July 11: The Sunsari-Morang Industrial Corridor has been hit hard by the anti-dumping duty (ADD) of up to 4 percent imposed by India on the jute industry which employs the most workers in the area. The problems of the jute industry have not been addressed due to the lack of effective diplomatic initiatives by the Government of Nepal.

Apart from writing a general letter to their Indian counterparts, the Ministry of Industry, Commerce and Supplies and the Ministry of Foreign Affairs done nothing more to remove the anti-dumping duty imposed since the last five years, according to the Nepali industrialists who are struggling to compete with the Indian products due to this very reason.

India has imposed anti-dumping duty on Nepali products but has not imposed such duty on jute products coming from Bangladesh.

Nepali industrialists have been paying an annual fee of Rs 300 million to the Indian government for anti-dumping. However, Bangladeshi industries do not pay a penny. Nepal’s jute industry has been exporting ready-made jute worth Rs 7.5 billion annually.

As the jute mill operated in Morang and Sunsari of Nepal is close to the border area, even the workers employed by those industries come from India. The Government of India has adopted a policy of mandatory use of jute bags in food packaging. However, the jute bags used for it is not enough and the industries have opted using plastic bags to pack food. In this regard, Nepal Jute Industries Association President Raj Kumar Golchha says that Nepal should take initiative to remove the ADD imposed on Nepali jute products. He says that the Government of Nepal must convince the Indian government that the jute manufactured in Nepal  would supported the policy of the Government of India.

He said that Nepali products could not compete with Indian goods due to the anti-dumping duty and the government should take initiative to abolish the duty by negotiating with the Indian government through diplomatic initiative. There are 30,000 workers in Nepal's jute industry.

Anti-dumping duty has been imposed on Nepali jute products in India for the past five years. The Government of India reviews the duty every 5 years. The industrialists say the duty could be scrapped if the government negotiates before India renews the duty.

Five years ago, after the Nepal Jute Industries Association repeatedly demanded the removal of ADD before the Indian government, a team of Indian tax experts visited the jute industries in Morang and Sunsari and decided to impose duties on different products at different rates.

Ramesh Rathi, treasurer of the Province 1 chapter of the Federation of Nepalese Chambers of Commerce and Industry and operator of Swastik Jute, says that Bangladesh, like Nepal, is sending jute products to the Indian market but India has not imposed any duty on them. India has decided not to impose anti-dumping duty on the products of 16 jute industries of Bangladesh. 

Six out of 11 jute industries in Nepal are closed. Arihant, Raghupati, Swastik, Baba and Nepal jute mills are still in operation. Rathi is of the opinion that if the government of Nepal solves the problem of ADD through talks with the government of India, the industry affected by the impacts of coronavirus will get relief. Rathi says if the Indian government revokes the ADD, industries will increase production capacity and create more jobs.

The Government of India had imposed 12 and a half percent countervailing duty (CVD) along with ADD. Jute items exported from Nepal were subject to 12 percent countervailing duty (CVD) from July 17, 2015. The jute industry then made several requests to the Indian government to remove it.

The jute industry also registered a protest letter against CVD with the Revenue Department of India’s Union Ministry of Finance on December 16, 2016 at the suggestion of the Government of India. 

Following the move, India allowed Nepali jute manufacturers to keep the amount equivalent to CVD as collateral with the Department of Customs.

Based on the protest letter, the Government of India removed the provision of CVD on April 20, 2017.