Shortage of jute sacks to hurt kharif season procurement

Jute Commissioner's office is yet to update its Jute Smart portal and make it compliant with GST

Grain and sugar procurement during the kharif season is set to suffer because of insufficient jute sack supply.

The Jute Commissioner’s office is yet to update its Jute Smart portal and make it compliant with the goods and services tax (GST). According to the Jute Packaging Materials Act, 1987, 90 per cent of grain must be packed in jute sacking. For sugar, the proportion is 20 per cent.

Punjab has warned the office of the Jute Commissioner that the situation may spin out of control if urgent steps are not taken to make the jute industry GST ready. In two letters to the Jute Commissioner's office on July 4 and July 10, the Punjab government warned kharif procurement would suffer due to jute sacking. The Punjab government has placed an order for 2.2 million bales (one bale is 180 kg) of jute bags for packing grain and sugar.

The Jute Commissioner could was not available for comments.

Punjab on July 3 noticed on the Jute Smart portal that 0-36 per cent bales of jute bags had been despatched to the state from 14 mills. The state government has sought a change of bag supply orders from non-performing to performing mills. It will review the supply position after July 25.

The situation is the fallout of an unbilled amount of Rs 450 crore. Each of the 70 mills in West Bengal, the biggest raw jute producer, has an average unbilled amount of Rs 6 crore.

“Before introduction of the GST, the Jute Commissioner’s office had issued a notification stopping despatches or accepting bills beyond June 27. Then, a meeting was convened between the Indian Jute Mills Association (IJMA) and the Jute Commissioner’s office. Though despatches resumed after July 3, payments could not be released due to problems with the Jute Smart portal,” said the owner of a jute mill.

From July 1, 5 per cent GST has been levied on jute products. The previous 1 per cent cess contributed by the industry now stands withdrawn. Jute bags are supplied through the railways, Container Corporation of India (Concor) and by road. The industry is demanding jute products be declared among the “specified category” to get relief from government challans.

Each day, the jute industry manufactures 10,000 bales of jute bags. Seventy per cent of this production is purchased by the government. All purchases used to be carried out through the Jute Smart portal.