On Sunday, Baba Jute Mill, which was offering jobs to around 2,000 individuals, shut down its operation. Baba has become the fourth mill to close down in the recent months. Other closed mills include Niki, Pathivara and CM.

The corridor once housed 11 jute factories. The seven factories that are currently in operation—Biratnagar Jute Mill, Raghupati Jute Mill, Guheswori Twain, Nepal

Jute, Arihant Multi-fiber, Swastik Jute and Chandra-Shiva Jute Mill—have slashed their productions by up to 60 percent.

As per Nepal Rastra Bank, a total of Rs 2.61 billion has been invested in these factories.

Mill owners have blamed low demand from India and the government’s decision to cut subsidies on electricity for the problem. Prakash Mundada, director of Baba Jute Mill, said high production cost and low demand forced them, to shut the factory. “Exports have come to a halt for the last two months,” he said.

Biratnagar Jute Mill General Manager Shyam Paudel complained they have not been able to promote their products in India. The oldest factory of the country restarted its production last year after being shut for four years. The state-owned enterprise was leased out to India’s Winsome International on condition it would pay Rs13.5 million to the government annually for the next 25 years. Raj Kumar Golchha, president of Nepal Jute Industries’ Association, blamed the cut in subsidy and other facilities for closure of industries. “The mills that are operating are struggling,” he said.

As Jute mills are labour intensive industries, their closure results in high unemployment. According to the association, the jute factories here have been providing jobs to 20,000 individuals.

The government had been providing 70 percent subsidy on electricity to the jute factories. However, teh subsidy was cut two months ago.

Golchha said they were unable to compete with Indian products as the Indian government offers cash subsidy as well as buy back guarantee to jute mills. “Almost 95 percent of our products is exported, but high cost of production has made our products uncompetitive in the Indian market,” he said.