India has banned imports of certain jute products and ropes from Bangladesh via all land routes, effective immediately. This decision, announced by the Directorate General of Foreign Trade (DGFT), restricts these imports to the Nhava Sheva Seaport in Maharashtra.

Scope of the Ban

The restrictions apply to a range of jute-related goods, including:

• Jute products
• Flax tow and waste
• Jute and other bast fibres
• Single yarn of jute or flax
• Multiple folded woven fabrics
• Unbleached woven jute fabrics
• Bleached and unbleached woven fabrics of jute or other textile base
• Twine, cordage, rope, etc., of jute
• Sacks and bags of jute

These categories previously had duty-free access under the South Asian Free Trade Area (SAFTA) Agreement.

Reasons for the Ban

The ban is driven by a combination of factors:

• Trade Malpractices: India has concerns about trade malpractices by Bangladeshi exporters, including circumvention of anti-dumping duties (ADD).
• Subsidized Imports: The Indian jute sector has long been affected by subsidized imports from Bangladesh, which undermine domestic manufacturers.
• Strategic Concerns: There are rising concerns about Bangladesh's growing strategic proximity to Beijing.
• Strained Relations: The ban comes amid strained relations between the two countries, partly due to controversial comments made by Bangladesh's interim chief. There is also political dissatisfaction in India over the inability to curb minority attacks in Bangladesh.

Impact on the Indian Jute Industry

The increased influx of low-cost jute goods has disrupted the domestic market. In fiscal year 2024-25, jute prices in India fell below the Minimum Support Price (MSP), triggering liquidity crises and mill closures. A number of jute mills remain shut with unpaid dues, and many workers are employed in the organised jute sector, with rural livelihoods in West Bengal, Bihar, Assam, and Odisha heavily dependent on the crop.

Government Measures

The Indian government has taken several steps to protect the domestic jute industry:

• Anti-Dumping Duty (ADD): The Ministry of Commerce imposes ADD on jute goods imported from Bangladesh.
• Minimum Support Price (MSP): The government implements a minimum support price for raw jute to stabilize prices and safeguard farmers' interests.
• Jute Packaging Material Act: The government mandates the compulsory use of jute bags for packaging certain commodities.

Impact on Trade Relations

In the fiscal year 2023-24, trade between India and Bangladesh stood at $12.9 billion. This ban is expected to escalate trade tensions between the two countries. Industry sources say that only a small percentage of Bangladesh's exports of these products to India currently use the sea route; the rest go by land. The restriction, therefore, effectively shuts off the most accessible export route for those goods.