Jute Textile Issue

  • May 2, 2022
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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Jute Textile Issue

Subject: Economy

Section:Monetary policy

Context:

The Office of the Jute Commissioner (JCO)’s September 30 notification mandated that no entity would be allowed to purchase or sell raw jute at a price exceeding ₹6,500 per quintal.

Details:

In simple words, mills are procuring raw jute at prices higher than what they are selling them after processing.

The government has a fixed Minimum Support Price (MSP) for raw jute procurement from farmers, which is ₹4,750 per quintal for the 2022-23 season. However, this reached his mill at ₹7,200 per quintal, that is, ₹700 more than the ₹6,500 per quintal cap for the final product. This high gap between MSP and procurement cost of the mills is due to the fact that they procure raw jute from intermediaries instead of farmers themselves, who charge a high commission.

Concept:

As per the Food and Agriculture Organisation (FAO), India is the largest producer of jute followed by Bangladesh and China. West Bengal, Bihar and Assam account for almost 99% of India’s total production.

In terms of acreage and trade, Bangladesh takes the lead accounting for three-fourth of the global jute exports in comparison to India’s 7%.This can be attributed to the fact that

India lags behind Bangladesh in producing superior quality jute fibre due to:

  • Infrastructural constraints related to retting,
  • Lack of farm mechanisation,
  • Lack of availability of certified seeds and varieties suitable for the country’s agro-climate.
  • Jute acreage competes with crops such as paddy, maize, groundnut, and sesame.
  • The increased availability of synthetic substitutes is further bothering the demand for jute domestically.
  • Lack of export competitiveness-as  Bangladesh provides cash subsidies for varied semi-finished and finished jute products.

Laws:

Government has expanded the scope of mandatory packaging norms under the Jute Packaging Materials (Compulsory Use in Packing Commodities) Act, 1987, also known as the JPM Act. Under it, the Government is required to consider and provide for the compulsory use of jute packaging material in the supply and distribution of certain commodities.

It mandates that 100% production of foodgrains and 20% sugar production must be packaged in jute bags.

Shemes: 

  • Jute-Improved Cultivation and Advanced Retting Exercise: Jute ICARE aims to improve the productivity and quality of raw jute. Under it, the Government is disseminating improved agronomic practices such as line sowing using seed drills, distribution of quality certified seeds, etc.
  • Jute SMART: It is an e-govt initiative which was launched in December 2016 to promote transparency in the jute sector. It provides an integrated platform for procurement of sacking by Government agencies.
  • Definitive Anti-Dumping Duty: It has been imposed on import of jute goods from Bangladesh and Nepal with effect from 5th January 2017 to protect the domestic sector.
  • Incentive Scheme for Acquisition of Plants and Machinery: Launched in 2013, it aims to facilitate modernisation in existing and new jute mills and up- gradation of technology in existing jute mills.
  • Collaboration between the National Jute Board and the National Institute of Design: It aims to support the diversification of the jute sector through a Jute Design Cell.
  • National Jute Board under the Ministry of Textiles, acts as the apex body for the promotion of the products in India and abroad.
  • Jute is included in the Minimum Support Price (MSP) regime of the country.
  • The Jute Commissioner looks after orderly development and promotion of the jute industry in India. He has been discharging both regulatory and developmental functions. This not only includes jute mills, but covers right from raw jute marketing up to the finishing stage of jute goods production including development of machineries and accessories used in jute manufacturing units. The Jute Commissioner exercises regulatory powers under Jute & Jute Textiles Control Order, 2016.Administering of mandatory packaging under the JPM Act, declaration of MSP of jute, declaration of monthly price of B-Twill sacking, informal monitoring of R&D Projects. Regulator for the Jute Sector.

Functions:

  • Monitoring and implementation of JPM (Compulsory use in Packing Commodities) Act, 1987 and Jute & Jute Textiles Control Order 2016.
  • Furnishing technical advice to the Ministry on all policy matters related to the jute sector.
  • Monitoring MSP prices for other grades of raw jute (based on CACP notification for TD-5 variety).
  • Monthly fixation of Govt B-Twill Prices is based upon updated provisional price methodology duly approved by Ministry of Textiles.
  • Coordination between all Govt. / Semi-Govt. and Autonomous bodies in the Jute Sector.
  • Handling the functions taken over by DGS&D since November 2016 for purchase of B.Twill Jute Bags by the State Procurement Agencies (SPAs) to the tune of Rs.6,000 Crores.
economy Jute Textile Issue