In a bid to promote jute goods exports the Union textiles ministry has reintroduced the External Market Assistance (EMA) scheme after a gap of four years. The scheme was scrapped from April 2007 as it failed to yield the desired results for jute goods manufacturers in the overseas markets.
The new scheme, however, is being introduced with riders where jute companies will have to comply with three types of national and international certifications on the quality of their products to avail of the new EMA facilities.
India exports jute goods worth around Rs 1200 crore every year to the US, Europe, Africa, West Asia, China and some Latin American countries.
As per the new EMA scheme, a subsidy at the rate of two per cent of the FOB (free on board) value of the jute goods will be provided to all ordinarily exporting jute companies. A maximum subsidy at the rate of fourper cent of the FOB value will only be given to those companies who comply with Quality Management Certificate under IS / ISO 9001:2005 from Bureau of Indian Standards (BIS), Environmental Management Systems Certificate under IS/ ISO 14001 : 2008 and Certificate of Safety Management Systems under BS /OHSAS (Occupational Health & Safety Assessment Series) 18001:2008.
The mandatory three certificates on quality, safety and environmental compliance for an additional two per cent subsidy has placed most jute mill companies in problem as majority of them have not modernized their mills and only stuck to vintage outlook.
Of the 52 operating jute mill companies in West Bengal, only one jute unit run by the Bangurs-Gloster Jute Mill has the capacity to comply with the government demand. This, quite naturally has placed the whole of the jute industry to shame and mill owners have started throwing up their arms against the government move.
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Before being scrapped in 2007, the EMA subsidy was offered to jute companies at the rate of five per cent of the FOB value and the money used to be paid from the cess funds collected by the government on the manufacture of jute bags.
The nodal agency was the erstwhile Jute Manufacturers' Development Council (JMDC) now called the National Jute Board. A number of jute companies had moved court against the government claiming non payment of EMA of around Rs eight crore. The government claimed that it had adjusted the amount on a different subsidy it had provided to the jute companies on the export of food grade jute bags (FGJB).
Indian jute companies face the biggest competition from Bangladesh products. The Bangladesh government provides a cash subsidy of around 10 per cent on all jute export items and an additional four per cent as other reliefs to its jute goods exporting companies. In comparison, the Indian jute companies get subsidy by way of duty free scrips under DEPB (Duty Entitlement Passbook Scheme) or duty draw back schemes. The government has already decided to withdraw DEPB which will further place the jute companies in problem.