Dhaka is expected to persuade Delhi for not imposing fresh countervailing duty (CVD) on jute goods as such products are already facing an anti-dumping duty (ADD) by the Indian authorities.
India has started conducting an investigation recently on the import of Bangladeshi jute goods to impose such duty on the items afresh.
As per the complaint petition by the Indian Jute Mills Association (IJMA), the Indian Directorate General of Trade Remedies (DGTR) has started this enquiry.
The IJMA cited that the Bangladesh government was providing a large amount of subsidies for the import of capital machinery used by local jute industries.
It claims the subsidy facility has been affecting Indian jute industry as jute sacks and other bags, made by subsidised jute mills in Bangladesh, are affecting jute millers.
The subsidy programme enunciated in the petition by the IJMA is non-actionable in nature and no jute industries are located in SEZs and EZs, according to a commerce ministry document.
The ADD is still effective on Bangladeshi jute goods in export to the Indian market. The same cannot be shown for both ADD and countervailing measure.
Section 9B (1) of the Indian Customs Tariff Act 1975 prohibits imposition of ADD and CVD simultaneously in the same situation.
The law stipulates that, "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 of countervailing duty on jute products is not supported by the Indian law too, according to the document.
The DGTR has already written to the commerce ministry of Bangladesh on August 04 for a consultation meeting on the issue.
It was supposed to be held the meeting on August 24 last. But the ministry later sought two more months for holding the meeting.
It has recently requested the Indian authority to reschedule the consultation meeting date for resolving the trade dispute amicably.
As the two months is supposed to end on October 2023.
The CVD is a specific duty on imported goods that are imposed to offset subsidies given by the exporting country's government.
The jute products exported from Bangladesh have been already facing a huge amount of ADD.
Since 05 January 2017, Indian finance ministry imposed ADD for five years on jute products from Bangladesh at rates range between $6.03 and $351.72 per tonne amid allegations of dumping goods like jute yarn, twine, jute sacking bags and hessian fabric.
The ADD continues through Sunset Review done in 2022.
Indian plan to impose CVD has taken Bangladeshi jute goods exporters by surprise, necessitating a process of domestic consultation, according to the ministry.
It states that this consultation aims to engage with pertinent industries and stakeholders, gathering essential insights to facilitate a productive and harmonious resolution of the matter.
When contacted, former director general of the commerce ministry WTO Cell Hafizur Rahman said generally Bangladesh would place its logical arguments in the consultation so that India should not impose CVD as Bangladeshi jute goods have already been facing anti-dumping duty in the market.
He, however, said Bangladesh does not provide actionable subsidy to its jute products.
A senior official of the ministry said the government would place logical points, where the fresh imposition of CVD would be legally inconsistent.
Dhaka will also try to convince Delhi through diplomatic or political channels for not imposing CVD afresh, arguing that ADD has already affected Bangladesh's export earnings from India, he added.
Export shipments of jute goods - hessian and jute sacks - are enjoying a 12-per cent cash incentive and jute fibre like yarn and twine a 7.0-per cent incentive.
The export of carbon and jute particle board produced from the natural fibre get a 20-per cent subsidy, according to a source.
ADD imposition has been seriously hampering the export of Bangladeshi jute goods to India. If India imposes fresh CVD on jute goods from Bangladesh, the sector will finally be ruined, argue businesses.
Apart from jute goods, India in April 2017 imposed ADD ranging between $27.81 and $91.47 per tonne on the export of hydrogen peroxide from Bangladesh.
In 2018, it also slapped similar duty, amounting to $2.69 per kilogram, on the export of fishing net.
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