JUTE, THE GOLDEN FIBRE

PRESENT STATUS AND FUTURE OF INDIAN JUTE

SECTOR
J.T.Pratihar*
The jute sector has been playing an important role in the economy of the country in general
and the eastern region in particular. About 4 million farmers, most of them small and
marginal, are engaged in the cultivation of Jute and Mesta and about 2.60 lakh workers are
employed in the jute industry.
However, the jute sector has been beset with several problems, including poor quality of raw
jute, low productivity, competition from the synthetics, high labour costs, repeated industrial
unrest, obsolete machinery, stagnating exports, all of which have led to endemic sickness in
the jute industry. To bring back the golden days of the golden fibre, introduction of the
National Jute Policy, 2005 has been a welcome move that is expected to give the sector a
fresh lease of life.
The Policy calls for the evolution of a new commodity development strategy to focus on
positioning jute as superior and environmental friendly material enhance the productivity of
raw jute, increase exports through innovative marketing, and better working conditions of the
workers engaged in the jute industry. The Government aims to increase the exports of jute
and jute products to nearly Rs.5000 Crores by 2010 from the current level of almost of
Rs.1000 Crores. The details of the Policy have been mentioned later in this article.
It is against this backdrop of renewed thrust towards the golden fibre, the article looks at
some of the important issues and problems facing the jute industry today. The article has
been subdivided into six parts. In Part-I, the present status of the jute industry has been
discussed. Part-II delves into comparative Position of India vis--vis other producing
countries in raw jute and jute products in the global trade. Part-III describes the importance
of Jute and Mesta/ Kenaf in the National Economy while Part-IV takes stock of the
Production, Domestic Consumption and Exports of Jute Goods. Part- V examines the
existing Incentive Schemes provided by Government of India to Jute Industry. Part-VI
concludes the article after proposing a few additional measures that may be taken for the
improvement of Jute Industry in the light of some of the existing schemes.

PART 1 - RELEVANCE OF JUTE INDUSTRY AND ITS PRESENT STATUS

1.1 Jute industry plays an important role in the national economy of the country in terms of
i) employment generation ii) contribution to the national exchequer by way of collection of
duties and value-addition. Cultivation of jute and mesta supports livelihood of about 40 lakh
farm families spread over West Bengal, Bihar, Orissa, Assam, Andhra Pradesh, Tripura,
Meghalaya and Uttar Pradesh. Jute industry provides direct employment to about 2.60 lakh
jute mill workers and indirectly generates additional employment of about 1.5 lakh people
engaged in R&D work, manufacturing in machinery and spare parts, trade and other allied

Director, DGCI&S

activities in service sector. Total number of composite jute mills, at present, stands at 77 and
State-wise distribution is W.Bengal- 60, Andhra Pradesh 7, Bihar 3, U.P. 3, Assam
1, Orissa- 1, Chhattishgarh -1, Tripura 1. Apart from the aforesaid jute mills, there exist 8
manufacturing units working as 100% EOUs in jute sector for production of high quality
yarn/twine, jute decorative, fine hessian cloth, food grade jute bags and blended fabrics.
Thanks to various incentive schemes launched by the Government of India juxtaposed with
vigorous campaigns through participation/ organization of trade fairs, workshops, seminars
within the country and outside the country by market promotional Govt. bodies, jute-related
activities have disseminated encouragingly not only in the jute growing States but also in the
non-jute growing States of the country. A Study was undertaken by the WEBCON in the
year 2005-06 under the sponsorship of Jute Manufactures Development Council, a
statutory body of the Ministry of Textiles, Govt. of India and on the basis of that study, JMDC
published a Report titled as National Directory Producers and Exporters of Jute
Diversified Products 2006. As per the study, number of Jute Diversified Product units
throughout the country has increased from 696 at the end of 1999-2000 to 1320 as on
31.05.2005 with W. Bengal having an encouraging number of JDP units at 673, rise in
number of direct employment in decentralized sector from 88,377 in the year 2001-02 to
1,42,338 during 2003-04 year and export share of JDPs increased from 15% in the year
2000-01 to 26% in 2005-06.
1.2 In the world of natural fibres, cotton occupies the leading position and jute comes next.
Besides its technical advantages like strength and length of the fibre, good moisture
absorption, dye-ability, good heat and sound insulation properties, the strength of jute
primarily lies on its biodegradability, renew ability, eco-friendliness, However, jute has some
disadvantages, like its coarseness, stiffness, high combustibility, yellowing and browning
under sunlight, poor crease recovery, poor durability, poor wash-ability, etc. Considering all
these advantages and disadvantages of jute, jute products still are predominantly used for
packaging and wrapping purposes. However, Govt. of India with assistance of UNDP
programmes and active cooperation and support from different textiles R&D institutions is
vigorously striving to bring about a discernible qualitative improvement in jute products and
also encourage diverse uses of jute, viz. jute geo-textiles, decorative fabrics, upholsteries,
furnishing fabrics, woven carpets, soft luggage, composites, paper pulp, handicraft and
handloom items, etc. Attempts are also being made to further diversify its end-uses by
blending/ unionizing jute with other textile materials to enhance its consumer appeal and
acceptability.
1.3 A technical assessment of Indias Jute mills: Although, India is a major producer of
jute products in the world, not much progress has been made in the manufacturing process
in jute industry which has taken place in other areas of textile industry, particularly in cotton
and man-made sectors. Slow pace of modernization in jute industry has been due to
insufficient availability of new generation high productive machines for processing jute. As a
result, Govt. policy towards modernization in case of jute industry has given emphasis on
two aspects viz.i) thorough renovation of old machinery and (ii) replacement of very old
machines with similar type of new machines With a view to have an idea of the extent of
modernization in jute industry, Govt. of India appointed Indian Jute Industries Research
Association (IJIRA), a premier jute research institute, to undertake a Technological Audit
of jute mills A draft report on Technical Assessment of Jute Mills by IJIRA submitted to the
Jute Commissioner, capacity utilization of 50 private jute mills mainly located in West Bengal
were covered. As per the report, number of jute mills achieving capacity utilization in the
range of 90% and above during the year 2005 stood at 33, number in the range of 80% but
below 90% at 14, number in the range of 70% but below 80% at 2 and one jute mill with

