In tune with the recently released National Fibre Policy (NFP)-2011 and the earlier National Jute Policy (NJP)-2005, the Jute Commissioner has recommended a dilution of the Jute Packaging Mandatory Act (JPMA) 1987 by 20 per cent for food grains and sugar packaging in the current fiscal.
As a second alternative, the Jute Commissioner’s Office (JCO) has recommended 100 per cent dilution of the Act for sugar packaging while continuing 100 per cent reservation for jute bags for packaging of food grains. JPMA makes it mandatory for government procurement agencies to pack sugar and food grains in jute bags to an extent of 100 per cent.
The jute industry annually supplies around 6.65 lakh tonnes of jute bags for packing around 230 million tonnes of food grains and 2.16 lakh tonnes of sugar twills (A twill jute bags) for packing 220 lakh tonnes of sugar.
The jute industry’s annual business turnover is around Rs 9000 crore including around Rs 1200 crore of exports. The jute bags are produced in 66 operating jute mills spread out in seven states. Of them, 5 are in West Bengal. The industry has the capacity to consume up to 105 lakh bales of raw jute to produce 22 lakh tonnes of jute goods every year.
As per Jute Advisory Board (JAB) estimates, this year the raw jute availability will be around 122 lakh bales because of good monsoon.
The road map of NFP-2011 points out that jute sector will not enjoy any protection by the end of the 14th Plan Period (2022-27) with the phased withdrawal of JPMA 1987.
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According to the Jute Commissioner, total protection to the industry will only create an imbalance in the jute sector as mills will only manufacture sacking products at the cost of other jute products. This will be counter productive as it will act a bottleneck for future modernization.
The Jute Commissioner, however, has admitted that the industry has the capacity to supply and meet the annual projected demand for 8.3 lakh tonnes (25 lakh bales) of gunny bags in the Kharif and Rabi seasons of 2011-12. This year, the demand is likely to go up by around 21 per cent from last year's demand of 20.71 lakh bales of gunny (B Twill) bags. The industry is expected to orders for supply of 14 lakh bales and 11 lakh bales of gunny bags in the Kharif and Rabi season.
The Government purchases 40 per cent of the gunny bags manufactured by the jute sector. This is almost an 81 per cent protection for sacking and 56 per cent protection on all jute products. According to an Ernst and Young (E&Y) report, the manufacture of gunny sacks should be pruned by 17 per cent from the present 67 per cent and the reduction distributed between yarn and diversified items whose demand is likely to rise in the market.
In 2009 and 2010, the JCO had also recommended a dilution of 25 per cent of JPMA but the proposal was struck down by the Cabinet Committee on Economic Affairs (CCEA) with interventions from the Union finance minister Pranab Mukherjee and the then Railway Minister Mamata Banerjee.