SECTION III: JUTE FIBRE

TABLE OF CONTENTS
SUMMARY JUTE FIBRE .................................................................................................................. 200 3.1 INTRODUCTION ............................................................................................................................ 203 INDUSTRY AT A GLANCE ............................................................................................................ 204 3.2 AGRICULTURE ............................................................................................................................. 205 CONSUMPTION OF RAW JUTE ................................................................................................... 208 RETTING OF JUTE FIBER ............................................................................................................ 209 3.3 INDUSTRY ..................................................................................................................................... 210 PRODUCTION, MARKET AND SALES......................................................................................... 210 FINANCIAL HEALTH OF THE MILLS ........................................................................................... 213 3.4 ISSUES........................................................................................................................................... 216 AGRICULTURE ............................................................................................................................. 216 INDUSTRY ..................................................................................................................................... 219 TECHNOLOGY .............................................................................................................................. 222 3.5 RECOMMENDATIONS .................................................................................................................. 228 AGRICULTURE ............................................................................................................................. 228 INDUSTRY ..................................................................................................................................... 233 3.6 ROAD MAP .................................................................................................................................... 238 3.7 ACTION POINTS ........................................................................................................................... 241 AGRICULTURE ............................................................................................................................. 241 INDUSTRY ..................................................................................................................................... 243 3.8 POLICY STATEMENT ................................................................................................................... 246 PREAMBLE .................................................................................................................................... 246 VISION ........................................................................................................................................... 246 OBJECTIVES ................................................................................................................................. 247 THRUST AREAS ........................................................................................................................... 247 ANNEXURE JUTE FIBRE ................................................................................................................ 249 ACKNOWLEDGEMENT................................................................................................................. 250 MEMBERS OF SUB-GROUP (JUTE) FOR NATIONAL FIBRE POLICY ...................................... 251 198

199

SUMMARY JUTE FIBRE

I.

Jute fibres inherent characteristics of strength, versatility, being eco -friendly, etc can directly cater to technical and industrial requirements through its appropriate functional end uses. The Indian jute industry had been at the forefront of industrialization of the Indian economy. The first jute mill In India was established in the year 1855. Today the Jute Industry is one of the major industries in the eastern region, particularly in West Bengal. It supports nearly 40 lakh farm families, provides direct employment to about 2.6 lakh industrial workers besides livelihood to another 1.4 lakh persons in the tertiary sector and allied activities. The production process in the jute industry goes through a variety of activities, which include cultivation of raw jute, processing of jute fibers, spinning, weaving, bleaching, dyeing, finishing and marketing of jute products. The jute industry produces goods worth Rs 6500 crore p.a. and contributes to export earnings to the tune of nearly Rs. 1200 crores p.a. The jute industry is labour intensive, thus requiring such a large number of people in the value chain. The industry at present faces stiff competition from its cheaper substitutes and is plagued with many problems ranging from obsolete technology, labour unrest, etc.

II.

The following issues concerning the industry emerged: Jute is a natural and eco friendly vegetable bast fibre extracted from plants whose stems are used as renewable energy resource and for other diversified uses. Its products are re-usable, sustainable and bio-degradable and deserve policy support towards environmental commitments. The jute sector is subjected to demand constraint The current demand for jute is mainly dominated by domestic consumption and comprises approximately 87% of the total production of jute goods in quantity terms. A consistent rate of domestic consumption of jute goods in India could reflect the industrys satisfaction with an assured demand from their large consumers in the protected market. Traditional products like Sacking and Hessian constitute the bulk of the product-mix (over 80%) which creates low value addition and are manufactured with age old machinery. In an unprotected market the traditional products would suffer from poor price competitiveness compared to alternative products. The Export Market expansion will also depend on the ability reduce cost to attain price competitiveness. Despite Indias potential for positioning jute goods in export market, jute goods confined mostly towards domestic consumption and the export remained almost stagnant. Raw jute production has remained stagnant and acreage has also declined.

200

Jute growers have been unable to obtain remunerative returns for raw jute. Fluctuations in raw jute prices around the year. Surplus production of raw jute as compared to demand for raw jute can deflate prices of raw jute thus leading jute growers to distress selling.

The gaps between production of raw jute and production and consumption of finished jute or jute goods creates a vicious cycle between jute growers and jute mills further leading to a demand inconsistency and uncertainty for jute.

Shortage of certified seeds in proximity of jute growing areas. Non-determination of Jute grades through scientific grading systems and absence of proper jute quality mapping leads to price variation in accordance with the decisions of the buyers.

Lack of or minimal availability of appropriate storage and warehousing facilities affect the consistent availability and quality of jute.