capacity utilization at 66.14%. In this assessment analysis, three major yard sticks were
used viz. (i) Machine Productivity Ratio (MPR), (ii) Machine Efficiency Index (MEI) and (iii)
Machine Utilization Index (MUI). For grading the Mills, Machine Utilization Index has been
used; whereas for assessing the Weaving performance, Machine Efficiency Index has been
used. As per findings of 54 mills by IJIRA, MPR (Machine Productivity Ratio) of 49 jute mills
stood higher of 85% and above and 5 mills are in the range of 75% to 85%. But in respect of
MUI (Machine Utilization Index), the picture is rather discouraging. MRP has been derived
with respect to standard production norms. Low MUI indicates low levels of machinery
maintenance, poor rates of replacement of old machinery and also bad management of
production at manufacturing level and less placement of qualified jute technologists at the
floor level.
1.4 As per the financial analysis made by the Office of Jute Commissioner, Govt. of India,
of 74 jute mills for period from 2001-2002 to 2004-05, on the basis of Annual reports of such
jute mills, private jute mills, excluding Govt. mills, earned profits before tax of Rs.1,055.14
lakh in the year 2002-03, Rs.3,637.05 lakh in 2003-04 and Rs.13,837.91 lakh in 2004-05,
turnover of 74 jute mills during the years 2003-04 and 2004-05 were Rs.524,725.91 lakh
and Rs.584,237.72 lakh respectively and percentage of profit to sales stood at 7.83% and
5.64% respectively during the same financial years. In case of capital formation during the
period from 2002-03 to 2004-05, net block of 74 jute mills showed a falling trend and they
were at Rs.169,698.16 lakh in 2002-03, Rs.160,025.39 lakh in 2003-04 and Rs.154,834.65
lakh in 2004-05.

PART II: COMPARATIVE POSITION OF INDIA VIS--VIS OTHER PRODUCING

COUNTRIES IN RAW JUTE & JUTE PRODUCTS IN THE GLOBAL TRADE
2.1 In the global context, India is the major producer of jute, kenaf (mesta) and allied fibres,
prominent processor of such natural fibres and also major consumer of jute products. As per
FAOs statistical publication of June, 2006, out of the world production of jute, kenaf and
other allied fibres of 2407.0 thousand M.T. in the jute year 2004-05, Indias production stood
at 1350.0 thousand M.T, accounting for 56.1% of the world production. As against total mill
consumption of such fibres at 2215.6 thousand M.T of the major manufacturing countries,
Indian consumption was at 1630.6 thousand M.T in the year 2004-05 which constituted
about 73.3% of total consumption. During the calendar year 2004, world apparent
production made out of jute, kenaf and allied fibres was derived at 2702.0 thousand M.T.
while Indias production of jute goods was at 1545.4 thousand M.T., constituting about
57.2% of the world production. In the world trade of products of jute, kenaf and allied fibres,
a fluctuating trend was witnessed during the years 1999 to 2004 in both export and import.
World exports of products of jute, kenaf and allied fibres, which stood at 689.9 thousand
M.T. in 1999 slipped down to 647.9 thousand M.T in year 2001; however, thereafter a
recovery phase set in to rise to the level of 737.4 thousand M.T in 2004. Imports of world
products of jute, kenaf and allied fibres registered a similar trend during the period from the
years 1999 to 2004. World imports declined from 628.4 thousand M.T in the year 1999 to
558.9 thousand M.T in 2001. Thereafter, recording a recovery, world imports of finished
products rose to 622.0 thousand M.T in 2004. Indian exports of jute goods which was at
255.1 thousand M.T in year 2000-01 fell down to 148.2 thousand M.T in 2001-02 but
recovered thereafter to ascend to the level of 321.8 thousand M.T in 2004-05. Comparative
positions of major jute, kenaf (mesta) growing countries may be seen from the table 1.

