Published in The Financial Express on Tuesday, 9 December 2014.
Jute exports could face speed bump as India moves to ease use of goods
New Delhi looks to abolish packaging law
Yasir Wardad
Bangladesh’s jute and jute goods exports to India may be hit hard after the neighbouring country has moved to phase out a law governing jute use, exporters fear.
Indian English newspaper The Hindu on Saturday reported the government of India is going to completely phase out the country’s Jute Packaging Materials Act 1987.
Exporters said India is a key destination of Bangladeshi raw jute, jute sack and bags as the country has a huge demand for jute products following mandatory jute packaging for foodgrain and sugar there.
They said easing use of jute sacks and bags in India will hit the Bangladeshi exports there.
Experts, however, said Bangladesh will have to take stern actions to implement the Mandatory Jute Packaging Act in the country, which can protect the local jute industry.
Citing Tapan Sen, an Indian Rajya Sabha lawmarker, the report said it will have “destructive impact” on the jute industry spread over five states, affecting about 4.0 million workers, growers and their families.
Bangladesh Jute Mills Association (BJMA) chairman Mohammad Shams-uz-Zoha told the FE that India is the biggest consumers of jute products in the world and the jute packaging law helped boost use of natural fibre there.
He said India has a demand of nearly 2.5 million tonnes of jute sacks and bags, of which 20 per cent is met through imports from Bangladesh.
Demand fall in India will seriously affect Bangladeshi jute sector, he said.
He said the government should highly emphasise on implementing the Mandatory Jute Packaging Act (MJPA) to increase use of jute locally.
A director at the state-run Bangladesh Jute Mills Corporation (BJMC) said nearly 0.1 million tonnes of jute yarn, 0.15 million tonnes of sacks and bags and 0.2.5-0.3 million tonnes of raw jute worth Tk22-25 billion combined are exported annually to India.
He also pointed out that if the demand for jute in the Indian captive market declined, the country’s private sector would definitely seek to capture the global market.
“Bangladeshi products will then face tough competition”, he said.
Kaihan N Rahman, deputy managing director at Pubali Jute Mills Ltd., said weaker Indian currency made Indian products cheaper to the global buyers leading to fall in orders for Bangladesh-made goods.
According to the state-run Export Promotion Bureau, (EPB), shipment of jute and jute goods sector fell by more than 29 per cent against its target for the last fiscal year. It fetched only US$824 million against its target of $1.16 billion for 2013-14.
Dr Khandker Golam Moazzem, additional director at the Centre for Policy Dialogue (CPD), said: “We have nothing to do with the Indian decision as it is solely an internal matter of the country”.
“India is one of the key destinations for Bangladeshi jute and jute goods, so up or down in demand in the country has direct impact on Bangladeshi export,” he said.
“Our government and the private sector will have to take precautionary measures to fight off negative impact of the Indian move to ease the provision of jute packaging law,” he said. “And implementation of our law will be most effective measure to combat such disaster,” he said.
“The captive market should be expanded that can ensure minimum 80 per cent use of local jute and jute goods annually”, he said.
Agricultural market expert Faisal Rahman said: “To implement the MJPA, prices of jute products should be competitive”
“Jute bags for daily kitchen market should be brought to Tk4-10 per piece and the sacks for foodgrain and sugar to Tk25-35 per piece which are now Tk10-25 and Tk50-70 per piece respectively,” he said.
He added that the Bangladesh Jute Research Institute (BJRI) has recently made few types of bags and sacks at low cost, which should be brought to the market as soon as possible.