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Will Cabinet approval to mandatory jute packaging revive its output?

The jute industry is predominantly dependent on the government sector, which purchases jute bags worth more than Rs 7,500 crore every year for packing foodgrains

twitter-logo Niti Kiran   New Delhi     Last Updated: November 28, 2019  | 15:15 IST
Will Cabinet approval to mandatory jute packaging revive its output?
The demand for jute amid single-use plastic ban might see some improvement

The Cabinet on Wednesday accorded its approval to the mandatory packaging of foodgrains and sugar in jute material for the year 2019/20. The government has retained the scope of mandatory packaging norms under the Jute Packaging Material (JPM) Act, 1987 as per the last year. The decision mandates that 100 per cent of foodgrains and 20 per cent of the sugar shall be mandatorily packed in diversified jute bags. The decision to pack sugar in diversified jute bags is expected to give an impetus to the diversification of the jute industry. Further, the decision also mandates that initially 10 per cent of the indents of jute bags for packing foodgrains would be placed through reverse auction on the GeM portal. This will gradually usher in a regime of price discovery.

The jute industry is predominantly dependent on the government sector, which purchases jute bags worth more than Rs 7,500 crore every year for packing foodgrains. This is done in order to sustain the core demand for the jute sector and to support the livelihood of workers and farmers dependent on it.

Between 2014/15 and 2018/19, the National Jute Board had released capital subsidy of Rs 4,971 lakhs to jute mills and JDP units. Several other attempts were made by the government for the development of jute industry and welfare of jute workers that include MSP operation in raw jute, welfare of jute farmers namely Jute-ICARE, incentive scheme for acquisition of plant and machinery, market promotion support, export market development assistance scheme, retail outlet of jute diversified products and bulk supply scheme.

Have these efforts paid off well? Not really if you go by the following numbers:

The industry that employs around 3.7 lakh workers with 4 million farmers involved in raw jute production does not seem to have delivered the desired output of government's concerted efforts. The number of operational jute mills has reduced from 93 to 75 over the last three years. West Bengal has a lion's share with 60 operational jute mills, followed by seven in Andhra Pradesh and the rest in Assam, Bihar, Uttar Pradesh, Odisha, Chhatisgarh and Tripura.

The production of jute goods declined from 1,142.3 metric tonnes in 2016/17 to 1,080.3 metric tonnes in 2018/19, registering a fall of 5.4 per cent. The production of the jute sacking cloth or the Hessian fabric has fallen by 12 metric tonnes in the in the first of fiscal 2020 compared to the corresponding period last fiscal.

Export of jute products whose share is just a tad over 1 per cent in the overall textile exports has decreased from $342 million in 2017/18 to $330 million in 2018/19. Its exports, however, increased 2.8 per cent since 2016/17. The US is the biggest exporter of jute products from India with a share of 22 per cent in 2018/19. This was followed by Ghana with 11 per cent and the UK with 7 per cent share. The overall textile exports though jumped around 8 per cent to $20,451 million in 2018/19-infact all the commodities within textiles except handloom and jute products have registered a growth during the period.   

The dismal show of these two broad indicators of output growth over the last three years is surely not in line with government's efforts so far. However, the demand for golden fibre amid single-use plastic ban together with government support might see some improvement, but the wait could be longer.   

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