Table -1 : World Production of Jute, Kenaf and other Allied Fibres

----------------(Figures in thousand M.T)---------------Total Jute, Kenaf 2000-01
2001-02
2002- 03
2003 - 04 2004-05
2005-06
& Allied Fibres
(July- June)
World
2698.26
3144.90
3085.41
2853.00
2407.02
2825.88
Bangladesh
814.70
924.70
793.30
963.00
810.00
990.00
China
126.00
136.00
130.00
99.78
86.92
90.00
India
1620.00
1890.00
1980.00
1620.00
1350.00
1575.00
(60.04)
(60.1)
(64.17)
(56.78)
(56.08)
(55.73)
Myanmar
27.80
50.80
Nepal
15.18
16.40
Thailand
29.69
56.00
VietNam
11.30
14.60
Source : FAO Statistics, June 2006

41.90
17.00
46.37
20.50

42.00
17.04
41.33
12.50

33.99
16.89
35.66
14.20

43.26
17.66
36.00
15.00

2.2 It may be seen from the table 1 that the world production of jute, kenaf and allied fibres
showed an erratic trend during the period 2000-01 to 2005-06(July-June season). Although,
India continued to be the major producer of such natural fibres, its share in the world
production slipped down from 60.04% in 2000-01 to 55.73% in the year 2005-06..
Table -2 : Mill Consumption of Jute, Kenaf and Allied Fibres
Mill Cons.of five
major countries
Bangladesh

-------------( Fig. in thousand M.T)---------2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

490.1

520.4

555.7

523.8

522.0

522.0

1627.6
(74.23)

1656.7
(73.67)

1581.9
(68.5)

1568.2
(72.45)

1630.6
(73.26)

1665.0
(73.67)

Myanmar

16.0

12.8

13.0

13.5

14.0

14.0

Nepal

15.0

15.0

15.0

15.0

15.0

15.0

Thailand

44.0

44.0

44.0

44.0

44.0

44.0

2192.7

2248.9

2309.6

2164.5

2225.6

2260.0

India

Total

Source: FAO Statistics, June, 2006

2.3 It is evident from the table No.2 that India continues to be the major consumer in jute,
kenaf and allied fibres among the major producing countries and its share in consumption of
such natural fibres veers around above 70%.
Table -3 : World Exports of products of Jute, Kenaf and Allied Fibres
2000

---------------(Fig in thousand M.T)---------------2001

2002
2003

2004

World

651.6

649.9

680.3

724.4

740.2

Bangladesh

378.0

409.2

400.6

391.9

439.4

11.5

11.2

11.1

15.9

16.1

177.8
(27.3)
10.0

151.0
(23.23)
10.0

189.9
(27.9)
10.0

243.8
(33.65)
10.0

193.0
(26.1)
13.0

7.2

8.3

7.3

7.9

6.3

China
India
Nepal
Thailand

Figures in the bracket show Indias % share to World Exports.

Source : FAO Statistics, June 2006
2.4 However, in case of exports of jute products, as may be seen from the table
No. 3, Bangladesh occupied the leading position with its share remaining around 58% and
India continued to be residual seller. In fact, in world trade of jute products, Indias main
competitor is Bangladesh.

Table -4 : World Imports of Jute, Kenaf and Allied Fibres:

---------------(Fig. in thousand M.T)---------------------2000
2001
2002
2003
World

2004

315.9

284.1

341.0

386.9

361.6

87.3
(27.63)

69.3
(24.39)

110.4 )
(32.37)

144.2
(37.27)

62.3
(17.23)

84.2

78.0

90.9

89.2

129.4

5.7

7.2

41.1

34.3

65.1

Thailand

42.6

38.0

15.0

36.7

17.6

Cote dIvoire

19.0

12.1

24.2

15.2

16.0

Brazil

12.1

11.0

4.0

13.8

19.4

India
Pakistan
China

Fig. in bracket show Indias % share in world Imports.

Source : FAO Statistics, June 2006

2.5 The above table shows that despite being major producer of jute, kenaf and allied
fibres, India is also an important importer, next to Pakistan. Increased demand for import of
raw jute has mainly been for quality fibres mainly from Bangladesh used for production of
value-added diversified jute products.

PART- III : JUTE AND MESTA IN THE NATIONAL ECONOMY

3.1 Indian raw jute including mesta is considered to be an important cash crop by the jute
growers. Such crop is mainly cultivated by small and marginal farmers who have little
holding power and is cultivated in less fertile land. Weather plays a crucial role since major
part of jute and mesta growing areas are rain-fed. Furthermore, the crop is grown during the
summer season. With variation in the behaviour of weather, jute and mesta crop is
potentially influenced by such weather vagaries. Instability in raw jute production dovetailed
with little holding capacity of farmers has given rise to erratic price movement in raw jute
both during intra-season and inter-seasons. To ensure a reasonable return to the jute
growers and stability in supply of such fibres to the processing jute mills, Government of
India, on the basis of recommendation of Commission for Agricultural Costs and Prices,
declares every year Minimum Support Price of the basic variety of TD-5 grade of jute at exAssam basis. On the basis of MSP prices, the Jute Commissioner fixes every jute year the
different grade-wise and different region- wise minimum support prices. Minimum support
prices grade-wise and region-wise are given wide publicity through news-papers, radios,
televisions and other dissemination media. Government of India through Jute Corporation of
India, an undertaking under the administrative control of the Ministry of Textiles, carries out
Minimum Support Price operation as and when ruling prices touch or slide below that
support levels. To facilitate as also sustain the support price operation, every year Govt. of
India grant credit guarantee to JCI with the nationalized banks to the tune of Rs.100.00
crores. These apart, to smoothen Price Support Operation, Government of India has linked
purchase of jute sacking bags from mills with lifting of raw jute stocks from Jute Corporation
of India. This step has contributed a lot to the Corporation to dispose its inventory of raw jute
and thereby facilitated MSP operation without any interruption. Government of India also
provide subsidy to the Corporation for MSP operation in jute and mesta.. To encourage
scientific farming and quality improvement in raw jute, State Governments of jute growing
areas through micro mode scheme provide a number of incentives to the jute and mesta
growers.
Trends in Acreage under Raw Jute and Procurement by Jute Corporation of India for the
period from 2000-01 to 2005-06 may be seen from table No. 5.
Table - 5 : Acreage of Raw Jute

