Caught in a sack race

In an 180-degree swing the jute industry’s fortunes have touched the nadir

November 02, 2014 11:41 pm | Updated 11:41 pm IST

Illegal import of jute bags is a contentious issue

Illegal import of jute bags is a contentious issue

Nearly a century-and-a-half ago, the many jute mills that dotted the western banks of the Hooghly symbolised West Bengal’s industrial progress, besides providing the building blocks of many industrial empires.

In an 180-degree swing, the industry’s fortunes seems to have reached a nadir, and it has now become a crisis-ridden sector, which witnesses incidents such as lynching of the Chief Executive Officer of a mill. This incident, that happened in May, brings into focus the goings on in an industry in which the Centre and the State seem to have little interest. The industry too has not given an exemplary account of itself, as a result of which it now faces a trust deficit.

So, it is somewhat surprising that the plight of the industry will be taken up by a Central Cabinet, which is yet to complete six months in office. But that is the case and is being seen as a good beginning.

The sector supports 40 lakh farmers engaged in raw jute cultivation and 3.50 lakh workers, who are employed in the mills and in the downstream and upstream industries. It’s turnover is Rs.10,000 crore, of which exports accounted for Rs.2,236 crore. There are 84 mills — 64 in West Bengal and seven in Andhra Pradesh. The rest are in Bihar, Uttar Pradesh, Assam, Odisha, Chattisgarh and Tripura. And, they all go through a cycle of closures, workers unrest, and reopening.

Despite the global emphasis on environmental issues, a green material such as jute is caught in a morass mainly on account of the industry’s inability to modernise and stay competitive due to technology gaps.

The industry has, thus, remained dependent on the Jute Packaging Material (Compulsory Use in Packaging Commoditiesa) Act of 1987. Known as the JPM Act, this legislation provides for compulsory use of jute packaging material in the supply and distribution of foodgrains and sugar. Originally, cement and fertilizer were also included in the JPM Act, but these were relaxed subsequently. In the face of competition from the makers of synthetic high-density polyethylene and poly propylene bag-making segment, the JPM Act has become the mainstay of the industry for generating orders. Unfortunately for the industry, there is an element of uncertainty involved in the entire stipulation as the jute industry’s quota is decided by a Standing Advisory Committee, constituted under the Act, on an annual basis.

The industry is heavily dependent on government orders for sacking, and almost 66 per cent of total jute goods are procured directly by state agencies such as the Food Corporation of India and other State-level food procuring agencies. The mills’ work-day schedules are determined by this, and are cited by the mill management to cut back production. At present, the industry is operating on a five-day week, and often such decisions and workers’ fears of lesser earnings precipitate Northbrook Jute Mill-like happenings. There is also the contentious issue of illegal imports of jute bags. While there is no bar on such imports (normally done from Bangladesh and Nepal), importers need to register with the Office of the Jute Commissioner (JC). However, it is often found that rampant unauthorised imports are taking place with the bags being used to feed the foodgrain-packaging market, further shrinking the pie for domestic units.

The Indian Jute Mills’ Association and the JC are aware of the problem, and the JC has often threatened penal action but indications are that the JC does not have either the manpower or the wherewithal to contain this problem.

The export market for jute too is shrinking, as the exporters are unable to put up with competition from Bangladesh where the government extends a range of benefits to give the industry an edge. During April-August this fiscal, jute exports in rupee terms are 12 per cent lower than a year-ago numbers.

In a Cabinet note circulated recently, the Centre admitted that the export market for sacking had declined due to political turmoil in key markets such as Thailand and West Asia.

The government has proposed a new scheme to incentivise jute goods’ exporters.

The Centre wants the industry to rework its product-mix in favour of diversified products such as geo textiles and decorative. The National Jute Board has been prompting the manufacture of these products. However, the industry says that it cannot bring the volumes achieved from traditional goods such as sacking and yarn.

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