Jute exporters count addl $100 per tonne as freight cost

Jute-goods exporters now wobble under pressure of mounting transportation costs for using sea route, stakeholders say, as Indian land-port ban on Bangladeshi exports takes its toll.

Due to the restrictions-in a trade spat evidently following the July uprising in Bangladesh--millers and exporters are now forced to send jute goods by sea from Chittagong seaport to Nhava Sheva Port in Maharashtra in the West Coast of India from where goods are transported to Kolkata by road in a distant detour, they say.

As a result, the jute millers and exporters say, the cost of transportation of cargo per tonne increased by $100, making the item uncompetitive.

On June 27 this year, the Indian Directorate General of Foreign Trade issued notification restricting Bangladeshi jute and jute goods from entering India through land ports on the Bangladesh-India border. Only one seaport, Nhava Sheva Port, can be used to export jute from Bangladesh to India.

Recently, leaders of all the trade bodies in jute sector convened in a meeting and demanded that the government compensate them for the additional costs as special assistance to keep the sector afloat.

Abul Hossain, chairman of Bangladesh Jute Mills Association, in a letter to Finance Adviser Dr Salehuddin Ahmed said the port restriction would cast severe negative impact on the country's jute-and jute-goods sectors.

In the past, he writes, jute and jute goods had been exported by using Benapole, Hili and Bhomra land ports and so the transportation cost was significantly low. The use of sea route now adds up extra costs to exports to India.

Mr Hossain has also raised some more demands to help the industry thrive. He mentions that in the budget for FY26 the government imposed tax at source on raw jute at 0.5 per cent, 10-percent tax on cash incentives, and 1.0-percent tax on export price.

"The tax at source is being levied on farmers and middlemen so farmers will feel discouraged from producing jute, thus lowering jute production," he alerts.

The association demands withdrawal of all kinds of taxes on raw jute for the next five years to help the farmers survive.

Mr Hossain has also mentioned that since February 2024, the rate of cash incentives on export of different jute goods was lowered twice by around 60 per cent that leaves severe negative impact on the jute industry.

Moreover, the anti-dumping duty on Bangladeshi jute goods on the Indian side has further worsened the situation.

As such, the association has demanded restoring the cash incentives at the rates that had been before 2024, in order to help the sector flourish. A senior official at the ministry of finance told the FE it is true that restrictions on export of goods to India through land has raised the transportation costs of goods for Bangladeshi millers and traders.

This will lower their export competitiveness on the Indian market, compared to the past, the official said.

"We will scrutinise their proposals and see what can be done to compensate the miller and traders," he said.

In 2023, Bangladesh exported jute and jute goods worth $61.8 million to India. The imposition of anti-dumping duty on Bangladeshi jute and jute goods in 2017 caused a steep fall in export of the items to the neighbouring country.

Millers and traders fear the new land-port restrictions and subsequent cost escalation will further undercut export of Bangladeshi jute and jute goods to India.

syful-islam@outlook.com