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Government approves plan to restructure Jute Corporation of India

NEW DELHI, August 19, 2015 : The government has approved a plan to restructure Jute Corporation of India to enhance its efficiency and capacity to handle huge quantity of jute to be procured from growers in the country, Parliament was informed.

"Based on the study done by Deloitte Touche TohmatsuIndia Pvt Ltd, a restructuring plan has been finalised and approved with the objectives of reducing fixed costs and implementing methods of alternative revenue generation. 
"The restructuring plan includes outsourcing of Department Purchase Centre (DPC) activities, rationalisation of manpower and merger/closure of unviable DPCs," Union Textiles Minister Santosh Gangwar said in a written reply to Lok Sabha.

The Jute Corporation of India Limited was set up in 1971 as an official agency by the government with the aim to provide minimum support price (MSP) to jute cultivators and also work as a helping hand in the raw jute sector.

Besides, Gangwar said the government has approved annual grants of Rs 55 crore for 2014-15, Rs 52.11 crore for 2015-16 and Rs 49.38 crore for 2016-17 and Rs 46.78 crore for 2017-18, respectively to Jute Corporation of India for maintaining its infrastructure for conducting MSP operations. Source: PTI

Reservation for jute packaging to stay

KOLKATA, July 9, 2015: Reservation for the jute sector through the packaging order is set to continue in line with a decision taken by the Standing Advisory Committee (SAC) of the Union Textile Ministry. The Ministry also took note of the import of jute bags and fabric from Nepal and Bangladesh, while urging the Commerce Ministry to take concomitant action of this.

The SAC is the recommendatory body in respect of the Jute Packaging Material Act, 1987 (JPMA). This legislation was enacted to protect the traditional jute sector against alternative modes of packaging such as synthetic HDPE bags. Sacking accounts for around 65 per cent of jute usage and initially foodgrains, fertiliser and sugar were reserved for jute packing.

The SAC recommended that for the Jute Year 2015-16, jute packaging is reserved for 90 per cent of production of foodgrains and 20 per cent for sugar may be continued. However, it has been mentioned that these provisions may be relaxed in case of any shortage or disruption in supply.

The minutes of the meeting taken by the SAC, circulated last week, took note of the objection to the JPMA raised by various user-sectors. It was noted that the Act, a short-term protection measure for the jute industry, had been continuing for 27 years.

The age-old jute industry is naturally happy with the order. Of the 59 jute mills in West Bengal, (where the industry is concentrated), 14 are now closed, throwing out of employment over 50,000 workmen. It now remains to be seen how many of them open their gates in anticipation of improved workload.Source:

Jute industry may lose govt support

Kolkata , June 7, 2015: The ailing jute industry is in for fresh trouble if the recommendations of the Jute Commissioner are to be considered seriously.

The Jute Commissioner Subrata Gupta has indicated at lifting of government support for the industry, citing that it has become stagnant, unproductive and inefficient due to over dependence on jute sacks.

Since 1987, the jute industry is enjoying government patronage under Jute Packaging Materials Act (JPMA), 1987. The Act mandates 100 per cent reservation for jute bags for packaging of food grains and sugar by government procurement agencies.

But Gupta has pointed out that despite protection from the enabling legislation, production, consumption and export of jute goods have stagnated for the past three to four years. Also, the industry has not been able to scale up production or export of jute goods. Gupta is likely to voice his opinion at the upcoming meeting of the Standing Advisory Committee on Jute on June 9.

Moreover, the sector's capacity is also impacted and highly stressed on account of non-availability of raw jute in time and labour crunch. The Commissioner indicated the factors are enough to derail and destabilize the sector in future. Jute sector analysts feel, based on the Commissioner's view the government may scrap, dilute or de-reserve JPMA in the coming days. The 12th Planning Commission now, NITI Aayog and the National Fibre Policy 2011 had already recommended phasing out of JPMA.

According to the Commissioner, the industry should not be supported in a way so that it becomes Rs inefficient'. Raghav Gupta, chairman of Indian Jute Mills' Association (IJMA) denied knowledge of any such recommendation by the Jute Commissioner. "The Jute Commissioner has backed our cause for mandatory reservation. He has not made any indication or recommendation for lifting government support to the jute industry."

It may be noted that the jute industry's 10 year CAGR (compounded annual growth rate) is less than 0.1 per cent.Gupta is in favour of an export subsidy to revive the sagging Indian jute sector.

Bangladesh offers 10 per cent export subsidy on jute including 7.5 per cent on export yarns. India exports almost two lakh tonne of jute goods valued at around Rs 2000 crore. In terms of volume and value, Bangladesh is twice India's exports. Source:


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