India's jute duties squeeze Nepal's eastern mills as support fades

Twelve jute mills once operated in the Morang-Sunsari belt of eastern Nepal. Only six still do. That halving, described by the head of the industry's trade body, frames a new round of Indian trade penalties that land on the survivors.

On 24 September 2026, India's Ministry of Finance issued a notification setting anti-dumping duties on Nepali hessian fabric, jute bags, and jute yarn and twine. Rates differ by product and manufacturer. The question for Nepal's exporters is whether they can absorb the extra cost, and for how long.

A market with no easy substitute

India is the largest market for Nepal's jute products. Exports of jute products reached Rs 10.89bn in 2025/26, and hessian fabric sold to India was the largest component at Rs 7.27bn. Jute bags brought in more than Rs 2.74bn and ropes about Rs 880m.

Source: The Kathmandu Post

The usual escape from a tariff is another customer, and that looks difficult here. Rajkumar Golchha, president of the Nepal Jute Industries Association, says Nepal's greater distance from seaports than India or Bangladesh raises freight costs and limits prospects in third countries. Finding a replacement for India in the short term would be hard.

How much the duties bite

Anti-dumping duties are extra tariffs meant to shield a domestic industry from goods sold below normal value. The increases are steep. Swastik Jute Mills in Biratnagar paid $8.18 per tonne on hessian fabric sold to India and now faces $132, roughly 16 times as much. Baba Jute Mills moves from $6.30 to $64 per tonne, about 10 times as much. Reports describe the rises as about fourfold, but these two examples show larger jumps.

Source: The Kathmandu Post

There is a second layer. India's Directorate General of Trade Remedies has recommended countervailing duties of $54.77 to $60.54 per tonne on Nepali jute products. These are a separate instrument, aimed at offsetting government subsidies rather than low pricing. India opened that process against Nepal and Bangladesh in 2025. For some manufacturers the countervailing duty is higher than the anti-dumping one.

Exporters can raise prices in India and risk losing orders, or hold prices and accept thinner margins. Either route hurts. Analysis: larger or better-capitalised mills are likely to cope better, and the weakest are likely to be pushed out.

The industry contests the premise

Golchha, who also runs two of Nepal's major jute producers, Raghupati Jute Mills and Arihant Multifibres, disputes the case for dumping duties. Nepal supplies less than 1% of India's jute production, he says, and Nepali mills depend on India and Bangladesh for raw materials and spare parts. India's duties rest on its own assessment of import effects and subsidies, and no finding has been made that the industry's argument is right or wrong.

He says there is little possibility of a resolution without an understanding between the two governments, and hopes the issue will be taken up during the prime minister's visit to India. The sources give no date for that visit.

Support at home has gone

The pressure is not only external. A 4% export subsidy on jute products has been suspended for about a year and a half. Mills therefore face higher costs abroad and thinner support at home at once.

Industry bodies have asked Kathmandu to act. On 27 September 2026, a Morang Industry Organisation delegation saw Industry, Commerce and Supplies Minister Deepak Kumar Sah and asked for diplomatic action. Its president, Nanda Kishor Rathi, said the government "must raise the issue firmly through diplomatic channels". The sector wants the priority given to the tea industry's problems.

Jobs and farms are the real exposure

The stakes extend beyond factory gates. Jute is cultivated in districts including Jhapa, Morang and Sunsari, involving around 100,000 farmers. The mills directly employ 10,000 to 14,000 workers, more than half of them women. Retting, washing, processing and packaging are further stages of the supply chain.

Analysis: if mill closures continue, the first losses would fall on payrolls, then on the farmers and labourers who supply and process raw jute.

What to watch

First, whether jute reaches the agenda of the prime minister's visit to India, once it is scheduled, and whether any outcome is concrete. Second, whether India finalises countervailing duties in the recommended range of $54.77 to $60.54 per tonne. Third, whether Kathmandu restores the 4% export subsidy. Finally, the number of operating mills in Morang and Sunsari, six against 12 before, is the plainest gauge of damage.