Jute mills in India are characterized with high conversion costs. Jute industry in general suffers from technological obsolescence, as there have been only lukewarm response in adoption of new technology developed by international machinery manufacturers and GOI sponsored projects.

Poor industrial practices like in the field of Material Handling, Training & labour, Maintenance, Quality Management, Energy Management, IT application & ERP etc caused the industry dearly in terms of profitability and cost competitiveness.

Assured market of over 50% of jute products through the JPM Act and cost plus administered pricing of over one third of total production acted as dampener in the real time modernization efforts of the industry.

Jute mills have not been able to generate desired level of profitable returns. Shortage in availability of skilled labour. Lack of compliance of welfare measures for growers and workers. Lack of collaborations within and between the institutions, jute growers, traders, jute mills, entrepreneurs of JDP.

III.

Compatibility of Jute fibres for blending with other fibres.

The policy aims at sustained growth and improved competitiveness of jute fibre, by taking appropriate measures: to create demand for jute fibre and its products; to produce good quality fibre and products to meet the domestic and international demand; 201

to create more value addition by shifting the focus to product diversification with help from Intensive R&D and market research

to make an concerted effort by all concerned e.g., the industry, R&D institutions, machinery manufacturers etc which is to be supported and facilitated by the Government for rapid development of upgraded technology and their adoption in large scale.

to ensure remunerative prices to the jute farmers in the country; to increasingly contribute to sustainable employment and the economic growth of the nation; to compete with confidence for an increasing share of the global market; to develop transparent information mechanism regarding jute, across the value-chain; to encourage self-initiatives from stakeholders for overall development and self-sufficiency of the jute sector;

to position jute as a positive prospering eco-friendly commodity with potential for diverse applications and make it the preferred choice of all the users.

IV.

The Policy envisages a road map for the jute industry for short term (5 years hence), medium term (10 years hence) and long term (15 years hence) as shown in chapter 3.7.

202

3.1 INTRODUCTION
3.2.1.

Jute, as a natural fibre, has inherent advantages like silky luster, high tensile strength, low extensibility, considerable heat and fire resistance and long staple lengths. Jute can be used in many different areas, and has been receiving increasing attention from industry. Their interests focus not only on the traditional uses of jute, but also on the production of other value-added products such as, pulp and paper, geo-textiles, composites and home textiles etc.

3.2.2.

Supported by several technological developments it has now become possible to visualize jute not only as a major textile fibre, but also as a raw material for manufacturing products, which help to protect environment and maintain ecological balance.

3.2.3.

The worldwide awareness on environment and health is likely to provide new opportunities for jute. Jute and kenaf have been employed for centuries as packaging materials. In recent times they are found to be a valuable aid to sound environmental management.

3.2.4.

The jute sector occupies an important place in the economy of the country in general and eastern region in particular. The Jute agriculture was badly affected by the partition of the Country in 1947, when most of the then jute cultivated land were located in Bangladesh (the then East Pakistan) region. Since partition of the country in 1947, there has been a systematic drive in India to raise the production and productivity of the crop so as to meet the requirements of the jute industry along with the well being of the jute farmers living in the predominantly jute and mesta growing states like West Bengal, Bihar, Assam, Orissa, Uttar Pradesh, Tripura, Meghalaya, Andhra Pradesh, etc. Presently, the area under jute in the country is around 8 lakh ha while the area under mesta is about 1.5 lakh ha producing about 109.7 lakh bales comprising 85 lakh bale of jute and 10 lakh bale of mesta. Raw Jute, comprising, Jute and Mesta with its insignificant coverage of only about 0.7 per cent, in terms of the total cropped area in the country, plays a pivotal role in the countrys economy, particularly, in the eastern and north-eastern states of the country where the crop is predominantly grown by about four million farm families mostly belonging to small and marginal category, generating huge employment opportunities to the tune of about 25 crore man days.

203

INDUSTRY AT A GLANCE
There are 78 composite jute mills in the country, of which 61 are located in West Bengal. These mills have 48 thousand looms with 7.5 lakh spindles. The total production of jute goods was 16.34 lakh tonnes in 2008-09, out of which 2.80 lakh tonnes was accounted for by Hessian, 10.71 lakh tonnes by Sacking, 1.76 lakh tonnes by Yarns and twines, 0.05 lakh tonnes by Carpet Backing Cloth (CBC), and 1.02 lakh tonnes by other diversified products. The value of the total production of jute goods is approximately Rs. 6000 crores. The product mix of the jute industry is highly distorted in favour of low-valued jute sacks (nearly 66% of the total). The jute industry provides direct employment to about 2.6 lakh workers. 1900 Small and Medium Sector enterprises providing employment to around 1.35 lakh artisans / workers are engaged in production of diversified jute products. In addition, around 1.4 lakh people are engaged in the tertiary sector and allied activities, supporting the jute economy. The jute industry also contributes to exports to tune of nearly Rs 1200 crores per annum. The Jute sector contributes Rs. 110 crores to the National exchequer by way of Income Tax, Fringe Benefit Tax and Cess.

