The Indian Jute Mills Association (IJMA) has said that the reduction in procurement of jute bags for sugar for the upcoming season will “adversely impact” the industry.
According to the new provisions, 20 per cent of sugar will have to be mandatorily packed in jute bags.
Currently, it is mandatory to pack 40 per cent of sugar in jute bags.
As a result, sales from the 80-odd jute mills across the country is expected to drop substantially, S. Majumdar, Director General, IJMA, said.
“There has been a substantial decline in orders from Government agencies for jute bags. Further reduction in procurement will hit the industry badly,” he told reporters during a press conference here.
for different agencies The Directorate-General of Supplies and Disposals (DGS&D), under the Ministry of Commerce and Industry, purchases jute bags (having 50 kg capacity) for different Central agencies.
Currently, the Centre procures two types of jute bags – one for foodgrains and another for sugar. In case of foodgrains, it procures 90 per cent of the total production.
Full procurement According to IJMA, the Centre should restore 100 per cent procurement of jute bags for foodgrains and sugar.
While, this was the practice till 2010-11, changes were initiated 2011-12 onwards.
In 2011-12, the mandatory procurement across both categories was reduced.
In 2012-13, the procurement for sugar only was reduced.
However, Subrata Gupta, Jute Commissioner, said that the industry has been witnessing a shortage in supply of jute bags in the last couple of years.
“Since supply was short and total requirement was not met on earlier occasions, the Centre decided to reduce procurement (from jute bag makers),” he said.
According to the Jute Commissioner, lack of competitiveness among jute mills due to higher dependency on Government for mandatory procurement is impacting the industry.
Commitment-based scheme to ensure adequate supply
The Union Ministry of Textiles expects to ensure ample supply of jute bags through a commitment-based procurement scheme.
Demand from various government agencies for jute bags to pack foodgrains went up by more than 40 per cent to nearly 38 lakh bales in 2012-13 against 27 lakh bales during the year-ago period.
However, 80-odd jute mills put together actually supplied close to 27 lakh bales of jute bags in 2012-13.
According to Subrata Gupta, Jute Commissioner, going by the scheme initiated in May, an agreement is signed between the Office of the Jute Commissioner and the mill owner seeking a “commitment of supply” of jute bags for a stipulated period. “Since the country has been seeing increase in production of foodgrains, there is a need to ensure adequate supply of jute bags,” Gupta told Business Line in an interview.
He further explained the total requirement for procurement by government agencies is being distributed among jute mills “based on their capacity and willingness”.
production capacity Previously, the mills had to meet the government’s demand for jute bags based only on their production capacity, and irrespective of their willingness to sell it to the government agencies.
According to the Jute Commissioner, there has been shortage of supply due to discretionary sales after a drop in government rates for jute bags on many occasions.
While the scheme offers more freedom to the mill owners, it also reduces the risk of short supply for the government agencies since there are stringent norms for defaulters.
penalty for defaulters So far, it has been implemented across 63 different jute mills in the country, Gupta said.
“Under this scheme, any jute mill that defaults on its commitment may be barred from supplying for two years,” he said.
Anirudh Kajaria of Hastings Jute Mill in West Bengal feels such a scheme will ultimately stop mill owners from defaulting supply.