Area in 000 Hectares

Period
Jute
Mesta Jute&Mesta
(July-June)
Area
Area
Area
2000-01
828
190
1018
2001-02
873
171
1036
2002-03
865
171
1035
2003-04
849
153
1002
2004-05
774
142
916
2005-06
771
160
931
Source : Ministry of Agriculture, Govt. of India

Table 6 : State-wise Procurement of Raw Jute

States

2000-01

2001-02

2002-03

Period: July-June
Quantity:000 Quintal
2003-04

2004-05

2005-06

W. Bengal

498.6

286.2

1585.8

1335.6

561.6

187.2

Assam

203.4

86.4

288.0

207.0

18.0

45.0

Meghalaya

--

--

12.6

10.8

1.08

--

Bihar

127.8

70.2

318.6

356.4

46.8

19.8

Orissa

1.8

--

34.2

21.6

1.8

--

Uttar
Pradesh

--

--

--

--

--

--

Andhra
Pradesh

1.8

--

120.6

73.8

Neg.

--

Tripura

--

--

5.4

7.2

4.00

1.4

Total

833.4

442.8

2365.2

2012.4

633.6

253.4

Source : Jute Corporation of India, Kolkata

PART - IV: PRODUCTION, DOMESTIC CONSUMPTION AND EXPORTS OF

JUTE GOODS
4.1 It has already been pointed out that jute goods as a packaging material has been facing
fierce competition both in the domestic and international markets from cheaper synthetic
substitutes and introduction of bulk handling devices. In the domestic market, demand for
packaging of cement, fertilizer and salt and other commodities has over the period lost to
synthetic substitutes. Similarly, world market for jute goods as packaging material over the
year has compressed due mainly to high cost of such products. In spite of such shift of
demand, production of jute goods over a decade or so has increased remarkably, thanks to
increased demand for packaging of food-grains, potatoes, onion, oil seeds, tobacco, etc.
Jute goods as a packaging material has some added advantages over synthetic substitutes
on stacking, porosity enabling better air circulation, higher re-usabilities and biodegradability. Additionally, added thrust on environment protection and heath consciousness
all over the world has opened up hope for jute products which are eco-friendly, renewable
and easy to dispose of. India as major source of such natural fibres should seize the
opportunity by improving its cost-competitiveness and ensuring regular supply of quality jute
products to the end-users within and outside the country.
Trend in production, domestic consumption and exports of jute products for the period from
2000-01 to 2005-06 may be seen from table -7.

Table- 7 : Production of Jute Goods

Qnty :000 M.T
Period
April-March

Hessian

Sacking

Carpet
Backing

Others

Total

2000-01

338.0
(20.8)

952.8
(58.6)

6.6
(0.4)

327.8
(20.2)

1625.2

2001-02

275.3
(17.2)

1034.0
(64.6)

5.0
(0.3)

286.5
(17.9)

1600.8

2002-03

338.3
(20.9)

1000.0
(61.6)

4.7
(0.3)

278.8
(17.2)

1621.8

2003-04

305.2
(19.4)

979.3
(62.3)

4.7
(0.3)

282.1
(18.0)

1571.3

2004-05

310.3
(19.25)

992.0
(61.5)

4.1
(0.25)

306.7
(19.0)

1613.1

2005-06

320.0
(20.2)

1007.5
(63.7)

6.2
(0.4)

248.8
(15.7)

2006-07
(Apl.-June)

72.3
(22.4)

191.8
(59.5)

0.7
(0.2)

57.4
(17.8)

1582.2

322.2

Source : Office of Jute Commissioner

(Figures in the bracket show % share of each item to total production)
4.2 It may be seen from the table No.7 that total production of jute goods recorded a
marginally decreasing trend over the period from 2000-01 to 2005-06, being slightly
above 16 lakh M.T in 2000-01 and falling to a level below 16lakh M.T in 2005-06. Out
of the total production, production of jute sacking bags occupied a pre-eminent position
of above 55 per cent over the same period, followed by hessian. Jute sacking is mainly
used for packaging purposes and Govt. purchase of sacking bags mopped up about
50% of such production of jute sacking bags. Main demand for jute sacking hinges on
domestic demand.
4.3 Table- 8 : Domestic Consumption of Jute Goods

Qnty in 000 M.T

Period
April-March
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
(Apl.-June)

Hessian

269.2
(20.6)
243.0
(16.3)
251.3
(18.3)
253.3
(18.9)
244.8
(17.5)
237.6
(17.2)
54.3

