Bangladesh is caught in an anti-dumping duty review in India, claimed State Minister for Labour and Employment Begum Mannujan Sufian last week. While there has been talk about the anti-dumping duty imposed on Bangladesh's jute products, in reality, interestingly, it has little to no effect on our jute industry.
Which begs the questions, what are the other factors at play here? And why is India's anti-dumping duty on our jute making the rounds in the news media?
India imposed a five-year ($19 to $352 per tonne) anti-dumping duty on Bangladesh's jute products in January 2017. Now that the term is coming to an end, Indian jute mill owners recently have again requested a review of the anti-dumping duty for Bangladesh.
The verdict is pending.
Meanwhile, until the verdict is announced, uncertainty brews. In regards to this, Sajjad Hossain, a former chairman of the Bangladesh Jute Goods Experts Association (BJGEA), stated that, contrary to popular belief, he believes that India's anti-dumping policy is not the primary reason for the sorry state of the country's jute industry.
It all started in 2015. While Bangladesh's production cost of jute was Tk1,35,000 per tonne, it exported the same products at Tk75,000 only. As a consequence, India claimed to have lost its hold in its local market.
As a result, India's concerned government investigated and imposed an anti-dumping duty on Bangladeshi jute exports in January 2017 (for a five-year period).
Basically in 2015, jute goods were exported only through Jute Mills Corporation (BJMC). Thus, the government agency was in control of this product's export to India. It was also dumping this product, since BJMC was exporting jute at a loss.
In 2015, this situation occurred because BJMC failed to fully utilise its production capacity. In fact, it only used about 15% of its capacity even last year.
When an organisation uses only 15% of its capacity while incurring 100 percent of the costs, it cannot survive in the market and exactly that happened.
Amid the utter failure of BJMC, there has been a positive development as a result of India's anti-dumping duty. After July 2020, the jute export market started to be controlled by private companies and the situation is now quite under control.
Infact, jute export has risen up to 31 percent in FY21.
But why couldn't we make BJMC cost-effective? It is because it lacks a stable management group. In the time span of 2010 to 2019, not a single manager of BJMC stayed for more than a year.
"This fluctuation establishes that BJMC lacks stability. When the efficacy of an organisation is at stake, we can expect a responsible director or managerial board to be in charge that will closely observe the problems and solve them. But everyone has treated it [the BJMC] as a dumping station and pushed it into further darkness," said Khondaker Golam Moazzem, Research Director of the Centre for Policy Dialogue.
Meanwhile Sajjad Hossain thinks that the anti-dumping duty was not entirely illogical. "India did an investigation on each [Bangladeshi] company and tried to find out who was selling at [a price] lower [than the market price in India] even after incurring loss.
And only those companies were put under the imposition of anti-dumping duties. Otherwise, there are companies too that are under 'zero' duty, " he explained.
Bangladesh is exporting 282 jute and jute based goods in 135 countries around the world and sure, India is the biggest importer. Still, India's anti-dumping duty is affecting the market only partially.
Additionally, Bangladeshi companies that are doing a huge amount of business in the Indian market are already under zero duty because they have complied with the rules and regulations of export.
The usual suspects
Mismanagement of the jute industry has caused far more damage than India's anti-dumping duty. Excessive export of jute raw materials is an example of this.
Last year, Bangladesh did not have the raw materials to produce jute goods as we exported more than we were supposed to. As a result, around 50 to 60 jute mills could not operate their businesses and, consequently, shut down production.
Also, corruption in the acquisition of raw materials is an open secret in this industry.
Other than the Indian market, there is an international jute market and both India and Bangladesh are competitors and stakeholders there but BJMC did not try to extensively explore the international market in the last few years.
Even after the high anti-dumping duty, jute goods are being exported to India as Indian buyers are ready to pay the anti-dumping duty.
Sajjad Hossain considers this imposition [anti-dumping duty] as an intentional move from India's part so that they can continue controlling the presence of Bangladesh's jute companies in their market. As mentioned earlier, most companies who are conducting substantial jute export business in India, already are under zero duty.
Hossain also thinks there is no reason for Bangladesh to wait on this 'sunset review' (an evaluation of the need for the continued existence of a program or policy). Instead, Bangladesh should invest in other countries where there are jute export opportunities.
Experts said that the anti-dumping duty alone, in the larger perspective of the jute industry, is not responsible for the lion share's of the industry's damage.
"Exporting to India alone is not a total blessing for us. So, why do we have to export our goods to India at a lower price when we have plenty of capacity to offer a competitive price [elsewhere]? What are we waiting for? Why cannot we fight with them in the international market? " Hossain speculated.
"We have become industrialists, but because we are not good marketers, we do not try to understand the business from a broader perspective. Hence, we are suffering like this. Thinking about only yourself will not make you a good industrialist, " said Hossain, who was the chairman of BJGEA for five years.
Moazzem voiced disagreement with Hossain as he looked at the problem from a different perspective. "Until we become clear on the anti-dumping duty issue, we will not be able to explore the international market either," Moazzem said.
He also suggested offering competitive prices in the market. "Most importantly, we could have focused on making BJMC more cost-effective," he added.
Later, he suggested that the government send a strong message to the Indian government about anti-dumping duties since now it is primarily controlled by the Bangladeshi private sector.