Source: The post India restricts jute flax imports to one seaport only has been created, based on the article “India’s jute import curbs and their implications” published in “Businessline” on 4th July 2025
UPSC Syllabus Topic: GS Paper 2 –India and its neighbourhood- relations. And GS paper3-Economy- Trade policy
Context: India’s recent move to restrict imports of jute and flax products from Bangladesh to a single seaport signals a shift in trade policy. Though aimed at quality control, this decision may strain the strong trade ties between the two neighbours.
Shift in Import Policy and Its Immediate Impact
- Restriction to Nhava Sheva Seaport: The DGFT has restricted key jute and flax imports to Nhava Sheva Seaport (JNPT), cutting off access via land ports like Petrapole and Gede, long used for cross-border trade.
- Stated Rationale: Quality and Compliance: The restriction aims to ensure uniform inspection, traceability, and better quality control using seaport infrastructure.
- Disruption of Traditional Trade Routes: Bangladeshi exporters, who rely on land-based logistics, now face operational challenges, increased costs, and delivery delays.
Economic Significance of Jute Trade
- Growth in Jute Imports: Bangladesh benefits from duty-free access under SAFTA and India’s DFTP scheme. Raw jute imports rose from $3.26 million in 2020 to $9.43 million in 2022, and remained at $8.64 million in 2024.
- Concerns Over Compliance: The sharp rise triggered concerns over under-invoicing, misclassification, and use of poorly monitored land ports.
- Anomalies in Flax Yarn Imports: Flax yarn imports rose from $95,107 in 2020 to $3.88 million in 2021, but fell to $1.41 lakh in 2023, prompting further regulatory scrutiny.
Broader Policy Realignment by India
- From Trade Liberalisation to Management: India is shifting from liberalisation to controlled trade, focusing on valuation accuracy and domestic interest protection.
- Withdrawal of Trade Concessions: India revoked transhipment benefits and delayed projects like the Akhaura–Agartala rail link, tightening control over logistics.
- Pushing for Formalisation: The aim is to move towards a formal, rule-based framework, possibly through a Comprehensive Economic Partnership Agreement (CEPA).
Geopolitical and Diplomatic Considerations
- Risk to Bilateral Trust: India enjoys a trade surplus (FY24 exports: $13.3 billion, imports: $2.7 billion), yet unilateral actions could erode goodwill.
- Need for Engagement: Trade regulation must be backed by transparent dialogue and institutional cooperation.
Way Forward
A balanced approach involves CEPA talks, shared inspection systems, and consultation to ensure resilient trade ties.
Question for practice:
Discuss how India’s recent port restriction on jute and flax imports from Bangladesh reflects a shift in its trade policy and its potential impact on bilateral trade relations.