Sacking

934.8
(65.2)
1021.4
(69.9)
954.8
(69.7)
909.3
(67.7)
972.4
(69.7)
974.2
(70.7)
163.5

Carpet
Backing
Cloth
0.8
(Negl..)
0.9
(Neg.)
0.5
(Neg.)
0.9
(Neg.)
0.9
(Neg.)
0.7
(Neg.)
-

Others

229.6
(16.0)
195.5
(13.4)
167.1
(12.2)
179.4
(13.4)
176.1
(12.6)
165.3
(12.0)
41.0

Total
Domestic
Cons.
1434.4

% share of
Domestic
Cons. to
Total
Production
88.26

1460.8

91.25

1375.7

84.7

1342.9

85.46

1394.2

86.43

1377.8

87.08

258.8

Source : Office of Jute Commissioner

(Figures in the bracket show % share of each item to total domestic consumption)
4.3 The above table testifies that jute industry is heavily dependent on domestic market and
domestic consumption accounted for above 85 per cent of total jute goods production over
the years from 2000-01 to 2005-06. In the domestic consumption, sacking took the leading
position, occupying above 65 per cent over the period.
Table-9 : B.Twill bags purchase on Govt. Account
Period
Purchase
Notified Price
Average
Market
price
April-March
(in bales of 500 bags) Rs./100 bags
(Rs./100 bags)
2000-01
1224,769
1581.07
1530.96
2001-02
1640,465
1701.58
1704.05
2002-03
1177,795
1691.99
1501.27
2003-04
1389,484
1646.26
1460.62
2004-05
1531,595
1683.70
1582.34
2005-06
1458,135
1979.68
1887.84
Source : Office of Jute Commissioner, Kolkata.
4.4 It is evident from the table No.9 that except the year 2001-02, notified prices of
B.Twills bags on Govt. supply were remarkably higher than those prices ruling in the
market.

Qty : 000 M.T

Table -10 :Export of Jute Goods from India since last Six Years :
Product
1.
2
3
4
5
6
7
8
9
10

Hessian
Sacking
CBC*
Yarn
FGJP**
Soil Saver
JDPs ***
Total of 1 to 7
Other
Total of All Jute
Goods
11 % of Hessian to
Total Export
12 % of Yarn to
Total Export
13 % of JDPs to
Total Export

2000-01
2001-02
2002-03
2003-04
2004-05
Qty.
Value
Qty.
Value
Qty.
Value
Qty.
Value
Qty.
Value
86.0
3176.05 51.6
1873.59 100.8
3533.01 157.1 4145.90
153.7 4249.79
3.1
104.49
2.1
73.55
6.1
187.35
33.4
846.70
31.2
777.24
8.1
242.75
2.9
98.64
2.8
105.01
5.2
156.28
1.5
62.50
127.3 3406.54
77.0 2212.36
77.1 2237.65
90.6
2469.15 120.4
3365.76
14.2
432.06
5.1
179.56
23.6
673.50
6.0
97.76
4.0
61.14
9.3
126.46 10.50
130.81
6.50
93.69
1423.53
1355.07
2031.65
2232.72
2537.47
244.7 8883.19
142.6 5853.90
219.7 8894.63 296.8
9981.56 313.3 11086.45
10.5
433.69
5.6
279.32
6.3
238.58
13.6
537.21
8.5
382.58
255.2 9316.88
148.2 6133.22
226.0 9133.21 310.4 10518.77 321.8 11469.03
34

31

39

37

36

23

15

22

21

39
29
22

Value : Rs./Million
2005-06
Qty.
Value
171.6 4933.48
33.2
996.36
0.9
44.64
69.1
2394.61
4.9
72.85
3125.92
279.7 11567.86
6.1
294.59
285.8 11862.45

37

42

29

20

22

26

* CBC- Carpet Backing Cloth

** FGJP- Food Grade Jute Products
*** JDPs Jute Diversified Products
-----------------------------------------------------------------------------------------------------------------------------------------------------------------Source : D.G.C.I. & S, Kolkata.

10

4.5 As may be seen from the above table, exports of Hessian, Jute Yarn and
Diversified Jute Products collectively constituted above 85% of total exports in terms
of value during the period from 2000-01 to 2005-06. During the same period, exports
of both Hessian and JDPs gained. Share of Hessian export has increased from 34
per cent in year 2000-01 to 42 per cent in year 2005-06, and that in JDPs has risen
to 26 per cent in the year 2005-06 from 15 per cent in the year 2000-01. Apparently,
share of Jute Yarn which is mainly used as intermediate/raw material for value added
jute products has shown a declining trend over the period from 2000-01 to 2005-06
entailing that such yarns have been used more by domestic manufacturers for
increased production of value-added JDPs in decentralized sector. Share of jute
Sacking Bags as packaging material in the export market has remained at a low level

