By Siddharth Subudhi
The benefits of ADD for Indian jute farmers, are however short-lived. Since the past few years, the exporting countries have found new ways to circumvent ADD. This is happening through different methods, the most popular of these is through the diversion of exports from one exporter to another, and the misdeclaration of products at customs entry points in India.
Government actions, whether internally or externally, are usually undertaken bearing the interests of all citizen stakeholders involved.
This being the case, the Indian government had decided to go ahead and apply anti-dumping duties (ADD) on jute products from Bangladesh and Nepal in January 2017 to protect the interests of over 40 lakh Indian jute farmers, 1 lakh mill workers and thousands others involved in jute trade.
This was done after the Directorate General of Trade Remedies (DGTR) concluded their investigation, and found serious dumping by the exporting countries that had badly affected the Indian jute farmers. This move by the government, expectedly, provided relief to the Indian jute farmers who were unable to sell their produce before.
The benefits of ADD for Indian jute farmers, are however short-lived. Since the past few years, the exporting countries have found new ways to circumvent ADD. This is happening through different methods, the most popular of these is through the diversion of exports from one exporter to another, and the misdeclaration of products at customs entry points in India.
The duties applied by India are not uniform. The duties vary from export items to export items depending on the products, on the exporters (whether they are from Bangladesh or Nepal). The exporters have been observed to have diverted their product to other exporters who have lower ADD on the same product. This is being done by a tacit arrangement between the exporters from one exporting unit to another, to avail the benefit of lower ADD. Usually, one product attracts a single ADD. However, this is not the case with jute.
Different jute products are also being misdeclared at customs check points. Products having higher ADD application are being declared as products having lower ADD to avail lower duties. This was observed as there was a sudden spike in imports of products having lower ADD, and a matching reduction in imports of products with higher ADD. As a result of this, experts have noticed more than 100 percent increase in imports of products such as Carpet Backing Cloth (CBC) that have zero ADD from Bangladesh.
In pure economic sense, it may seem at first that manufacturers from Bangladesh have decided to now only manufacture and export CBC to India due to lower ADD – however, did demand for CBC in India go up by over 100% in the same time frame? If it did not, the only conclusion that can be ascertained is that other products are being misdeclared as CBC to avail zero ADD.
This has had severe consequences for jute farmers in India. On one hand, jute farmers are already paying the price for erratic rainfall, and on the other hand, the seeping in of subsidized jute products from Bangladesh and Nepal in enormous volumes has led to price undercutting and demand suppression for Made in India jute products. Jute mills in India cannot buy jute from Indian farmers if there is no private market to sell finished jute products, as imported products have completely taken over the private market.
Farmers in West Bengal, Assam and other jute growing states have expressed that they are expecting the largest ever carry-forward of jute crop from this season to the next due to demand suppression for jute products in the private market. Jute farmers in Bangladesh and Nepal are benefitting significantly, at the cost borne by our Indian jute farmers.
The good news is that the issue of misdeclaration of products at Customs checkpoints can be addressed. Testing labs need to be put in place at different checkpoints to ensure that there is no illegal entry of jute products through mis-declarations. This can be done through jute R&D organizations such as Indian Jute Industries Research Organization (IJIRA), or through the Bureau of Indian Standards (BIS).
The cost of permitting misdeclaration of products to continue is borne by the exchequer. By addressing this issue, it will be a step ahead in protecting the livelihoods of over 40 lakh jute farmers.
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