The ailing jute industry is headed for a deep crisis with the Union food ministry mooting a proposal to exempt wheat completely from packaging in jute bags.
For jute mills, wheat packaging is a huge market and its exemption can have serious repercussion on the mills' operations. The size of wheat packing (in jute bags) is estimated at 1.2 million bales (one bale is 180 kg), meaning 50 per cent of all government buying of B Twill bags. In value terms, the market is pegged at around Rs 3000 crore.
Manish Poddar, chairman of Indian Jute Mills Association (IJMA) denies this. "I haven't heard of any such proposal either from the food or textiles ministry. There is ample availability of jute bags and so, any such possibility of exemption does not arise", said he.
Read more from our special coverage on "JUTE MILLS"
In a recent communication to the Union textiles ministry, the department of food & public distribution has stressed on a permanent alternative solution for the future in the form of high density polyethylene (HDPE)/polypropylene (PP) bags so that the malpractices of a handful of errant jute millers can be curbed.
"This department is of the view that decision on rates may be taken keeping in view the fair practices of the market and not the unethical practices in jute sector to escalate the prices.
The expenditure on packaging material is public money and cannot be given away for black marketers. Hence, such expenditure on escalated price has to be contained so that funds for food subsidy are not misused", stated a letter from the department of food & public distribution to joint secretary (jute), textiles ministry.
The department has emphasized on preparation of a Cabinet note to back the transition from jute to alternative packaging material for wheat. The exemption has been proposed for 2016-17 jute season which runs from November to March.
The new Jute and Jute Textiles Control Order, 2016 has come into to force with effect from February 4, 2016. Under Section 8 of this Order, the Jute Commissioner has been empowered to debar a mill company from supply of bags to the government agencies for a period ranging from three months to two years depending on the nature and extent of unfair practices carried on by the manufacturer.