PART : V THE NATIONAL JUTE POLICY -2005 AND THE EXISTING

INCENTIVE SCHEMES PROVIDED BY GOVT. OF INDIA TO JUTE
INDUSTRY
THE NATIOANAL JUTE POLICY 2005
The objectives of the policy are to : 1) enable millions of jute farmers to produce
better quality jute fibre for value added diversified jute products and enable them to
enhance per hectare yield of raw jute substantially; 2) facilitate the jute sector to
attain and sustain a pre-eminent global standing in the manufacture and export of
jute products; 3) enable the jute industry to build world class state-of-the-art
manufacturing capabilities in conformity with environmental standards, and, for this
purpose, to encourage Foreign Direct Investment, as well as research and
development in the sector; 4) sustain and strengthen the traditional knowledge, skills,
and capabilities of our weavers and craftspeople engaged in the manufacture of
traditional as well as innovative jute products; 5)expand productive employment by
enabling the growth of the industry; 6) make Information Technology (IT), an integral
part of the entire value chain of jute and the production of jute goods, and thereby
facilitate the industry to achieve international standards in terms of quality, design,
and marketing; 7)increase the quantity of exports of jute and jute products by
achieving a CAGR of 15% per annum; 8)involve and ensure the active co-operation
and partnership of state Governments, financial Institutions, entrepreneurs, and
farmers organisations in the fulfillment of these objectives. To achieve these
objectives, the strategic thrust will be to position jute and allied fibers as superior and
environmental friendly materials vis--vis synthetics and check the erosion of the
market for traditional fibre products and encourage diversification by timely regulatory
and promotional interventions.
Emphasis will be given to enhance the
productivity/yield of raw jute through basic, strategic and adaptive research and
improve on-farm practices and to modernize the jute industry to improve efficiency in
production and processing, to reduce cost and enhance product quality.
A major highlight of the policy is the creation of the National Jute Board which will
subsume, merge and integrate the functions of various institutions currently operating
in jute sector, at the earliest. The Board will seek to rectify the systemic ills of lack of
coordination among the several jute related organizations under different ministries of
the Government and to be a facilitator rather than a regulator for jute. The proposed
National Jute Board is yet to see the light. The Jute Board will explore the possibility
of establishing a National Institute of Natural Fibres with the objective of harmonizing
development and promotional activities pertaining to all natural fibres.

11

Jute Technology Mission, approved earlier by the Planning Commission, was

scheduled to be operational zed in the first half of 2005 to make jute sector as an
intrinsically competitive and integrated entity. It will encompass the sub-systems
pertaining to agricultural research and seed development, agronomic practices,
harvest and post harvest techniques, the primary and secondary processing of raw
jute, diversified products and market development and marketing distribution.
However, Jute Technology Mission is yet to take-off.

THE EXISTING INCENTIVE SCHEMES

a) Government of India has provided a number fiscal supports and incentive
schemes for the betterment of jute industry. One such vital support is the
continuation of Jute Packaging (compulsory use of jute bags in packing Materials)
Act,1987. Such fiscal support is considered as main plank of much needed support to
jute industry which is at presently facing fierce competition both in domestic and
international market from cheaper and lighter synthetic packing material and
increased use of modern bulk handling devices. As per a recent judgement of the
Honourable High Court of Gujrat, the current reservations under JPM Act, stand at
75% in case of foodgrains and 70% in sugar. In addition, Government of India
regularly and almost un-interruptedly have been placing purchase orders of B.Twills
bags to jute mills for supply to Food Corporation of India and other food procuring
agencies of State Govt.s. The prices fixed for such Govt. purchases of B.Twill bags
have been in most times well above the market ruling prices.
b) Duty Entitlement Pass Book benefit to Jute Products : The Director General of
Foreign Trade w.e.f. 03.07.2006 revised the DEPB rates of jute products as in table
No-11.
Table 11 : Revised DEPB rates of Jute products
Product Group : Miscellaneous
Product Code : 90
S. No

Description

DEPB Rate (%)

Value
cap
for
DEPB Entitlement

24

Jute Soil Saver

1.00

-----

25

Jute Yarn/Jute Twine

1.00

--

26

a. Hessian Cloth
b. Hessian made-up

3.00
3.00

Rs.40/Kg.
Rs.55/Kg.

27

a. Sacking cloth
b. Sacking Bag

4.00
4.00

Rs.30/Kg.
Rs.40/Kg.

12

Table - 11 A : Revised DEPB rates of Plastic liner/ laminated Jute products

Product Group : Plastics
Product Code : 63
S. No. Description
DEPB Rate (%)
Value cap for DEPB
entitlement
34

Hessian Bags with LDPE/ HDPE/ 3.00

PP liner/ lamination with/without
Zipper/ Handle

Rs.175/Kg.

37

Jute Bags with HDPE liner/ LDPE 3.00

liner/ Lamination with/ without
Zipper/ Handle

Rs.175/Kg.

83.

