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Jute sector likely to reel under zero import duty
Kolkata, January 07, 2008: Recent government decision for lifting customs duty on imports of raw jute and jute goods has hit a blow to the Indian jute sector. In fact, the Union government has amended the custom notification No 125/2007 and 126/2007 withdrawing 10% import duty to nil on jute and jute products with effect from January 1, 2008.
Naturally, the domestic jute industry has received a rude shock and expressed grave concern at the decision. Normally, India imports these jute and jute items from Bangladesh, Bhutan, Maldives and Nepal. Nil import duty, it is feared, will open a floodgate of imports of raw jute and jute goods and serve a death blow to domestic jute industry.
In an SOS to the Union textile secretary, the chairman of Indian Jute Mills Association (IJMA), Mr Sanjay Kajaria, has made a plea for his immediate intervention into this problem. He wants the matter to be taken up with appropriate authorities and arrange exclusion of raw jute and other jute goods from the customs notification issued by the finance ministry and maintain status quo ante.
The IJMA chairman has drawn the attention of the textile secretary to the fact that India happens to be a dominant player in the world jute market in terms of both supply and demand. What is more, India is also the single largest producer and consumer of jute. Bangladesh produces large quantity of qualitative raw jute. However, it does not process much as there is little market demand in that country.
As for the impact of lifting of duty by the Union government and evaluating benefits of such a decision, it is found that there will be availability of quality raw jute to Indian jute producers from Bangladesh as that country has the cheapest and best quality of raw jute available due to its
favorable weather conditions. In the present market situation due to the import duty, there was les of an incentive to import jute from Bangladesh. Higher qualities of raw jute will mean more efficiency in jute production as well.
Second, the Bangladesh economy will get a boost as the jute producers have complete access to the large Indian market. Bangladesh farmers and labour will largely benefit as production will shift here due to economic reasons. If one can supply to the Indian market by producing in Bangladesh, he will save more than 10% of his costs than by producing in India. All these are positive sides of the import duty abolition, particularly in
favor of Bangladesh.
However, the government is in ‘frenzy’, as put by Supreme Court, in a bid for the open economy, forgetting their role in a socialist sense. After all, the government is supposed to implement policies for the benefit of the Indian people and not that of Bangladesh. The Indian farmers and mill workers will be worst hit if such a policy is implemented. Jute farmers in India will be forced to sell at a lower price compared to before, which will affect their income. About four million farmers will suffer directly and may have to stop jute cultivation altogether.
Source: The economic Times
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