Jute industry will benefit if import of raw material is reduced

At a time when a large number of jute mills in the country are facing more problems than one, ranging from reduced orders for food grains packaging to liquidity issues causing inordinate delays in payments to suppliers, several key initiatives announced in the Union Budget 2024, have come as some sort of a relief to them. These initiatives are expected to promote and impact the sector positively. The jute sector is a key economic activity worth Rs. 10,000 crore for West Bengal supporting 2.5 lakh mill workers and over four million farmers in the state. Budget initiatives like increased allocation for Minimum Support Price (MSP) scheme for jute from Rs. 500 crore to Rs. 700 crore is a significant step towards ensuring better price stability and encouraging more farmers to cultivate jute, feels the Indian Jute Mills Association (IJMA). The budget has introduced a Rs. 200 crore incentive fund for industries producing biodegradable and recyclable goods, including jute products. This fund offers subsidies for new manufacturing units and upgrades, which is expected to boost the production capacity and innovation within the sector.

It should be noted that the body of jute suppliers had earlier written to Union minister Giriraj Singh, pointing out that raw material imports from Bangladesh, either directly by mills or through third parties, have adversely impacted Indian industry and farmers. The Jute Balers' Association has raised concerns over the "unregulated import of raw jute" from the neighbouring country and "low orders" for mills have led to a severe payment crisis for domestic raw jute suppliers. Also calling for immediate attention to the situation, the Indian Jute Mills Association had raised concerns over the issue and sought intervention from the central and state governments to tide over the crisis. At least six jute mills have downed shutters already, reflecting the acuteness of the crisis, they pointed out.

Quite interestingly, there has been a bar on the use of imported jute in making bags for food grains packaging but the influx of cheaper and lower grade jute from Bangladesh has exacerbated the crisis, jute industry insiders point out. Significantly, despite a bumper crop in 2023-24, where domestic supply was sufficient, Indian jute mills had to import large quantities of raw jute from Bangladesh. Last month, 73,000 bales or 22 per cent of the total 3,34,000 bales were imported from the neighbouring country.

There is an opening stock of three million bales of raw jute for the jute season, as of July 1 and the new crop is round the corner. These factors together, caused prices to fall below the minimum support price.

Prices of golden fibre fell below Rs. 5,000 per quintal, while the MSP is Rs. 5,335 per quintal for 2024-25 season.

Therefore, while the budget initiatives will certainly go well with the jute industry stakeholders in the country, the industry, per se, will need a severe crackdown on imports of raw jute from Bangladesh. There should be no two opinions on that count.