Dhaka has urged Delhi not to impose countervailing duty -- also known as anti-subsidy duty -- on raw jute and jute goods, citing the existing anti-dumping duty already in place for these products in the Indian market, sources said.
To formally convey its stance, the commerce ministry recently sent a letter to the Indian Directorate General of Trade Remedies.
In the last week of October this year, Bangladesh and India sat for a consultation meeting in Delhi to present their arguments and counterarguments regarding the proposed Indian countervailing duty on jute goods.
The commerce ministry has concluded its preliminary observations on the petition filed by the Indian Jute Mills Association and has shared its findings with the Indian trade remedy directorate.
"Based on the observations, the view of the Government of Bangladesh is that there is no prima facie evidence to initiate an investigation based on the petition. Therefore, the Bangladesh government requests the DGTR not to initiate any investigation as required under Article 11.9 of the Agreement on Subsidies and Countervailing Measures," the observations said.
The ministry further said it is ready to engage constructively with the trade remedy directorate and provide any necessary clarifications.
During the meeting in Delhi, both parties strongly advocated for their respective positions on anti-subsidy duty issues. Bangladesh reiterated its request to the Indian side to refrain from imposing such a duty.
Md Hafizur Rahman, a member of the Bangladesh Competition Commission who led the Bangladesh delegation at the meeting, said there is no provision in the World Trade Organization (WTO) or the existing Indian law to impose anti-dumping and anti-subsidy duties simultaneously on the same product.
Mr Rahman, a former director general of the WTO cell under the commerce ministry, said that Bangladesh does not provide actionable subsidies for its jute products.
Recently, India initiated an investigation into Bangladeshi jute goods imports with the intention of imposing a fresh duty. Following a complaint petition by the Indian jute mill owners, the Indian trade remedy directorate began the inquiry.
Subsequently, the directorate wrote to the Bangladesh High Commission in Delhi in August this year. The Indian directorate proposed resolving the anti-subsidy duty issue amicably through a consultation meeting.
The Indian jute mill owners' association alleged that Bangladesh was providing huge subsidies for the import of capital machinery used by local jute industries.
Indian mill owners also claimed that this subsidy scheme was harming the Indian jute industry, as jute sacks and other bags are manufactured by subsidised jute mills in Bangladesh.
According to a commerce ministry document, the subsidy programme outlined in the Indian mill owners' body petition is non-actionable in nature, and no jute industries are located in Special Economic Zones (SEZs) or Export Processing Zones (EPZs).
Section 9B (1) of the Indian Customs Tariff Act 1975 clearly prohibits the imposition of anti-dumping duty and countervailing duty simultaneously on the same product. The law states, "Notwithstanding anything contained in section 9 or section 9A: (a) no article shall be subjected to both countervailing duty and anti-dumping duty to compensate for the same situation of dumping or export subsidisation."
Therefore, the investigation into the imposition of countervailing duty on jute products lacks legal support under Indian law, according to official documents.
Countervailing duty is a specific duty imposed on imported goods to offset subsidies provided by the exporting country.
Jute goods exported from Bangladesh have already been facing significant anti-dumping duty since 2017. This anti-dumping duty, ranging from $6.03 to $351.72 per tonne, was imposed based on allegations of dumping goods such as jute yarn, twine, jute sacking bags and hessian fabric.
According to commerce ministry officials, Dhaka is currently pursuing diplomatic and political channels to persuade Delhi against imposing a countervailing duty, highlighting the detrimental impact of the existing anti-dumping duty on Bangladesh's export earnings from India.
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