Jute sector in India faces threat of ban on government quota  

The Indian Jute Commissioner has warned the country’s jute industry of a ban on their getting a government quota for five years, citing unfair trade practices by some mills.

Certain jute mills are saddled with allegations of cheap but illegal imports of jute bags from Nepal and Bangladesh for profiteering.

juteThe Jute Packaging Materials Act, 1987 provides for compulsory packaging of sugar and food grains in jute bags by government agencies up to 100 per cent.

Every year, the Food Corporation of India purchases 40-45 per cent of the jute bags produced by the industry on behalf of the state food procurement agencies. However, the legislation prohibits use of imported jute bags to meet demand from government procurement agencies.

“This office will be compelled to come down with a heavy hand if the practices are not stopped forthwith. You may think of taking a suitable resolution in the long-term interest of the jute industry. Further, we are also contemplating action against mills which have resorted to such practice in the past”, Jute Commissioner Subrata Gupta wrote to Raghav Gupta, chairman of Indian Jute Mills’ Association (Ijma).

Recently, the commissioner had found that some mills, including a majority of them belonging to Ijma, are illegally importing jute bags from Bangladesh and Nepal at a cheaper price to sell it at higher prices to the state-owned food procuring agencies.

Under Jute and Jute Textile Control Order, the Jute Commissioner has the power to recommend prosecution and imprisonment against the mills violating the laws. Ten to 12 mills are in the line of fire of the Jute Commissioner. Sources said the Jute Commissioner has sent a note to the Union textiles ministry recommending action against these jute mills.

On July 3, 2014, the Jute Commissioner had already highlighted the issue of unfair trade practice within the jute industry before the 22nd Standing Advisory Committee of the ministry.

He said that the industry was found to indulge in unfair trade practices like supply of used, underweight and poor quality bags not conforming to BIS (Bureau of Indian Standards) norms, lack of co-operation, supply of inaccurate data and illegal imports of jute bags from Nepal and Bangladesh.

Bangladesh offers 10 percent cash subsidy on its export products. Hence, the prices of jute bas bags are cheaper than those manufactured in India.

Under JPMA, imported bags are barred from use in government supplies. As per law, only those bags that are manufactured and produced in India can be used for government supplies.

Any action from the Jute Commissioner would deal a further blow to the jute industry that has started facing hostility from states like Punjab.

Punjab, the biggest purchaser of jute bags, is gradually shifting to plastic bags. In the past three months, there is an almost 30% fall in the off-take of jute bags pushing up the production cost in the jute mills.

Courtesy: Business Standard


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