The Cabinet Committee on Economic Affairs has approved the mandatory packaging of 90 per cent of foodgrains produced in India as well as 20 per cent of sugar in jute bags for the 2014-15 crop season, which started in July 2014.

“This preserves the position as in the past and helps the jute sector. There have been many concerns that the reservation for jute packaging would get reduced,” an official statement released after the meeting said.

Almost all the foodgrains procured by state-run Food Corporation of India is packaged in jute bags.

West Bengal produces 80 per cent of India’s total annual jute production of 11-12 million bales (one bale is 180 kg) and is home to almost all the country’s jute mills.

The state, which is slated for elections in mid-2016, is critical for the Bharatiya Janata Party’s foray into eastern India.

The Cabinet, however, said if the jute mills were not able to provide bags according to the requirement despite making a full advance indent, then a relaxation of 10 per cent can be granted by the Department of Food in consultation with the textiles ministry.

This relaxation can be further extended up to 30 per cent in the event of any disruption in supply from jute mills.

Sugar meant for export and bulk packaging in excess of 100 kg have also been exempted from this order. The CCEA okayed a financial support of Rs 55 crore for the Jute Corporation of India (JCI) in order to offset the losses it suffered on account of undertaking minimum support price (MSP) operations.

JCI is the price-support agency of the Centre for jute to protect the interest of growers. It procures raw jute under the MSP fixed from time to time; it also stabilises the raw jute market for the benefit of jute farmers and the jute economy as a whole.