Bedraj Poudel

BIRATNAGAR: A year ago, during his visit to India, Prime Minister Pushpa Kamal Dahal requested Indian Prime Minister Narendra Modi to cancel the anti-dumping duty (ADD) on readymade jute products from Nepal. In 2079 BS, India imposed ADD on ready-made jute from Nepal and Bangladesh, ranging from 3 to 4 percent depending on the product. This duty is typically levied when foreign goods are imported at prices significantly lower than the local market, harming domestic industries.

"I requested Prime Minister Modi to remove the anti-dumping duty imposed on jute produced in Nepal," Prime Minister Dahal stated in a joint press conference with Modi. Following this high-level appeal, the jute industry in the Sunsari-Morang Industrial Corridor hoped for the duty's removal.

Industrialists, who anticipated the reopening of closed industries and the flourishing of existing ones, are now disappointed due to the lack of action from the Indian side on the Prime Minister's request.

In addition to the ADD, India has imposed a 12.5 percent countervailing duty (CVD) on Nepali jute. As a result, jute industries in the Sunsari-Morang Industrial Corridor have had to cut production. Industries that used to operate three shifts, 24 hours a day, now only run for 8 hours.

Beyond the unresolved ADD issue, industrialists face problems such as economic recession, decreased demand for ready-made goods, irregular electricity supply, and loss of competitiveness in the Indian market.

Raj Kumar Golchha, president of the Nepal Jute Industry Association, and part of the Prime Minister's delegation to India, initially believed that the visit would positively address the jute industry's issues. However, he expressed disappointment over the lack of progress on removing the duties for the past year.

Approximately 30,000 workers are employed across the five jute mills operating in the Sunsari-Morang Industrial Corridor. Six other mills remain closed. If the Indian government removes the ADD, these six closed mills could reopen. Nepali industrialists currently pay Rs 300 million annually to the Indian government in anti-dumping charges. Nepal imports over 50 percent of its raw jute from India and exports finished products back to the Indian market, holding only a 2 percent share of the Indian jute market. Both the technology and raw materials used are sourced from India.

Although India mandates the use of jute sacks for food packaging, its production is insufficient, leading to the use of plastic sacks as well. Nepali jute products complement this Indian policy, prompting Golchha to demand the cancellation of the ADD on Nepali jute products.

Due to the ADD, Nepali products struggle to compete with Indian products. Industrialists urge the Government of Nepal to negotiate directly with India. The Indian government reviews these duties every five years, and it has been five years since the imposition of ADD on Nepali jute products.

Ramesh Rathi, a member of the Federation of Nepalese Chamber of Commerce and Industry and owner of Swastik Jute, stated that resolving the tariff issue through negotiations with India would relieve the industry. He noted that canceling the duty would increase production capacity and employment in the jute industry.

India imposed a 12.5 percent CVD on Nepali jute products on July 17, 2015. The jute industry protested this duty to the Indian government. On December 16, 2016, the industry filed a protest letter with India's revenue department, and from that day, the CVD amount was held as a bond at customs. The Indian government withdrew the CVD on April 20, 2017. However, the bond amount, totaling Rs 20 million, has not been returned according to industry rules.

Due to the ongoing ADD, Nepali products cannot compete with Indian products, leading industrialists to call for direct government negotiations with India.