The jute industry's long-standing demand for a revision in prices of B Twill jute bags has got a jolt with the Union textiles ministry scrapping the Tariff Commission's report of June 2009 on the fair price of jute bags.
The ministry has now decided to go for a fresh study and has already prepared the Terms of Reference (TOR) for the same.
Sources said the textiles ministry turned down the Tariff Commission's report as it was stated to have manipulated on issues like batch cost and jute loss. Moreover, it was also not in conformity with the productivity norms of the erstwhile Jute Manufacturers' Development Council (JMDC), which is now now known as the National Jute Board (NJB).
The jute industry is grappling with an under recovery of around Rs 1200crore since 2001 on the price for B-Twill jute bags. If implemented, the Tariff Commission's report would have got back around Rs 400crore to this ailing sector between April 2009 and July 2010.
The Indian Jute Mills Association (IJMA), the organized platform of jute owners, representing the industry, has objected to the scrapping of the report.
Currently, the price of jute bags procured by government procurement agencies is around Rs 52,000 per tonne and is well above the market price. Though the jute industry had been thriving on the old Tariff Commission's formula of 2001, the price they got from sale of jute bags was always higher than market price barring few exceptions.
The West Bengal government and the trade unions had also requested the textiles ministry to implement the report.
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In the current financial year, the textiles ministry has once again recommended a 25 per cent dilution for jute bags in favor of polypropylene bags manufacturers stating that they are better suppliers and cost effective.
It may be noted that the jute industry has completely lost ground to the plastic bags industry on the commercial aspect as it is totally out priced.
While the price of a jute bag is around Rs 42, a plastic bag costs Rs 12. The textile ministry is understood to be in favour of phasing out of the Jute Packaging Mandatory Act (JPMA) 1987 and make the jute industry self reliant.
Under JPMA, it is mandatory for the government procurement agencies to go for 100 per cent packaging of food grains and sugar in jute bags.