India declines to import jute bags from Bangladesh and Nepal

The government of India has turned down proposals from Nepal and Bangladesh to supply gunny bags in 2012-13 for packing sugar and foodgrain.

The Jute Packaging Materials Act (JPMA)-1987, a Central legislation, provides for 100 per cent mandatory reservation for jute bags for packaging of sugar and foodgrain.

Since both sugar and foodgrain are under the reserved sector, the Union law ministry has expressed reservations over import of gunny bags from Nepal and Bangladesh.

According to law ministry, there are serious technical, legal, supply and policy problems in allowing import of jute bags from Nepal. The law ministry, however, has allowed such imports in the unreserved sectors other than foodgrain and sugar.

Moreover, jute bag prices in India are fixed on a price formula of the Tariff Commission of 2001 and procured by the Directorate General of Supplies and Disposal (DGSD) or through the National Competitive Bidding (NCB). DGSD has no jurisdiction on inspecting quality of jute bags in Nepal or Bangladesh.

“There was a proposal for import of gunny bags from Nepal and Bangladesh but it has been struck down by the Centre. In any case, the domestic jute industry is more than self-sufficient and is in a position to meet the requirement of packing sugar and foodgrain,” said Manish Poddar, chairman, Indian Jute Mills Association (IJMA).

While one million tonnes (mt) of jute sacks are needed to pack food grains, 0.2 mt are necessary for packing sugar. The jute industry has the capacity to churn out 1.5 mt of sacks and sacking capacity is almost 0.55 mt higher than peak government demand.

On May 16, Bangladesh jute minister Abdul Latif Sididique had written to former Union finance minister Pranab Mukherjee, for export of Bangladesh gunny bags to meet India’s increasing output of foodgrain. “It is a matter of great concern that there are also supply constraints and food grains are lying unpacked in open space eventually getting spoilt. We have enough stock to meet your problem for urgent delivery”, Siddique had pointed out in the letter.

Bangladesh produces around 0.5 mt of gunny bags each year as against India’s 1.1 mt. Bangladesh’s raw jute production is around five million bales (1 bale is 180 kg) in comparison to India’s 11 million bales.

Bangladesh, however, is a bigger player than India in the export market and mostly thrives on discounts that are covered up by huge government subsidy. While Bangladesh exports over 60 per cent of its products, India exports only 10-12 per cent.

Besides, the Nepal Jute Mills Association (NJMA) had also approached the Indian textiles ministry to modify JPMA 1987 and allow it to supply gunny bags for packing food grains and sugar.

Nepal produces 15,000 tonnes of gunny bags.