The Union government has slapped an excise duty of 10% on jute products that constitute about 80% of the Rs 6,000 crore industry and threatens to cripple the fate of 2.5 lakh workers.
"This 10% central excise duty on the jute sector will bring great trouble to the industry and increase the cost of jute packaging products," industry veteran Sanjay Kajaria said.
He believes this could be an error of part of the ministry as jute comes under textiles and branded garments on which excise duty has already been levied.
All export orders have been stalled because of the notification, Kajaria informed.
There was no mention in the Union Budget about any such step, but a government notification dated March 24 levied 10% excise duty on branded and non-branded jute products meant for domestic consumption or export under the HS code 6305 including hessian, sacking and jute soil savers, official sources told PTI.
The government in a notification dated March 1, had asked for 10% duty to be imposed on branded jute products.
Thereafter, a letter by the jute commissioner followed stating that the branding in jute items was required for various reasons of 'marking' and thus the levy should be withdrawn.
"But, another notification dated March 24 clarified that duty would be levied on all branded and non-branded jute products," the sources said.
Mill owners expressed concern over inadequate action taken by the Indian Jute Mills Association (JMA) in this regard.
JMA chairman M Poddar, however, said a representation from the industry body has gone to various departments of the ministry in Delhi.
The jute industry is also under fire from the Union Ministry for Food and Public Distribution, where some jute mill owners based out of West Bengal had supplied inferior quality jute bags.
The jute bags were to be used for packaging of food grains in Punjab.