204

3.2 AGRICULTURE
3.2.1.

Jute is a rotational crop which is grown once a year between March / April and July / August (90 110 days). There are different grades of jute viz. TD 1 to TD 8 (Tossa variety) and W1 to W8 (White variety) and four grades of Mesta M1 to M4. Tossa Deshi (TD) jute is the most commonly used by industry .TD 4 and TD 5 constitute of almost 60% of the total jute production. West Bengal contributes 65% of raw jute acreage.

3.2.2.

The present production level of raw jute in the country averaged at about 95 lakh bales comprising about 85 lakh bales of jute and about 10 lakh bales of Mesta. (1 bale=180 KG). The production has risen from 17 lakh bales in 1947, a 6.7 fold increase. Exhibit 3.2.1: Production ( in Lakh Bales) Pre-plan 1947-48 Jute Mesta Total Raw Jute 1671.3 0.0 1671.3 1st Plan 1951-56 3928.8 853.3 4782.1 8th Plan 1992-97 8169.4 1116.7 9286.1 9th Plan 1997-2002 9618.8 1098.4 10717.2 10th Plan 2002-07 10041.9 924.5 10966.4

Exhibit 3.2.2: Production of Jute in last ten years Years Crop Size In Lakh Bales (@180 Kg / bale) 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 83.00 78.00 90.0 105.0 110.0 90.00 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 (Estimated) Years Crop Size In Lakh Bales (@180 Kg / bale) 75.00 85.00 100.00 99.00 82.00 94.00

205

Exhibit 3.2.3: Crop size over last 10 years

Crop size in lakh bales

120 110 100 90 80

70 60
2003-04 2006-07
1998-99 1999-00 2000-01 2001-02 2002-03 2004-05 2005-06 2007-08 2008-09 2009-10 (Estimated)
206

3.2.3. 3.2.4.

Growth in raw jute production has remained flat in the last 10 years. Area under cultivation : The present area of cultivation under raw jute is 9.6 lakh ha comprising 8.1 lakh ha of jute and about 1.5 lakh ha of mesta i.e., about 3.5 fold increase since independence. In the last 10 years the area under cultivation has witnessed a decline. Exhibit 3.2.4: Area under Cultivation (in 000 hectare) Years Area under cultivation (000 hectare) 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 1025 1036 1018 1049 1021 959 913 931 949 971 926

3.2.5.

In the last 10 years the area under cultivation has witnessed a decline. Further increase in area is unlikely because of present day crisis in jute trade vis--vis fluctuating prices of jute fibre over the years and high cost of basic inputs for raw jute cultivation. The area would at best remain static or even shrink or may be pushed to marginal lands. Exhibit 3.2.5: Area Under Cultivation & Yield Per Hectare Pre-plan 1947-48 AREA ( '000ha) YIELD (kg/ha) 263.9 1140 1st Plan 1951-56 843.3 1021 8th Plan 1992-97 963.5 1735 9th Plan 1997-2002 1046.6 1843 10th Plan 2002-07 957.0 2063

Exhibit 3.2.6: Acreage and Yield

1060 1040 2.4

Acreage ('000 hectare)

1020 1000 980

2 1.8 1.6 1.4 1.2 1

960
940 920 900

2000-01

1998-99

1999-00

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

Area

Yield

2008-09

Yield (Ton / hectare)

2.2

207

CONSUMPTION OF RAW JUTE

3.2.6.

Consumption of raw jute has always remained lower than production. Supply has always outstripped demand with the exception of last jute season 2009. Exhibit 3.2.7:

3.2.7.

