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Jute firms may lose rs 1,061 cr on dilution of packaging act

Jayajit Dash  |  Bhubaneswar 

With the deadlock over jute mills still continuing, the Ministry of Textiles has recommended a 78 per cent dilution in the packing of foodgrain in B Twill jute bags.

The diluted quantity will be made up by alternate sources like polymer bags. The total requirement for jute bags for the rabi marketing season of 2010-11 has been pegged at 1 million bales. A 78 per cent dilution means that the government procurement agencies can use alternate packaging material like polymer bags for up to 780,000 bales of foodgrain and sugar.

The dilution would allow use of plastics instead of B-Twill jute bags for the rabi marketing season

The jute industry is set to lose Rs 1,061 crore because of this dilution proposal which will be applicable to the rabi marketing season of 2010-11.

Industry experts noted that the jute industry which has already been hit hard by an unwarranted strike since December 14 last year will be pushed to deep sickness due to the dilution move.

Sanjay Kajaria, chairman, Indian Jute Mills Association (IJMA) said, “The dilution move violates the decision taken by the Union Cabinet in September 2009 to continue 100 per cent reservation for jute bags for packing foodgrain and sugar for 2009-10. The dilution will adversely affect the industry making ways for closure of mills, job losses and production cuts.”

It may be noted that the Jute Packaging Materials Act (JPMA) of 1987 provides for mandatory use of jute bags to the extent of 100 per cent for packing of foodgrain and sugar meant for government procurement.

He pointed out that the jute industry has suffered a production loss of over Rs 1,600 crore and the workers have lost wages of around Rs 300 crore because of the unwarranted and unilateral strike thrust on the industry.

Besides, the jute industry has suffered a loss of over Rs 874 crore for selling B Twill jute bags under the DGS&D (Directorate General of Supplies and Disposal) account since 2003.

Even though the Tariff Commission had submitted its latest report in June 2009, the Union textiles ministry is yet to implement it as a result of which the industry is compelled to bear a daily loss of Rs 3,962 a tonne on B Twill bags sold under DGS&D account.

Despite repeated appeals made by the jute industry, the textiles ministry is sticking to the old and outdated price formula of the Tariff Commission of 2001.

The industry fears that if the Tariff Commission’s latest report is not implemented urgently, the jute industry will be pushed to further woes.

First Published: Tue, February 02 2010. 00:52 IST