India has withdrawn the countervailing duty (CVD) imposed on import of jute products from Nepal. The anti-dumping duty, however, continues. A Gazette notification on April 20, said that Nepal is eligible to get exemptions from additional duties on jute sacks and bags similar to Bangladesh which was granted the exemption in February 2011.

Issuing a press note today, the Embassy of India in Kathmandu, said that the Indian government issued a notification last week exempting levy of additional customs duty on jute products from Nepal. Henceforth, no CVD shall be imposed on Nepali jute products when imported to India.

The government of India also believes that abolition of CVD will substantially enhance the export of Nepali jute products to Indian markets, thereby helping the people engaged in jute industry of the country.

The export of jute products from Nepal to India had halted for the last four months after the Indian government imposed excise duty of 12.5 per cent on different Nepali jute products beginning December 15. Such import-restrictive levy was imposed on jute yarn, fabric and jute bags. The imposed CVD on

Nepali jute exports ranged from $6.30 to $351.72 per tonne on jute exports to India.

This restriction imposed by the Indian government on Nepali jute products had immediately garnered criticism from Nepali private sector and the government itself citing that the Indian government’s move had violated the Nepal-India Trade Treaty that ensures duty-free access for Nepali jute products in the Indian market. Efforts were then made by the Nepal government and the private sector to encourage the Indian government to roll back the decision to levy CVD on Nepali jute products.

Raj Kumar Golchha, president of Jute Industry Association of Nepal, said that the domestic jute industries were on the verge of collapse after such imposition by Indian government. However, it is praiseworthy that India has finally exempted the tax levy, paving way for Nepali jute factories to flourish.

Following the exemption of CVD by India, domestic jute companies have already started full-fledged production. Currently, there are four jute companies operating in Nepal — Arihant, Swastik, Baba and Raghupati.

India is Nepal’s largest importer of jute products. As per traders, Nepal produces almost 200 tonnes of jute products every day and more than 90 per cent of Nepali jute products are exported to the Indian market. Domestic jute factories, however, are reliant on India for supply of more than 70 per cent of raw materials.

Prakash Mundara, Secretary-General of the Biratnagar-based Morang Merchants Association in Nepal, believes the additional duty was imposed “by mistake”. Mundara pointed out that the bi-lateral treaty didn’t have scope for such duties and the Nepalese jute industry benefits Indian farmers as well.

According him, with anti-dumping still on, Nepalese jute industry is now treated at par with Bangladesh. This is a positive development for India-Nepal relationship which will help people of both the countries.