The Hindu Business Line : Jute struggles to survive

If the East was the centre-stage for the commencement of industrialisation in this country, then the jute sector can claim to have played a significant role. The relevance of this sector might be eroding every day but no one can deny the fact that the industry gave India a global leadership position from the end of the 19th century to the middle of the 20th century.

The first jute mill in India was set up in 1854 at Rishra in the Hooghly district of West Bengal. It was a joint venture between Mr George Auckland, a British, and Mr Babu Bysumber Sen, a Bengali gentleman. The second jute mill, despite the political unrest in the country due to the Sepoy Mutiny, was set up in 1857 at Baranagore, only a few kilometres away from Barrackpore. The next few decades witnessed the growth and subsequent maturity of the industry.

How it all began

The beginning of the 20th century saw British capital moving to several countries, including India. Jute sector was a major beneficiary and the number of units increased to 44, of which only one was outside Bengal. In a thriving industry, M&A is a norm and so was the case here too. By 1909, the number of mills dropped to 39 but the total capacity jumped to 38,685 looms. About 1.84 lakh workers got employment under 450 European managers.

While the jute mills were located around Kolkata, the bulk of the raw jute was cultivated in the eastern part of Bengal. So, post-independence, the jute industry faced a major raw material crisis because East Pakistan, now Bangladesh, almost stopped exporting raw jute by imposing huge tariff barriers. Subsequently, several laudable steps were taken by the then Union Government, which soon made India the largest producerof the golden fibre.

The jute sector's trouble came in the seventies, as the usage of synthetics in India grew at a rapid pace. From a mere threat, it has now cannibalised the sector. Jute is no longer a preferred packaging choice for the cement and fertiliser manufacturers.

Sugar and foodgrain producers are too eager to opt for synthetic packing bags. On the other hand, jute mill owners were fighting for survival.High production cost, unruly manpower, old technology, lack of innovation, low capital investment and falling market share has pushed the sector to a corner.

A bane

The Jute Packaging Materials (Compulsory Use in Packing Commodities) Act, 1987 was enacted by Parliament as a short-term panacea for the sector but it became a bane rather than a boon. This artificial support robbed the entrepreneurs of their enterprise, the workers of their die-hard spirit and the users of a choice. The Centre is still committed to its law, as its agencies keep on buying jute sackings for packaging food grains.

In this scenario, the financial health of the sector was worst affected. Out of the 76 jute mills, 38 are in the BIFR (Board for Industrial and Financial Reconstruction) net. The industry has earned the unfortunate tag of the biggest defaulter of workers' statutory payments. The Union Ministry of Textiles is also trying hard to close down two out of the six mills of National Jute Manufactures Development Corporation Ltd, a central public sector unit.

Despite the overwhelming gloom, it would be unfair to state that jute industry is all set to die, because demand for natural fibre might fall but will not taper off.

Moreover, newer usages of jute as geo-textile material and jute composite boards (as a substitute of wood) are increasing. Hydrocarbon-free food grade jute bags have already created a niche market among the global cocoa and coffee producers.

Jute exports have been hovering around the Rs 1,000-crore mark for a few years and a target of Rs 5,000 crore has been fixed for the 2010.

The UPA government, because of the Left support, has been working hard for this sector. Several mini-technological missions have been conceptualised and work has just started.

Jute Manufactures Development Council and National Centre for Jute Diversification have been merged to create the National Jute Board. From now on, it will be nodal governmental agency for several promotional activities of the sector.

The biggest advantage of the sector is that it deals with a nature-friendly product. As a result, the potential of the industry will continue to grow because ecological consciousness among the population is increasing.

Industry leaders will have to cash in on it but experts feel that the industry may not survive in its existing form and structure. Integrated jute mills (where raw jute comes in at one end and jute sackings are supplied out from the other) will pave way for slick and job-oriented units.