India-Bangladesh trade row hits Bengal jute mills, mill workers hard

A deepening India–Bangladesh trade dispute over jute—crucial to West Bengal’s rural economy—is beginning to hit the state’s jute sector, with two mills suspending operations this month and several others teetering on the brink of closure.

What began as tit-for-tat policy tightening measures on imports and exports has now spilled into raw material shortages, rising costs, and growing uncertainty for mills, farmers, and workers, in India’s jute heartland.

Raw materials go scarce

The closure of the Jagatddal Jute Mill at Bhatpara in North 24 Parganas district and the Mahadev Jute Mill at Belur in Howrah district has already disrupted the livelihoods of nearly 5,000 workers and their families. In their respective “suspension of work” notices, the managements of the two mills cited lack of raw materials as the reason for the shutdowns.

“Due to a lack of raw materials, the jute mill has been closed indefinitely,” read the notice hanged on Monday (December 22) outside the gate of the mill run by the Jagaddal Jute. A mill official said that due to the sharp increase in raw jute prices, they are unable to procure jute to operate the mill.

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“The mill used to operate in three shifts. However, for the past weeks, we have reduced operations to only two shifts due to a shortage of raw materials,” the official said, seeking anonymity.

“Thousands of workers and their families are reeling from this sudden decision. If the raw material shortage is not addressed, many more mills could face closure, putting countless livelihoods at risk,” said Nabin Kumar, a mill worker.

Curbs on raw jute exports

The shortage of raw jute in India has been closely linked to recent export restrictions imposed by Bangladesh.

In a move that disrupted the supply chain, the Bangladesh Ministry of Commerce, on September 8, placed raw jute shipments under conditional approval, limiting exports and creating uncertainty for Indian jute mills.

According to industry sources in Bengal, before Bangladesh tightened exports, raw jute in India was trading at about Rs 60,000 per tonne in July. After the curbs took effect, prices have jumped to around Rs 1,10,000 per tonne in December. This dramatic rise has been attributed directly to the disruption in supplies following Bangladesh’s export restriction.

The Indian Jute Mills Association (IJMA), in a recent communique to the government, stated that Bangladesh’s unilateral decision to curb raw jute exports has triggered an acute shortage of raw material in India, leading to a sharp rise in prices in the domestic market.

India's restrictions

Bangladesh’s decision comes close on the heels of the Indian Directorate General of Foreign Trade's (DGFT) move this April to impose restrictions on Bangladeshi jute products.

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The new rules bar imports through land ports along the India-Bangladesh border, requiring all shipments to be routed exclusively via the Nhava Sheva port in Maharashtra. This affects items such as woven fabrics, twine, rope, sacks, and other bast fibre goods, leading to higher transportation costs and logistical complications.

Earlier, trade with West Bengal’s jute-producing areas used to move efficiently through land customs posts, which kept expenses lower and delivery times quicker.

Dire straits

Jute mills in West Bengal, which contribute the majority of India’s jute production, are bearing the direct impact of these reciprocal trade restrictions.

The state’s stock of raw jute has dropped to below 4 lakh bales, sufficient for only six to eight weeks of operations, while rising raw material costs are squeezing profit margins.

At the same time, a regulatory cap on finished product prices is adding to financial strain. According to the IJMA, if these conditions persist, more than half of West Bengal’s mills could be forced to close by March 2026, putting over 400,000 direct mill workers at risk, along with many others employed in related industries.

Farmers in Bengal’s jute-growing regions are feeling the impact of the crisis. Districts such as Nadia, North 24 Parganas, and Hooghly are facing uncertainty regarding crop prices and procurement.

Of the approximately 70 lakh bales produced in the 2024–25 season, only 6.24 lakh were procured by the Jute Corporation of India at the minimum support price (MSP), forcing the rest to be sold in unpredictable and fluctuating mandi markets.

Sale below MSP

“This season, we had no choice but to sell our jute below the MSP. Many of us are considering planting paddy or maize next year because jute does not feel like a safe crop anymore,” said Aminul Islam Khan, jute grower from Nadia district’s Karimpur.

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Ironically, while farmers are compelled to sell their jute below the MSP, market data shows that current mandi rates stand at around Rs 8,858 per quintal, which is well above the MSP of Rs 5,650 for the 2025-26 marketing season.

Rising raw jute prices offer little relief to farmers, as financially strained mills and limited procurement options could still leave them facing losses in the next marketing season beginning June-July, said Khan.