Centre deliberates to freeze jute bags capacity at 2.59 million bales

The Jute Commissioner had advocated the move since internal consumption of jute bags was lower than the actual capacity

The Union textiles ministry is mulling to freeze capacity of B Twill jute bags at 2.59 million bales (one bale is 180 kg) for 2014-15.

The ministry's proposed move is on the basis of recommendation by Jute Commissioner Subrata Gupta who had advocated freeze in capacity since internal consumption of jute bags was lower than the actual capacity.

“For the purpose of supply of jute bags under the Jute Packaging Materials Act 1987, the capacity of jute mills (existing and those that may come up in the future) may be frozen at 2.59 million bales which is the average of B Twill supplied by the industry over the last three years for 2011-12, 2012-13 and 2013-14”, the ministry stated in a draft Cabinet note.

The B-twill gunny bags are primarily meant for government supply through the public distribution system (PDS) to pack food grains and sugar. As per the plan, in future, the capacity of a jute mill will be assessed as per its production strength as on January 1, 2014. The government will ignore fresh capacity demands made by jute mills.

Since 2012, the government has been placing orders for jute bags based on commitments from jute industry.

The government has written strong letters against the industry for not supplying jute bags and diverting them to the open market for selling at higher prices. Two years back, the government blacklisted 14 jute mills.

The move to freeze jute bags capacity has come in for opposition within the jute industry.

“The fact remains that industry has got enough capacity to not only meet 100 per cent bag requirement by government procurement agencies for food grains but for meeting 100 per cent requirement of jute bags by sugar industry as well.

The overall capacity to manufacture & supply sacking by industry is proposed to be frozen at an artificial lower level which is contradictory in itself. It seems that the possible impact on the JPMA dilution has remained unforeseen”, said Sanjay Kajaria, a leading jute mill owner and former chairman of Indian Jute Mills' Association (IJMA).

JPMA is the only life-line for the beleaguered jute industry. In 2012 and 2013, the government had partially diluted the Act and had made similar recommendations for partially implementing it in 2014.

According to a draft note prepared by the government for the Cabinet Committee on Economic Affairs (CCEA), total production of jute material over the last five years from 2009-10 to 2013-14 has varied from 1.32 million tonne to 1.52 million tonne, averaging around 1.51 million tonne while average internal consumption had been 1.33 million tonne.

The jute industry supplied 0.7-0.8 million tone of jute bags to the government valued at around Rs 5000 crore at the rate of Rs 50,000 to Rs  55,000 per tonne.