Jute Sector in India

    0
    1702

    In News

    • India’s jute economy is faltering while Bangladesh’s is flourishing.

    About

    • According to the third advance estimates released by the Union Ministry of Agriculture and Farmers Welfare in May 2022, it has fallen by over 13 percent in the past decade —  1.77 million tonnes in 2021-22, from 2.03 million tonnes in 2011-12.
    • The average area under jute in the country was 0.82 million ha between 2000-01 and 2009-10, according to a 2021 report by the Commission for Agricultural Costs and Prices (CACP). This declined to 0.73 million ha between 2010-11 and 2019-20.

    Comparison with Bangladesh

    • Production: 
      • While India’s production and acreage declined, Bangladesh’s production and area under jute has increased over the years. 
    • Cultivation: 
      • India is still the largest producer of jute but in terms of acreage, Bangladesh is the largest cultivator. It also accounts for nearly 75 percent of the global jute exports, while India’s share is just 7 percent.
    • Imports: 
      • Even India imports jute products (yarn, floor coverings and jute hessian) from Bangladesh. In 2020- 21, India imported products worth Rs 1,123 crore from Bangladesh.
      • Imports from Bangladesh had adversely affected the domestic industry, given that the landed price of jute and its products from the neighbouring country was less than the domestic rate.
    • Cost:
      • Bangladesh has traditionally enjoyed a comparative advantage in export of jute products because of its low cost of production driven by lower wages, favourable power tariffs, cash subsidy for export and better fibre quality.
    • Infrastructure:
      • It has been a sore point in India’s jute cultivation. Jute in India is marred by poor infrastructural facilities for retting, a process done after harvesting of the crop.

    Bangladesh Model: A Success

    • Subsidy: It does well in exports because it has three to four different kinds of subsidies. For instance, it gives a 9-10 percent export subsidy for food-grade packing bags, which is much higher than India’s 1.5-3 percent subsidy.
    • Diversified Products: Its capturing of the diversified jute products market, for which there is a huge international demand. India’s major jute exports, in contrast, are sacking and hessian bags.
    • High Exports: High-end fashion brands are also coming out with more jute products such as sandals. Around 85 percent of India’s jute is consumed domestically, while 15 percent is exported. The situation is reversed for Bangladesh.

    Jute

    • Temperature: A mean maximum and minimum temperature of 34oC and 15oC and a mean relative humidity of 65% are required. 
    • Rainfall required: Around 150-250 cm
    • Soil Type:
      • Jute can be raised on all kinds of soils from clay to sandy loam, but loamy alluvial soils are best suited. 
      • The new grey alluvial soils of good depth, receiving silt from the annual floods are the best for jute cultivation. 
    • Highly profitable commodity: 
      • Its leaves are sold in markets as a vegetable even before the crop is harvested. 
      • The inner stem can be used to manufacture paper while the outer layer produces fibre.

    Issues in Jute Sector in India

    • Declining Production: Ten years ago, production was very high, but gradually reduced and since 2011 most farmers have stopped cultivating the crop, shifting to horticulture crops.
    • Price fall: The jute price kept falling. From Rs 30,000-40,000 per tonne in late 2000s, it reduced to Rs 25,000 in 2010-11. This was barely enough to recover the input cost.
    • Poor Quality: Under retting, jute bundles are kept under water at a depth of about 30 cm. This process gives the fibre its shine, colour, and strength. It should ideally be done in slow moving, clean water bodies like rivers. But Indian farmers do not have access to such resources. 
    • Lack of Government intervention: When the prices fell, the Jute Corporation of India (JCI) Ltd, a Government of India enterprise for procurement of raw jute from the growers at the minimum support price, barely intervened.
    • Reduced Procurement by Government: Between 2007-08 and 2021-22, the quantity procured by JCI decreased to 0.014 million tonnes, from 0.14 million tonnes. The poor procurement figures came despite the government being the largest buyer of jute bags.
    • Arbitrage pricing of jute bags: This pricing is fixed on a formula derived by the tariff commission, under the Union Ministry of Commerce and Industry.
    • Jute mills in India: Jute mills are marred by issues of:
      • Machinery modernisation, 
      • Mismanagement, 
      • Labour shortage and 
      • Unrest and dependence on the government. 
      • Amongst the functioning mills, only 8-10 are in good financial health and can survive seasonal losses. The business of another 20 mills is just average. The rest of the mills are financially unsound.

    Government Initiatives in Jute sector

    • Jute-ICARE (Improved Cultivation and Advanced Retting Exercise) programme for increasing the productivity and quality of jute.
    • Incentive Scheme for Acquisition of Plants and Machinery (ISAPM) for facilitating modernization and up-gradation of technology in existing/ new jute mills and JDP units.
    • Jute Integrated Development (JID) Scheme to provide basic, advance and design training and training cum production centre.
    • Jute Raw Material Bank (JRMB) Scheme to supply jute raw materials to MSME units and artisans engaged in production of jute diversified products at mill gate price.
    • Export Market Development Assistance (EMDA) Scheme to facilitate registered jute exporters for participation in foreign fairs/ BSMs.
    • Scholarship Scheme for the girl children of the workers of jute mills, JDP-MSMEs.
    • Usage of Jute Geo-Textiles for slope stabilisation, rain water harvesting tanks and construction of roads.
    • The Central Research Institute for Jute and Allied Fibres (CRIJAF) under the Indian Council of Agricultural Research (ICAR) has developed a model retting tank with slow moving water.

    Way Ahead

    • Diversification:
      • It is key if India wants to make the jute market successful. 
      • Demand for diversified products has to be created even domestically. 
      • Being environmentally friendly, jute can be a big boost for a plastic-free India as well.
    • Strengthening Jute Mills:
      • The government should purchase 70 percent of the mills’ total production so as to give the sector a boost. 
      • This should put the mills on a strong footing to capture diversified markets for the rest 30 percent.
    • Schemes such as the Incentive Scheme for Acquisition of Plant & Machinery, under which capital subsidy is being provided to replace the old machines, should be implemented expeditiously.

    Jute Packaging Materials (Compulsory Use in Packing Commodities) Act 1987 (JPMA)

    • Under this Act, the government issues orders from time to time for mandatory use of jute packaging.
    • Since 2017, the norms provide that 100 percent of foodgrains and 20 percent of sugar should only be packed in jute bags. 
    • Due to this, jute sacks account for 75 percent of the total production of the jute industry.
    • Recent Data:
      • 90 percent of the jute sacks are supplied to the Food Corporation of India (FCI) and state procurement agencies, while the remaining are exported or sold directly. 
      • The government purchases jute sacks worth Rs 8,000 crore every year from mills.

    Source: DTE