Pre-Budget expectations of jute sector

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Kolkata: About a week before Union finance minister Nirmala Sitaraman presents the budget, jute industry captains in Bengal urged the Centre to impose a complete ban on the export of raw jute to Bangladesh, arguing that if it is not done it will spell death knell for the domestic industry.

The Indian Jute Mills Association (IJMA), the 136-year-old body of jute mill owners, wrote to Union textile minister Smriti Irani arguing that the raw jute stock is low and “it is unlikely that the domestic industry will not be able to function towards the end of the jute season 2020-21 in totality.”

Apart from the ban, industry captains were looking for incentives from the Centre for modernization of the 150-year old industry, boost for the farmers and export-oriented benefits.

After Prime Minister Narendra Modi’s drive to curb the menace of plastic, bio-degradable and environment-friendly jute has come back into focus.

A major item on the wish list of the industry captains is agriculture incentives.

“Seeds are a crucial input. The entire requirement of 6,000 MT of certified seeds is not being met. Further, the preparation of jute fields is an essential precondition to get more production from jute farming,” said Raghabendra Gupta, chairman of Indian Jute Mills Association (IJMA), the 136-year old body of jute mill owners.

Gupta also said that the Centre should consider allocating a budget of Rs 250 crore for research on decoding of the jute genome, genetically modified HYV seeds and expansion of Jute I-Care programme and another Rs 250 crore for research and development into the commercialisation of the jute viscose fibre process which Bangladesh is pursuing actively with China’s help.

I-Care is a programme for mechanization of jute farming in a farmer friendly way. It was initiated by National Jute Board in association with Central Research Institute of Jute and Allied Fibres.

“Scientific agronomic practices are still to reach raw jute farmers. The Jute I-CARE programme needs to be extensively adopted across all jute growing areas,” emphasized Debasish Roy, director general, IJMA.

Former chairman of IJMA, Sanjay Kajaria, who owns four jute mills in Bengal said that their hands are full of orders. “Availability of quality jute should be a focus area apart from adequate storage facilities,” he said.

Another element on the jute wish list is that the government needs to focus attention on product diversification and manufacture of non-conventional products that are in demand in domestic and world markets.

The jute owners’ body has also used Bangladesh as a benchmark while seeking subsidies for export.

“Bangladesh doles out cash subsidies of 7-12% of export value on conventional products and 20% on diversified products. The Merchandise Exports from India Scheme (MEIS) Scheme was scheduled to be withdrawn after December 31, 2020 and the Remission of Duties or Taxes on Export Products Scheme (RoDTEP) is scheduled to be applicable for the entire textile industry. It is requested that the RoDTEP for the jute sector is adequately funded to incentivise exporters and reimburse all embedded taxes and levies,” said Gupta.

He also pointed out that the subsidy in Bangladesh coupled with availability of cheaper labour and cheaper power make Indian jute goods uncompetitive for exports. Gupta’s another area of concern is the “intermittent functioning” of the Incentive Scheme for Acquisition of Plants and Machinery.

“The intermittent functioning is discouraging. Such staggered implementation may lead to the scheme jeopardizing the process of modernisation and diversification in the jute industry,” said the IJMA chairman.

“The scheme needs to be continued for the next three financial years with a much higher budget outlay of Rs 150 crores,” added Gupta.

Natural, bio-degradable and eco-friendly, jute is the second most important fibre of India after cotton. The country accounts for 62 per cent of the world’s jute production. Bengal, Assam and Bihar account for 98 per cent of the raw jute production of the country.

According to 2018 data, there are 97 composite jute mills in the country of which 71 are located in West Bengal. Andhra Pradesh has 12, Uttar Pradesh, Bihar and Odisha have three each, Assam and Chhattisgarh have two while Tripura has one jute mill.

The Jute industry contributes in excess of Rs. 12,000 crore to the rural economy of India by purchase of raw jute and payment of wages. Its share in the industrial output of the State of West Bengal is more than 6%.

In 2018-19 exports by the jute industry was valued at about Rs 2,300 crore. The industry has made investments towards modernization to the tune of Rs 1,000 crore in the past three financial years.

The policy that the government is following right now is that all foodgrains and 20% of sugar should be packed in jute bags.

Under the Jute Packaging Materials Act 1987, the Union government specifies the different commodities and the extent to which they should be packaged in gunny bags.

The legislation was enacted in 1987 to protect the jute industry from the aggression of plastic packaging. The decision to package 100 per cent of the foodgrains in jute bags was taken in October 2020.

Old processing technology and lack of product diversification have long been reckoned as the two shortcomings plaguing the jute industry.