India's jute mill owners, who circumvent the guidelines to source jute from the two countries, will face imprisonment for one year and also have their property forfeited under Essential Commodities Act, 1955.
A recent report by the Union textiles ministry points out that the competitiveness of the domestic jute industry has been eroded by cost advantage polices pursued by the Bangladesh government and lukewarm efforts by the Indian jute manufacturers.
Bangladesh's jute mills enjoy 15-20 per cent cost advantage due to low wages and 35 per cent cheaper power tariff. Finished jute goods shipped by Bangladesh are also entitled to a 10 per cent export subsidy (7.5 per cent on yarn). Hence, finished jute products from Bangladesh are more cost competitive than the ones produced in India.
Raw jute imports from Bangladesh have been consistently on a rise. India imported 0.3 million bales in 2018-19 and this fiscal, the imports from Bangladesh are tipped to rise 33 per cent to 0.4 million bales (one bale is 180 kg).
Against escalating imports, jute goods exports from India have witnessed a downtrend on volume terms. Data from the National Jute Board (NJB) illustrates that exports tanked 32 per cent between 2014-15 and 2018-19. In value, finished jute products exports rose 10 per cent in the same period.
“Recently, jute mills were found to be clandestinely selling imported jute bags from Nepal and Bangladesh to National Marketing Federation (NAFED) at a premium of 7-8 per cent over prices recommended by the Jute Commissioner. They were also creating an artificial deficit in the market by diverting India manufactured jute bags meant for Kharif season supply to the government to NAFED at high prices," an industry source said.
The Office of the Jute Commissioner has held this practice as illegal. It has ordered mandatory registration of importers, traders and end users with details of their import plans and monthly reports to facilitate tracking of imported materials. Following restrictions Indian Jute Mills Association (IJMA) and its member jute mills have decided not to import jute bags from Nepal and Bangladesh.
Recently, NAFED was compelled to cancel a jute bag purchase tender as IJMA decided to follow the jute bag requisition and import order of the Jute Commissioner.