The variation in jute crop prices is quite high, with lower prices at the start of the jute season and higher prices at the end of the season Exhibit 3.2.8: Trend in Jute Prices (Rs/Quintal Average Wholesale Prices of TD5) Months January February March April May June July August September October 2004 719.7 631.2 644.2 690.5 575.0 723.0 755.7 869.0 840.7 815.4 2005 915.5 930.8 916.5 966.0 999.0 1340.7 1125.3 985.5 1335.0 1124.3 2006 1220.4 1232.4 1234.2 1277.1 2087.8 1414.7 1165.3 1003.0 1046.4 1123.0 2007 977.4 974.3 1241.0 1044.4 1179.4 1266.6 1079.2 1015.7 1286.5 946.0 2008 930.9 964.8 996.2 1071.6 1156.2 1297.1 1387.7 1266.7 1181.6 1136.5 2009 1500.9 1484.9 1453.8 1405.4 1561.2 1432.4 1811.4 1444.1 1581.1 1780.5 208

Exhibit 3.2.8: Trend in Jute Prices (Rs/Quintal Average Wholesale Prices of TD5) Months November December 2004 861.5 989.8 2005 1211.0 1232.8 2006 1012.3 1068.4 2007 1051.1 1022.4 2008 1156.0 1346.9 2009 1816.2 1805.5

Source: Department of Agriculture and Cooperation, Ministry of Agriculture and D&B

RETTING OF JUTE FIBER

3.2.8.

Retting is a microbial process by which the jute plant is immersed in water and the fibre is loosened from the woody core (stick) of the jute plant. It has been found that jute stems ret most rapidly at 34 C. At this temperature it takes generally 8 12 days for complete retting. Early cut plants are retted quicker than the late cut plants.

Deficiencies in traditional retting:

3.2.9.

The traditional method of retting, in which the stems are immersed or steeped in ponds, ditches and rivers, allows the grower very little control. The quality of the fibre is dependent largely on the care given to retting. At present, one of the major problems faced by the jute farmers is availability of clean flowing water, and as a result are forced to use stagnant water in ditches and ponds. The same water is used for repeated retting. This practices result in fibre of inferior colour and strength. Further excessive iron content in water imparts a dark colour to the fibre which reduces its value.

Improved Retting Techniques:

3.2.10.

Improved retting methods are being developed on the basis of research carried out at various jute research institutes of India. Ribbon retting, Low Cost retting and bio-technical retting are the alternative methodologies to the conventional retting which can overcome the problem of scarcity of water, enhance the rate of retting by suitable bio-technical intervention. These methodologies are being developed by R & D and other institutes, but the same are yet to be widely accepted by the farmers.

209

3.3 INDUSTRY
PRODUCTION, MARKET AND SALES
3.3.1.

The jute industry has grown marginally at a CAGR of 0.1% in volume since 1999, but it has grown in value terms largely because the costs have increased over the years. Sacking and Hessian has been the mainstay of the Jute industry constituting around 82% of total production of jute goods.

3.3.2.

The production and product mix of the main jute products in last 10 years were as follows: Exhibit 3.3.1: Production & Product Mix of Jute Goods Sacking '000 MT 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 909.2 952.9 1034.3 1000.0 979.3 992.3 1007.5 874.7 1143.0 1071.4 % to total 57.2% 58.7% 64.6% 61.7% 62.3% 61.5% 63.7% 64.5% 64.4% 65.6% Hessian '000 MT 344.5 337.9 275.2 338.3 305.2 310.3 320.0 250.3 350.3 279.8 % to total 21.7% 20.8% 17.2% 20.9% 19.4% 19.2% 20.2% 18.5% 19.7% 17.1% Yarn '000 MT 183.1 188.7 169.9 182.0 197.7 212.7 167.3 161.9 188.5 176.2 % to total 11.5% 11.6% 10.6% 11.2% 12.6% 13.2% 10.6% 11.9% 10.6% 10.8% Others '000 MT 153.4 144.5 121.4 101.5 89.1 97.8 87.3 69.4 94.2 106.3 % to total 9.6% 8.9% 7.6% 6.3% 5.7% 6.1% 5.5% 5.1% 5.3% 6.5% Total '000 MT 1590.2 1624.0 1600.8 1621.8 1571.3 1613.1 1582.1 1356.3 1776.0 1633.7

210

Exhibit 3.3.2: Production of Jute Goods

2000.0 1500.0 '000 MT 1000.0 500.0 0.0 19992000 200102 Sacking 200304 Hessian Yarn 200506 Others 200708

3.3.3.

Others include production of Jute Diversified Products in the composite jute mills and exclude the production of yarn / twine mills and production of JDPs by the decentralized sector enterprises.

3.3.4.

Domestic consumption of jute goods contributes to around 87% of the production. Exhibit 3.3.3: Total Production/Internal Consumption of Jute Goods (Unit 000 MT) Internal Consumption as % of Total production 84.8 85.5 88.3 87.1 89.7 86.9 87.9

Period (Apr-Mar) 2002 2003 2003 2004 2004 2005 2005-2006 2006-2007 2007-2008 2008-2009
3.3.5.

