The new jute crop has just arrived in the market. And at precisely the same time, the price of raw jute has slumped by over 15 per cent over the last two months. What is more worrying is that 7-8 jute mills have closed down and many others have gone for severe production cuts, leaving nearly 1 lakh workmen jobless. In West Bengal alone, four jute mills have suspended operations over the past few months The jute industry fears further production loss and shutdowns with the textile ministry looking to freeze the procurement of jute bags for compulsory packaging to 25.91 lakh bales.

What has rubbed salt into wounds is that jute manufacturers were let down by political turmoil in major jute bag-importing countries such as Thailand and Syria, leading to the loss of nearly 75,000 tonne of export demand. Besides, rising import from Bangladesh is another worrying factor. Under South Asian Association for Regional Cooperation (SAARC) treaty, there is no customs duty on jute goods import from Bangladesh, while, the cash subsidy of 10 per cent on jute goods export from Bangladesh is also applicable to those made to India.

Significantly, Indian jute manufacturers ship around 200,000 tonne of jute goods abroad, valued at Rs 2,000 crore. Bangladesh, on its parts, exports 800,000 tonne, worth Rs 5,000 crore. In 2013-14, India did not export any raw jute, while Bangladesh exported both raw jute and jute goods.

At this juncture, Indian jute industry is lobbying hard for an external market assistance (EMA) scheme to increase their share of export of jute products in the global market. Raghav Gupta, chairman, Indian Jute Mills Association (Ijma), the major industry body, said in Kolkata that a draft EMA scheme is pending for approval with the ministry of textiles for the last three years. The drawn up scheme can easily be financed out of the cess fund that is being paid by the jute industry in respect of production of jute goods (1 per cent ad valorem at present). “We need support from ministry of finance for approval of the scheme,” he said.

IJMA has also called for imposition of a countervailing duty on import of jute goods from Bangladesh, to the tune of the subsidy extended by the Bangladesh government, to ensure a level playing field for Indian manufacturers.

When it comes to West Bengal, which produces nearly 75 per cent of the total jute produced across the country, most of the jute mills in the state have to depend substantially on orders from Punjab, Haryana, Chattisgarh, Madhya Pradesh and to a lesser degree from Uttar Pradesh, FCI, Bihar, Haryana and Odisha. Since the state government does not participate in TPDS (targeted public distribution system) programme, there is no organised purchase of jute bags from mills in Bengal by the West Bengal government. And Ijma has urged the state government to purchase jute bags through the DGS&D (directorate general of supply & disposals, the official procuring agency) for packaging of food grains as is being done by about 10 other states. Interestingly, rice mills reportedly prefer to use second hand jute bags and PP/HDPE (polypropylene/high density polythyelene) bags, which is in complete violation of the provisions of Jute Packaging Materials Act, 1987.

The jute industry is now looking forward to the Bengal government’s decision on making use of jute geotextiles mandatory in road construction, which, in turn, would generate a reasonable demand for the fabric. In the last three years, 1,887 km of Pradhan Mantri Gram Sadak Yojana roads have been taken up in the state. If geotextiles are used, these roads would require about 10,500 mt of the fabric. Pavement fabric has been demonstrated to be an effective and cheaper substitute for mastic asphalt on a road in Kolkata, the Ijma chairman said.

Source:- mydigitalfc.com