The Union textiles ministry keeping in view the performance and production trends of sacking bags of the jute industry over the years has proposed to dilute the mandatory jute packaging order mandated under Jute Packaging Materials Act (JPMA), 1987.

The dilution moves is also aimed at gradually decreasing the dependence of jute mills on sacking and persuade them to go for product diversification.

The ministry has favoured a minimum reservation of 90 percent for food grains and 20 per cent for sugar for 2014-15 jute year, a move if implemented could spell Rs 4000 crore loss for the industry.

The huge dilution in sugar has been proposed since jute bags are not preferred by the user agencies due to reasons such as contaminants like jute fibre, jute batching oil, moisture pick up, mildew and leakage of sugar.

Currently the legislation provides for 100 percent reservation for jute bags for packing food grains and sugar by government procurement agencies.

The textiles ministry has appraised the total kharif season requirement of jute bags for packing food grains at around 1.39 million bales (or 465,000 tonne). Total government requirement for jute bags has been pegged at approximately 2.39 million bales.

But according to Sanjay Kajaria, a leading jute mill owner and former chairman of Indian Jute Mills Association (IJMA), the textile ministry's dilution plan is aimed at killing the jute industry. There is no open market for the jute mill owners. The dilution of the order prescribed by the ministry will deprive the jute industry of a market worth Rs 4000 crore. The ministry is proposing dilution even though the industry has sufficient capacity to meet the demands of government procurement agencies.

In 2013-14, the Centre had fixed mandatory packaging in jute bags at 90 percent for food grains and 20 per cent for sugar. The beleaguered jute industry has taken strong exception to the move.