The Union ministry of textiles has repealed the Jute Textiles (Control) Order 1956 and the Jute (Licensing and Control) Order 1961 and replaced them with the Jute and Jute Textiles Control Order 2000. According to the official gazette, the order will be extended to the whole of India.
In February 2000, the Union minister for textiles had approved an amendment to an order issued by the jute commissioner under Section 3(1) of the Jute (Licensing and Control) Order 1961. According to the amendment, the licensing requirements were restricted to jute and jute products of Indian origin only.
This implies that licensing requirements under the earlier order have been completely done away with.
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According to industry sources, this will result in a smoother flow of imports from Bangladesh, which in turn will have an adverse effect on the local jute industry.
The total import of jute bags from Bangladesh during the year 1999-2000 has increased by over 20,000 tonne at 21,178 tonne over the 1998-99 figure. In March alone, 5,590 tonne of jute bags have been imported which constitutes about 8 per cent of the industry's total sacking production in March 2000.
According to estimates, Bangladesh is selling jute bags in the export market at 30 per cent below cost. In addition, it also grants 10 per cent subsidy on export of all categories of jute goods.
S A M Kibria, finance minister of Bangladesh, while presenting the budget for 1999-2000, had said, "The country's jute mills are going to incur a total loss of about Tk 2.25 billion during the current fiscal (1998-99) due to a sharp price gap between the production cost and the export price of jute goods."
The large-scale import of jute bags from Bangladesh has posed to be a threat to the Indian jute industry. The prices of B Twill jute bags remain pegged at around Rs 22,000 per tonne which has widened the gap between the manufacturing cost and prices, resulting in losses to jute mills in India.