Alarmed over the rise in raw jute imports from Bangladesh, a section of the jute industry in the country has decided to approach the Central government to discontinue the 4% special additional duty (SAD) imposed on imported fibre.
There is an over 75% increase in imports of high quality raw jute from Bangladesh in the past five years. Figures available from land customs - Petrapole, West Bengal show that raw jute imports have gone up from approximately 0.5 million bales in 2006-07 to almost 0.9 million bales till 2011-12.
Almost 9-10% of India’s raw jute requirements are met through imports from Bangladesh. The quality of raw jute produced in Bangladesh is much superior to that produced in India.
The Union finance ministry imposed SAD on raw jute imported from Bangladesh in March 2012. SAD on raw jute pushed up product costs, rendering the local jute industry uncompetitive in the domestic and export markets.
The move to impose SAD also confronts existing state and Central laws in terms of VAT (value added tax) and CST (Central sales tax). However, according to Customs Act, the government reserves the right of imposing an additional duty at a maximum rate of 4%.
The jute industry also continues being deprived of a jute goods export incentive scheme since April 2007. The Union textiles ministry scrapped the External Market Assistance (EMA) scheme in April 2007 for jute goods exporters as it failed to yield the desired results. EMA has remained in operation since 1992.
In another blow to the jute industry, the Reserve Bank of India (RBI) refused extending 2% interest subvention on rupee export credit to jute manufacturing sector till March 2014. Interest subvention was available to jute industry till March 2011. In June 2012, the RBI removed jute manufacturing from its list.
Jute exports have fallen by almost 15% because of stiff competition from jute exporters of Bangladesh that receives 10% cash subsidy from its government.