Bangladesh could face a further reduction in export earnings from jute products following the recent land port restrictions on most products of the "golden fibre" imposed by India.
Bangladesh is the top exporter of jute and jute products in the international trade market, while India has been one of the top importers of Bangladeshi jute and jute products.
As per India's commerce ministry's decision on 11 August, the products will be allowed entry only through the Nhave Sheva Seaport in Mumbai, whereas earlier the lion's share of jute exports reached India through land ports along the hundreds of kilometres of border shared by the two neighbours.
An already struggling jute sector is likely to be further disadvantaged as India accounts for roughly a quarter of Bangladesh's jute exports, according to data from Export Promotion Bureau (EPB), Bangladesh Bank's annual Balance of Payment (BoP) databases, and the Bangladesh Trade Portal.
"This will increase the export costs massively, which will be a burden for us. Though there has been a huge demand for our products in India, the restriction is entirely to discourage the jute and jute products from Bangladesh," a top official of Jute Export Corporation told Stream on condition of anonymity.
The products include bleached and unbleached woven fabrics of jute or of other textile bast fibre; twine, cordage, rope, etc of jute; twine, cordage, rope and cables; and sacks and bags of jute .
Earlier in June, India restricted several jute related goods including raw or retted jute and other textile bast fibres, jute, single flax yarn, single yarn of jute or of other textile bast fibres, unbleached woven fabrics of jute or of other textile bast fibres.
What the numbers say
According to Bangladesh Investment Development Authority (BIDA), Bangladesh is the second largest producer and top exporter (around $1 billion per year) of jute products in the world. India is one of the top destinations of Bangladesh's jute and jute products exports.
Latest official data reflects that the export performance of jute and jute products of Bangladesh has already been showing downward trends in recent years.
According to the EPB data, the $820.16 million earned from jute exports was 16.31% short of the target of $980 million set for the 2024-25 fiscal year (FY25). Compared to FY24 ($855.23 million), jute exports decreased 4.1% in FY25.
Bangladesh Bank's annual commodity wise export shipment or Balance of Payment (BoP) data suggests that jute and jute product's export decreased 1.7% from FY24 ($925.4 million) to FY25 ($909.7 million).
According to Bangladesh Trade Portal, raw or retted jute and other textile bast fibres, unbleached woven fabrics of jute or of other textile bast fibre, single yarn of jute or of other textile bast fibres, sacks and bags of jute are among the top 20 exported items to India amounting to around $216 million in FY24.
Thus, India accounted for around 25.25% (Bangladesh Trade Portal and EPB data) and 23.34% (Bangladesh Trade Portal and BoP data) of Bangladesh's jute and jute products exports in FY24.
What does the future hold?
Jute goods exporter AI International's owner SM Shahidul Islam told Stream that the port restriction will create some burden for the jute traders, but the markets of US, Japan, South Africa and EU could be viable alternatives for Bangladesh.
Bangladesh is in close competition with India for share of the global jute market. India is the top producer of jute in the world and their government is willing to provide more subsidies for jute and jute products than Bangladesh, he added.
However, to secure a replacement for such a bankable market as India would be a major challenge for Bangladesh if restrictions are prolonged and made permanent, said the Jute Export Corporation official, speaking on condition of anonymity.
Researchers argued that the marketing of raw jute and jute products is currently under intense competitive pressure due to the emergence of new market participants from other countries.
Currently, the jute industry, encompassing both public and private sectors, is facing significant challenges. These include growing reliance on subsidies, escalating production costs, a rising number of idle looms, leadership gaps, ineffective operational strategies, reports of severe mismanagement in raw jute procurement, limited buyer orders with varied specifications, structural imbalances, and outdated, deteriorating machinery, according to an article titled as Commercialization of Bangladeshi Jute and Jute goods: A Special Case Study published in International Journal of Research Publication and Reviews (Jahan et al) at the end of 2022.
While talking to Stream, personnel of both Jute Export Corporation and AI International agreed on these points.
Since the jute industry is one of the most economically important sectors in Bangladesh, any problems it faces must be carefully studied, researched and resolved as soon as possible, said the stakeholders.
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