PVC fabricated bags (made from 4.00

PVC leather cloth backed jute and
polypropylene)

116
589

Poly Jute Bags

Textile Machinery

3.00
4.00

519

Sewing Machinery

1.00

--

--Rs.7.0 Lakh
---

DEPB scheme in exports of jute goods was introduced in the financial year 2002-03.
It has a great impact on boosting exports of jute products since 2002-03 and
onwards.
c) JMDC Incentive Scheme (Capital Subsidy ) for modernization of Jute Industry :
Government of India, Ministry of Textiles. since July, 2002 introduced the scheme
with the objective to facilitate modernization and upgradation of technology in existing
jute mills, introducing new modernized technology in new mills in jute growing areas
having inadequate jute processing facilities and establishing of new mills located in
non-jute growing areas. Setting up modern jute mills in new locations either in jute
growing areas or non-jute growing areas having inadequate jute processing facility
will be eligible for capital subsidy @ 20% on installation of plant and machinery and
in case of other areas @15%. The ceiling of subsidy under the scheme shall be
limited to Rs. 50 lakh per claimant per year.
d) NCJD SCHEME CALLED- JUTE ENTREPRENEURS ASSISTANCE (CAPITAL
SUBSIDY) SCHEME
The main objectives of the scheme are :
Sustaining the benefits that have accrued under various programme on jute,
Increasing employment opportunities in rural and urban areas through micro
units,
To spread the production bases of jute diversified products particularly in nonjute growing areas,
Exploring new application area for jute products,
Encouraging projects on reduction of process cost to give competitive edge to
end products.
Capital subsidy under the scheme shall be @ 10% and 15% respectively according
to group of investment

13

e) TECHNOLOGY UPGRADATION FUND SCHEME(TUF) :

The scheme provides for 5% interest subsidy on the investments in the
benchmarked machinery for technology upgradation in the jute industry.
Cumulative position of sanction and disbursement under TUF from 01.04.1999 to
15.11.2005 may be seen from table No-12
Table 12 : Status of TUFS in Jute industry as on 15.11.2005

(Rs. In crore)
Assistance Disbursed
No.
Amt.
under No.
of Amount under
Application
TUF
Applications
TUF
18
141.68
*82.78
17
74.87
Source : Website of Ministry of Textiles
*Against Rs.82.78 crore sought under TUF, an amount of Rs.80.36 crore was
made eligible under TUF
Sanction
of Project Cost

PART- VI : SOME CONCLUDUNG OBSERVATIONS ON EXISTING

INCENTIVE SCHEMES ALONGWITH PROPOSED MEASURES TO BE
TAKEN FOR IMPROVEMENT OF JUTE INDUSTRY
6.1 Keeping in view the socio-economic objectives being fulfilled by jute industry, the
continuation of existing incentive schemes provided by Government of India,
particularly JPM Act in jute goods and MSP operation in raw jute would be beneficial
for the industry.
6.2 The basic objective of the JPM Act is to protect the interest of millions of jute
growers and jute mill workers and therefore may be viewed as a poverty alleviation
measure of the government of India. Reservation for packing of foodgrains and sugar
under the Act provides direct benefit to jute mill workers by keeping the mills running
and indirect benefit to jute growers by flow of demand for raw jute throughout the
season. Moreover, Govt. of India also places purchase orders for B.Twills bags to
jute mills regularly on behalf of Food Corporation of India and other foodgrains
procuring agencies of the State Governments. All these measures have made the
jute mills complacent about the expanding indigenous or international market, making
them somewhat indifferent towards making sufficient investment in modern and
updated plants and machinery in finishing sector. However, if JPM Act is repealed, it
may be a death-knell to the jute industry, unable to withstand the fierce competition
from cheaper and lighter synthetic bags for packing purposes. The resultant impact
of such step may give rise to wide spread sickness in jute industry, leading to closure
of a number of weak jute mills and may bring about a socio-economic adverse impact
on the economy of jute growing States, specially in W.Bengal. Having regard to all
these harmful possibilities, a pragmatic approach is to be taken to motivate jute mill
owners to invest adequate fund for technological upgradation and at the same time to
introduce professional management. To speed up the space of modernization, a
scheme of proportionate allocation of Govt. purchase linking it up with adoption of
vigorous and tangible upgradation and modernization programme by mills may be
practical solution to this dilemma.
6.3 Special thrusts are to be given on development of On Shore Capability of jute
sector encompassing from sustained supply of quality fibre of jute to manufacturing
processing mills, efficient marketing of raw materials and finished products and timely
delivery of increased volume of value-added Jute diversified Products in the export
market. In fulfilling the objectives, the jute industry needs to reorient and revitalize its

