The Cabinet Committee on Economic Affairs (CCEA) has approved the Textile Ministry’s recommendation for 60 per cent dilution in the mandatory Jute Packaging Materials Act (JPMA) of 1987 for packing sugar in 2012-13.
The committee has also permitted 10 per cent dilution in JPMA for packing foodgrains. The Act directs all sugar factories to use jute bags for packing sugar to the extent of 100 per cent.
According to Manish Poddar, the committee is likely to issue an order to this effect next week. “I have not seen the papers yet but it looks like they have approved the dilution,” he told Business Line.
The jute industry is estimated to suffer a blow of nearly Rs 1,500 crore if the dilution comes through, he added.
Estimating the total quantity of jute bags required for packing foodgrains and sugar at 14 lakh tonne for the jute year 2012-13, the Ministry of Textiles in its note circulated to the Cabinet said there was a demand-supply gap. Of the 14 lakh tonne jute bags, 10.67 lakh tonnes would be required for packing foodgrains (the projected requirement for kharif season is around 6.34 lakh tonnes and that for the rabi season is around 4.33 lakh tonnes); and 3.33 lakh tonne for packing sugar.
“The stated installed capacity (for sacking) of the jute industry is 15.02 lakh tonne for the year. Assuming 83 per cent capacity utilisation, the stated annual capacity is 12.47 lakh tonne. At present, 10 mills remain closed whose total capacity is around 1.5 lakh tonne, which would bring it down to about 11 lakh tonne,” the note said.
The Textile Ministry added that availability of a reliable and secure market with guaranteed returns has acted as a deterrent for the jute industry, over the years, which has not sufficiently diversified into non-reserved sacking and non-sacking items.
There has been an increase in demand for packaging even while the total production of jute goods has remained stagnant thereby leading mills to divert capacities from non-sacking products such as hessian, to sacking.
Production of raw jute is estimated at 93 lakh bales in 2012-13. With a carryover of 31 lakh bales and import of 8 lakh bales, the total availability stands at 132 lakh bales. Production and availability of raw jute was sufficient to meet the mill requirements this year, Poddar said.
According to a senior official in the jute industry, the dilution would trim down the order book of most jute mills, thereby indirectly affecting workers employed at these mills.
“Around 2.5 lakh workers will suffer as 54 jute mills will be forced to reduce work shifts and enforce job cuts,” he said.