The Hindu Business Line : National Jute Policy: Revitalising the sector's fibre

The jute industry has been beset by several problems, including competition from the synthetics sector, high labour costs, obsolete machinery and operational diseconomies, all of which have led to endemic sickness. In this background, the National Jute Policy, unveiled by the Textile Minister recently, and the proposed restructuring of the Jute Corporation of India are welcome moves that will give the sector a fresh lease of life, says G. Srinivasan.

Will the new policy set the jute sector rolling?

THE golden fibre appears to be getting a stronger hue, with the United Progressive Alliance (UPA) Government going all out to revive the fortunes of the jute sector. This is reflected in the National Jute Policy unveiled by the Textile Minister recently, followed up by the endorsement of the financial and functional restructuring of the 35-year-old Jute Corporation of India (JCI) by the Cabinet Committee on Economic Affairs (CCEA).

For Members of Parliament from West Bengal and other jute-growing States such as Orissa and Bihar, and a few in the North-East, the woes of the jute industry have been a constant issue deserving a proper response from the Centre.

With the Jute Corporation of India completing 35 years of service to the jute growers in April 2005, itcould not be wound up or jettisoned for lack of support. Hence, the CCEA on April 27 decided to write off its entire outstanding loan of Rs 195.68 crore and an interest component of Rs 313.97 crore on these loans (as on end-March 31, 2003) against the accumulated losses (Rs 144.17 crore), subsidy receivable (Rs 301.88 crore) and the JCI's claim (Rs 64.13 crore) on the National Jute Manufacturers Corporation (NJMC).

The Finance Ministry's concern over the write-off of PSU debt and its reluctance to prop up unsustainable market intervention operations of commodities such as jute are not lost on the observers of the fiscal scene, given the public posture of the Finance Minister, Mr P. Chidambaram, and his refrain on the virtues of fiscal rectitude.

Observers of the textile scene recall that the restructuring of and the turnaround strategy devised for the sick mills of the National Textile Corporation (NTC) remained in a limbo since 1993, and successive governments could not find a durable solution to this public sector giant. Presumably, political pragmatism for once took precedence over fiscal concerns in the case of the jute sector. That is why the CCEA decision in the official statement proclaimed "the financial restructuring of JCI through cleaning of its balance-sheet and further strengthening its financial footing so that it can play an effective role in maintaining minimum support price (MSP) and in stabilising prices through large-scale buffer stock operations."

The Jute Manufacturers Development Council's Incentive Scheme for the Modernisation of Jute Industry has been in vogue since July 8, 2002. Under this scheme, all eligible jute mills are entitled to get a subsidy for the procurement of eligible items of machinery/equipment/ancillary items for modernisation.

Machinery can be purchased from approved vendors using loans from financial institutions. A Parliamentary Standing Committee on Labour, analysing the demands for grants of the Ministry of Textiles in its report released in March, said that it has been informed of machinery worth Rs 52.88 crore having been installed in the jute sector under the Incentive Scheme.

As this scheme is in place till July, the Textile Ministry told the House panel that it would consider extending the same beyond July 2005 "for improving significantly productivity, quality of products and making the jute industry internationally competitive".

Be that as it may, the Textile Ministry, in a notification on September 28, 2004, stipulated that foodgrains and sugar are to be compulsorily packed in jute bags to the extent of 100 per cent and 90 per cent respectively of their total production during the current jute year 2004-05, ending June 30, 2005.

This is a reversal of the decision of the previous NDA government to introduce progressive dilution of the Jute Packaging Materials (Compulsory Use in Packing Commodities) Act 1987 though the Inter-Ministerial Committee on the basis of the recommendation of the Standing Advisory Committee (SAC).

Interestingly, a meeting with 45 West Bengal MPs was held at the residence of the Defence Minister, Mr Pranab Mukherjee, in June 2004, before the issue of notification. The House panel, headed by Mr P. K. Vasudevan Nair, spelt out its apprehensions that any such dilution might adversely affect the jute industry and the interests of the workers.

Going by the apprehensions of the House panel, one can surmise that when the chips are down, the Government would not hesitate to renew the Compulsory Packaging Order beyond June 30, 2005 for the next jute year too, lest any hasty or peremptory termination of the reservation of business for jute sector rubs coalition partners the wrong way.

The concern and care being lavished on jute sector are understandable; the sector holds a key position in the scheme of things in the Eastern region. It provides direct employment to about 2.76 lakh workers now and supports the livelihood of around 40 lakh farm families producing jute and mesta, and around 1.4 lakh people engaged in tertiary sector and allied activities.

In the global map, India is by far the major producer of both raw jute and jute products. Of the total 78 jute mills, 61 are in West Bengal, three each in Bihar and Uttar Pradesh, seven in Andhra Pradesh and one each in Assam, Orissa, Tripura and Madhya Pradesh. India exported jute goods worth $153.7 during the first 11 months of 2004-05, against $159 million in the corresponding months of 2003-04.

The jute industry is undoubtedly faces several constraints, including competition from the synthetics sector, high labour costs, obsolete machinery and operational diseconomies, all of which have led to endemic sickness in the industry.

That is why the 2005 National Jute Policy (NJP) proclaimed that the "approach for the jute sector will be directed towards reviving the jute economy through supportive measures covering research and development, technology upgradation, the creation of infrastructure for storage and marketing of raw jute and products and market development activities for jute and diversified jute products".

Lest there are any misgivings about the intentions of the Government, the NJP reassuringly notes that "the Government will ensure a reasonable market for jute products by continuing the ongoing policy of reserving foodgrains and sugar to be packed in packaging material made from jute. The quantum of reservation will be as approved by the Government from time to time."

A particularly noteworthy aspect of the policy is that to rectify the systemic ills of lack of coordination among the several jute-related organisations and to synchronise and synergise the integrated development of the jute sector, a National Jute Board is to be set up.

This Board will subsume, merge and integrate the functions of various institutions currently operating in the jute sector and also explore the possibility of establishing a National Institute of Natural Fibres to harmonise the development and promotional activities relating to all natural fibres.

On the marketing front, the Policy states that the objectives of the effort would be to improve the ratio of domestic consumption to exports from the current 82:18 per cent to 65:35 per cent in the next ten years. The objective is to step up exports to Rs 5,000 crore by 2010 from the current Rs 1,000 crore.

It is heartening to note the establishment of professional marketing wings in the organised jute sector and to identify tariff and non-tariff barriers against the export of jute products from India. A brand equity fund, exclusively for jute and jute products is also to be set up.

It is also proposed to ensure diversified and composite jute products and jute handicrafts, besides setting up of a full-fledged Design and Development Centre and dedicated retail outlets in public-private partnership for diversified jute products in all towns and cities with a population of more than 5 lakhs.

All told, the measures are well in consonance with the UPA Government's National Common Minimum Programme (NCMP), which aims to restore the glory of traditional products such as jute with tangible gains for employment and livelihood to millions of farmers.

One can only hope that the Government displays a similar approach to sunset industries with enormous livelihood concerns such as the plantation sector, including tea, coffee, rubber, spices, aquaculture and sericulture, that are threatened by cheaper imports in the quantitative restrictions (QR) free regime India has ushered in.

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