14

production capacity in alignment with efforts of Govt. bodies, R&D institutions,

Bureau of Indian Standard and Quality Inspection Agencies.
6.4 Off Shore Market Development in close contract with Indian Embassies/ High
Commissions. Such step would require establishment of overseas commercial
agents, consisting of representatives of Jute mills, exporters, target customers,
JMDC. Good offices of Indian Embassies and High Commissions may play a vital
role as a catalyst between the Exporters and Importers for building the image of jute
products as eco-friendly products. International Organizations like UNCTAD, FAO,
International Jute Study Group(IJSG), Dhaka may also be associated in propagating
intrinsic attributes of natural fibres like jute as eco-friendly, biodegradable and
renewable.
6.5
National Research Organizations like Indian Jute Industries Research
Association (IJIRA), Institute of Jute Technology (IJT) and National Institute of
Research on Jute and Allied Fibre Technology (NIRJAFT) may be provided with
adequate fund support for quality enhancement, product development in tune with
the changes in market demand and acceptability but also cost effectiveness of jute
products.
6.6 Establishment and maintenance of a Design Bank which will provide information
and samples in respect of colour, fashion, design and fabric trend popular in foreign
markets may be contemplated. Information and materials may be collected from the
leading fashion centres like Paris, Milan, London, New York, etc. Interested exporters
or entrepreneurs may avail of the resources of bank after payment of a fee.
6.7 JMDC may continue to play the pivotal role as a Nodal Agency in product
promotion as also in exports of jute products, providing vital inputs to jute mills and
exporters. To fulfill its role as a Nodal Agency, JMDC may collect requisite
information in respect of target export markets of jute products, role of competitors of
jute products, trend of exports and market prices of synthetic substitutes.
6.8 Furthermore, proper cooperation among various departments of the Govt. of
India,
viz. Ministry of Textiles, Ministry of Commerce and Industry, Ministry of Agriculture
and Ministry of Finance and States Govt.s is essential for global trade facilitation. The
Exim Bank, RBI and ECGC may also play their role in financing and risk
management of the exporters. Strict measures to be adopted by Export Inspection
Agencies for quality assurance and adherence to international standards may lead to
reduction in complaints in foreign trade.
6.9 JMDC had awarded in the year 2001 a Study to Tata Economic Consultancy
Service (TECS) for the formulation of Export Strategy for Selected Jute products
from India. TECS had made group-wise identification of major target markets for
different types of exportable jute products. As per such classifications, in case of jute
yarn, Belgium, Turkey, Iran, U.S.A. and U.K were categorized as Group-A ,
accounting for 58% of Indias export, countries like Egypt, Saudi Arabia, Japan and
Syria in Group-B with export prospect at 17% and Germany, Poland, Russia and
Netherlands in Group-C with export share of 7%. Group-wise identifications of Target
Countries in different jute products as made by TEC may be seen from the table
No.13. Product-wise focused countries may be useful in guiding the prospective
exporters.
On 20th January, 2007, UN General Assembly decided to declare the year 2009 the
Year of Natural Fibres. According to FAO, such decision will contribute to the

15

Millennium Development Goals by further developing the efficiency and sustainability

of these agricultural industries that employ millions of people in some of the worlds
poorest countries.
Table No- 13 : Export Target Countries in different Jute products
S.No Products

Group- A
Belgium,
Turkey,
Iran, U.S.A., &U.K
58%

Target Countries
Group-B
Egypt,
Saudi
Arabia,
Japan,
Syria -- 17%

1.

Jute Yarn

2.

Jute
Geotextiles

3.

Jute
U.S.A., Japan, Saudi Belgium, Spain,
shopping and Arabia, U.K.
UAE,
Italy,
Carry Bags
--- 39%
Germany, France
--- 27%

4.

Food Grade U.S.A.,

Turkey,
Jute Bags
Ghana
Argentina, Australia,
Japan --- 52%
Jute Carpet Australia,
Belgium,
Backing
U.K., Japan
Cloth
---- 74%

5.

6.

7.

8..

U.S.A. -- 71%
U.K. --- 22%

Japan, Australia,
Hongkong,
MiddleEast 4%

Saudi
Arabia,
Spain, Belgium,
Germany, South
Africa 16%
New
Zealand,
Russia,
Korea,
Egypt,
U.S.A.,
Turkey -- 23%
Jute
Floor U.S.A. --- 56%
New
Zealand,
Covering
Europe --- 25%
South
Africa,
Australia, Japan,
Canada -Hessian
U.S.A, Iran, Syria, Egypt, Australia,
Belgium, U.K.
Netherlands,
Turkey,
Japan,
---- 53%
UAE, Germany,
Sudan,
Ghana,
Indonesia
--25%
Jute Sacking Sudan, Syria, Iraq, Kenya,
U.S.A.,
Bags
Indonesia,
Egypt, Australia,
--- 35%
Iran,
Belgium,
Turkey, Japan
--- 13%

Group-C
Germany,
Poland, Russia,
Netherlands

7%
Singapore,
Canada, Korea,
Malaysia,
Australia --- 3%
Turkey,
Argentina
Sweden, Czech
Rep. Singapore,
Malaysia,
Australia --- 11%
Peru, Singapore,
Costa
Rica,
Nicaragua
---- 10%

It is further stated by FAO that the International Year of Natural Fibres will raise the
consumer awareness of natural fibres and strengthen demand for natural fibre
products, improving the livelihoods of the farmers who produce them and the
revenues for countries that export them. At the same time, promoting the use of
natural fibres will improve the environment. The natural fibres include cotton, jute,
wool, silk, flax, sisal, coconut fibre and many others. These fibres are used in clothing
and other consumer goods as well as in industrial applications. The year 2009 will,

16

therefore, be a watershed for the Indian jute sector if we can pull of our socks and
grab the grand opportunity of international marketing for this environment friendly
fibre. Due diligence can bring back the golden days of the golden fibre.
Comments on this article may be sent to vaanijya.dgcis@nic.in.

Reference :
1.
2.
3.
4.
5.

Website of Ministry of Textiles, Government of India: www.texmin.nic.in

Website of JMDC: www.jmdcindia.com
Statistical Publication of JMDC- titled Indian Jute
FAO Statistics on Jute, Kenaf and Allied Fibers
National Directory Producers and Exporters of Jute Diversified
Products2006 - Published by JMDC
6. TECS Study report on Export Strategy for selected Jute products.

17