Exempt jute from futures trade, urges industry

It was only to arrest such speculation that the government was compelled to impose a ban on futures trade three years ago, which has once again been brought back by the UPA government.

The industry feels such practice of futures trading in the fibre would do more harm than good for 4-million odd farmers and about 3 lakh workers attached to the jute industry across the country.

The commencement of futures trading in raw jute by MCX from July 31 2007 witnessed a rise in fibre prices to unprecedented levels mainly due to speculative activities which is wholly unrelated to the demand-supply scenario.

The industry has approached the textile ministry to take up the matter with the department of food and public distribution and instruct FMC to stop proceedings on jute and jute products in the area of futures trade.

The stabilization of raw jute prices was essential under the National Jute Policy (NJP) as the government now wants to shift focus for the jute industry from packaging to diversified and value-added items which could occupy a place in the export markets.

According to NJP, the government is looking at a CAGR of about 15 per cent per annum for the jute industry on the quantity of exports of jute and jute products.

With price being the prime indicator and determinant factor that influences decisions of the international buyers to purchase jute goods from India, the futures trading therefore needs to be banned to ensure stable fibre prices. In fact, the government, is already contemplating banning of futures trade in some essential commodities due to abnormal price rise.

The industry has approached the textile ministry to take up the matter with the department of food and public distribution ( DFPD) and instruct the Forward Market Commission (FMC) to stop proceedings on jute and jute products in the area of futures trade.