Jute mills practicing unfair trade to be banned from government quota

Some jute mills, including a majority of them belonging to Indian Jute Mills Association (Ijma), have been found illegally importing jute bags from Bangladesh and Nepal at a cheaper price to sell it at higher prices to the state-owned food procuring agencies for profiteering.
The Jute Commissioner has warned the jute industry of a ban on their getting a government quota for five years, citing unfair trade practices by some mills.

The Jute Packaging Materials Act, 1987 provides for compulsory packaging of sugar and food grains in jute bags by government agencies up to 100 per cent.

Every year, the Food Corporation of India purchases 40-45 per cent of the jute bags produced by the industry on behalf of the state food procurement agencies. However, the legislation prohibits use of imported jute bags to meet demand from government procurement agencies.

Jute Commissioner Subrata Gupta has written to Raghav Gupta, chairman of Indian Jute Mills’ Association (Ijma) that this office will be compelled to come down with a heavy hand if the practices are not stopped forthwith. Further, they are also contemplating action against mills which have resorted to such practice in the past.

Under Jute and Jute Textile Control Order, the Jute Commissioner has the power to recommend prosecution and imprisonment against the mills violating the laws. Ten to 12 mills are in the line of fire of the Jute Commissioner. Sources said that the Jute Commissioner has sent a note to the Union textiles ministry recommending action against these jute mills.

On July 3, 2014, the Jute Commissioner had already highlighted the issue of unfair trade practice within the jute industry before the 22nd Standing Advisory Committee of the ministry, as the industry was found to indulge in unfair trade practices like supply of used, underweight and poor quality bags not conforming to BIS (Bureau of Indian Standards) norms, lack of co-operation, supply of inaccurate data and illegal imports of jute bags from Nepal and Bangladesh.

Bangladesh offers 10 percent cash subsidy on its export products. Hence, the prices of jute bas bags are cheaper than those manufactured in India.
Any action from the Jute Commissioner would deal a further blow to the jute industry that has started facing hostility from states like Punjab.

Punjab, the biggest purchaser of jute bags, is gradually shifting to plastic bags. In the past three months, there is an almost 30% fall in the off-take of jute bags pushing up the production cost in the jute mills.

Under JPMA, only those bags that are manufactured and produced in India can be used for government supplies as per law, while imported bags have been banned from use in government supplies.