Jute imports from Bangladesh become costlier by 76 per cent

The value of raw jute imports, mainly from Bangladesh, has increased more than 76 per cent over the last year, even as the quantity of imports has fallen almost six per cent.

In contrast, the quantity of import of jute goods from Bangladesh increased by almost 19 per cent for April 2009 and the value also increased by about 73 per cent, according to the latest jute import figures by the Government of India.

Imported jute from Bangladesh is mainly used for manufacturing value-added products by millers in India. However, the mills have failed to diversify and modernise infrastructure, giving way to Bangladesh jute products into India.

Like India, jute crop in Bangladesh was short by about 30 per cent last crop season.

As a result of the supply-demand mismatch, the exporters in Bangladesh have been raising prices and there have been several instances of non-commitment of supply contracts by shippers, said Sanjay Kajaria, chairman, Indian Jute Mills Association (IJMA).

Besides, jute exports from Bangladesh have been increasing to China and Pakistan.

Recently, the Bangladesh government had announced a 34.24 billion taka ( $500 million) stimulus package for key sectors of the economy, which included 4.50 billion taka cash subsidy for the jute, leather and frozen food exports. The government had also increased the subsidy on exports of jute goods by 2.5 per cent to 10 per cent.

Last year, the Indian government had also reduced the import duty on jute and jute products from 10 per cent to nil, which led to a substantial rise in imports. IJ MA had also urged the government to remove the duty in view of severe competition from Bangladesh.

Meanwhile, the domestic jute prices continue to rise, and there are apprehensions of a late crop due to adverse weather conditions. Raw jute prices continue to be in the range of Rs 2,300-2,500 a quintal.

The prices have been on a rise since June 2008, when jute spot prices were close to Rs 1,400 a quintal. The prices increased to Rs 2,000 a quintal in February 2009.

The industry is also likely to suffer due to Centre’s Standing Advisory Committee’s decision use of non-jute bags, up to 25 per cent, for use packaging government procured food grains.