However, the modalities of private participation is still undecided.
The Union government ruled out the possibility of dilution of its stake in the mills.
The move followed recommendations by private consultant firm Deloitte & Touche Consulting, submitted to the government.
According to sources in the jute industry, the government would shortly invite tenders for running the jute mills without any stake dilution and this model would be used to revive more jute mills in future.
Sources at National Jute Manufactures Corporation Limited (NJMC) said several possibilities were being examined for revival and outright stake sale was one of the options.
However, Bhupinder Singh, joint secretary of the ministry of textiles of the government of India, ruled out any such possibility.
"We want private participation in the mills, which will be done through a transparent process. The revival package is with the Board for Industrial Financial Reconstruction (BIFR), which is yet to approve it. However, there will not be any dilution of government's stake in the mills," said Singh.
The capacity of the two jute mills was close to 180 tons per day, with upto 7,000 people working there.
In 2007, the Board for Reconstruction of Public Sector Enterprises (BRPSE) had recommended that NJMC close the National, Alexandra and Union jute mills, and revive the Khardah and Kinnison jute mills in West Bengal and RBHM in Bihar.
NJMC was the only public sector undertaking engaged in jute goods manufacture and owned six jute mills - five in West Bengal and one in Bihar.
All the jute mills were closed at present.
Earlier, BRPSE has suggested the revival of Kinnison and Khardah Mills in the public sector, and private partnerships for the Katihar Mill.
The mills produced traditional jute goods like hessian, sacking, jute twine and jute carpet backing cloth (CBC).
At the time of nationalisation, the NJMC mills produced around 1.10 lakh ton of jute goods per annum, which rose to 1.33 lakh ton in 1985-86. However, there was a continuous decline in production thereafter.
By 2004-05, the six units of NJMC ceased operations due to disconnection of power supply for non-payment of bills caused by working capital crisis.
