure a ‘no objection certificate’ (NOC) for every consignment along with the details of those who buy the imported products from them.
Virtual ban imposed
Business sources say, in effect the concerned Indian authority has imposed virtual ban on the import of raw jute and good products from Bangladesh. This interpretation may sound a little harsh but it is generally accepted because procurement of NOC from the concerned department for each and every consignment of imported jute and jute goods is simply impossible. The task is extremely daunting even for the most efficient bureaucracies in the world and the Indian bureaucracy, like that of Bangladesh, enjoys the unenviable reputation of being one of the worst.
The cancellation order was issued in the form of a notification by the Jute Commissioner of India’s (JCI) office. While the JCI notice did not mention the name(s) of the exporting country, it has effectively stopped imports of raw jute and jute products from Bangladesh with immediate effect.
The announcement of the abrupt Indian government policy change has strongly jolted the country’s jute and jute goods exporters and affected the livelihood of millions of farmers, countless small jute traders, mill owners and workers at one go. It will immediately adversely affect raw jute price in local jute market and jute goods producing mills may suspend their production forthwith to avoid incurring losses. Media reports, quoting Bangladesh Jute Association (BJA), say that hundreds of India-bound trucks loaded with raw jute and jute products have became stranded at different land ports including Benapole for the last few days.
Business sources say, India is the largest importer of raw jute and jute products from Bangladesh and the JCI’s announcement has put Bangladesh’s business in raw jute and jute goods in jeopardy. Media reports quoting the Kolkata-based Jute Products Importers Association (JPIA) said they have placed confirmed orders for their products with some of the Bangladesh jute manufacturers and advanced them nearly Taka 130 crore. There are total Import orders placed by the Indian merchants for jute goods worth Taka 470 crore. Likewise, Bangladesh mill owners have also exported goods worth Taka 58 crore on credit. This has been the normal business practice for decades and has been severely jolted.
Indian policy falters
Interestingly, industry sources say, Indian jute mills produce jute sacking from raw jute imported from Bangladesh. About 20 to 30 lakh bales of raw jute are exported to India annually and mostly are shipped through the land port of Benapole. This route is speedy and inexpensive and the importers prefer it.
Bangladesh is the world’s largest producers of raw jute and three of the largest buyers of raw jute are India, Pakistan and China. Other countries including Britain, Spain, Ivory Coast, Germany and Brazil also buy the same product regularly. It produces around 5.5 million bales of jute (1 bale equals 180 kg) annually. The production figures, however, fluctuate somewhat.
According to Export Promotion Bureau figures, during FY2014-15, the country exported raw jute and jute goods worth $865.8 million of which India imported jute and jute goods worth totaling $104.4 million. In bilateral trade with India, Bangladesh always gets the short end of the stick. During FY2015, total Indo-Bangladesh trade amounted to over $5.5 billion of which Bangladesh only exported goods worth about $500 million.
Top Indian leaders during bilateral meetings and discussions always argued that while no country can have balanced bilateral trade with every country, Delhi will go out of its way to facilitate Dhaka’s export of goods into India by providing matching facilities. Bangladesh, as a member of the LDC group, wanted duty-free facility for its goods to enter Indian market as is done by the European Union and many other countries including China and Japan that allow duty-free entry of all items from Bangladesh except arms. But the abrupt imposition of virtual ban on imports of two important items tend to go against the repeated Indian arguments that it would facilitate Bangladesh for increasing its exports into India to at least make a modest attempt at improving trade relations instead of its being a one-way traffic.
Levy anti-dumping tax?
Analysts are at a loss to understand what really prompted India to take such an abrupt, knee-jerk decision at a time when both the countries have been trying to close the gaps in their bilateral trade relations. In response to Dhaka’s complaint about yawning trade imbalance with India Delhi allowed duty-free entry of Bangladeshi goods into India including some categories of readymade garments, raw jute and jute goods. Delhi always introduced non-tariff and para-tariff barriers to prevent Dhaka’s export surge into India. In fact the available bilateral trade figures speak volume about that.
Sources say, India needs raw jute from Bangladesh but doesn’t want jute goods because it competes with Indian produced jute products. As a result, for sometime Indian Jute Mills Association (IJMA) has been demanding the imposition of ban on duty-free import of jute goods from Bangladesh but prefers raw jute imports because it helps them produce hessian cloth and other products to meet Indian market. Despite having the economy of scale, Indian jute industry does not seem to compete with Bangladesh-produced jute goods and wants government intervention.
Besides, the Indian media reports say, IJMA Has already pleaded with its government for an anti-dumping tax in case Bangladeshi jute goods enter India. The Indian Jute Commission is considering the plea, and soon a decision is to be given.
Sources say there must be something, some development that took place in the last few days which must have extremely annoying for India for prompting it to take such lightening decision without caring to go through diplomatic niceties?
Source: Weekly Holiday