Hessian 338.3 305.2 310.3 320 250.3 350.3 297.8

Sacking 1000 979.3 992 1007.5 874.7 1143 1071.4

CBC 5.4 4.7 4 6.2 2.9 6 4.5

Others 278.1 282.1 306.8 248.5 228.4 276.7 160

Total 1,621.80 1,571.30 1613.1 1582.2 1356.3 1776 1633.7

Internal consumption 1375.7 1342.9 1424.1 1377.8 1216.2 1543.3 1435.6

Exports have been in the range of around Rs.1050 crores to Rs.1190 crores.

211

Exhibit 3.3.4: Export of Jute Goods (Unit- Qnty. 000 MT, Value Rs. In Cr.) (Apr-Mar) > ITEM Hessian Sacking CBC Yarn JDP Others TOTAL % change over last year
3.3.6.

2004-2005 Qnty 153.7 31.2 1.5 120.4 15 321.8 3% Value 424.98 77.72 6.25 336.58 253.75 47.62 1146.9 9%

2005-06 Qnty 171.6 33.2 0.9 69.1 11 Value 493.35 99.64 4.46 239.46 312.59 36.74

2006-07 Qnty 122.2 31.6 0.1 78.3 10.6 Value 376.12 103.25 0.65 273.15 256.48 45.51

2007-08 Qnty 67.8 30 92.1 14.4 Value 299.83 91.38 285.18 402.55 64.63

2008-09 Qnty 53 53.2 82.9 10.7 199.8 -2.2% Value 195.41 161.68 251.63 388.37 68.99 1066.1 -6.8%

285.8 1186.24 -11% 3%

242.8 1055.16 -15% -11%

204.3 1143.57 -16% 8%

Sacking is the key product in the domestic market and yarn and hessian are key products in export market. However the share of sacking in exports has been going up while the share of Hessian and yarn has been coming down.

3.3.7.

Indias share in global exports of jute goods is around 25%. The share of Indian exports in World trade has been coming down over the years: Exhibit 3.3.5: Global Export (Unit 000 MT) Year 2004 2005 2006 2007 World 748.1 800.3 774.1 823.7 India 321.8 285.8 242.8 204.3

3.3.8.

The jute industry is generally unable to consume the full quantity of raw jute produced and during many years there is huge carryover of raw jute from one season to the next.

212

Exhibit 3.3.6: Closing Stock / Total Crop Production 2002-03 Closing Stock (Lakh Bales) Total Jute & Mesta Crop (Lakh Bales) 34 2003-04 33 2004-05 14 2005-06 8 2006-07 23 2007-08 22 2008-09 8

110

90

75

85

100

99

82

FINANCIAL HEALTH OF THE MILLS

Sales:
3.3.9.

An analysis of sales over the last five years indicated a mixed trend. A summarized position showing sales is given in table below:Exhibit 3.3.7: 2003-04 Particulars Sales Change over previous year Nos 39 Amount 4454.61 2004-05 Nos 39 Amount 4973.14 11.64% 2005-06 Nos 39 Amount 5425.60 9.10% 2006-07 Nos 39 Amount 3632.20 -33.05% (Rs. In crore) 2007-08 Nos 39 Amount 4444.97 22.38%

3.3.10.

It may be seen from the above Table that sales during the years 2004-05 and 2005-06 registered increasing trend in comparison to the sales for the year 2003-04. In fact, the sales during 2005-06 were the highest and were Rs.5425.60 crore. However, due to strike in jute industry in the year 200607 ( from 5
th

January, 2007 to 8

th

March, 2007), sales declined by 33.05% in the year 2006-07.

During the subsequent year i.e. 2007-08, there was an increase of about 22% in comparison to previous year. However, the sales of Rs.4444.97 crore for the year 2007-08 was still lower than the sales for the year 2003-04 and the sales reported for the year 2005-06. The increase in the year 2007-08 indicates that there is potential for growth in sale of jute in the coming years.

213

Return on Capital Employed (ROCE) :

3.3.11.

Return on Capital Employed is the ratio of Profit to the Capital Employed. Capital Employed refers to long term funds supplied by the creditors and owner of the company. It is the summation of Net Fixed Assets and Net Working Capital of the Company. Higher the ratio, more efficient use of the Capital Employed is indicated. An analysis Return on Capital Employed (ROCE) of 37 Jute Mills brings out the position as follows:Exhibit 3.3.8: ROCE(%) Less than 20% -20%to less than-10% -10% to less than 0% 0% to less than 5% 5% to less than 9% 9% to less than12% 12% to less than 15% 15% to less than20% More than 20% Total 2003-04 1 4 3 11 4 2 3 1 8 37 2004-05 2 4 9 11 5 1 2 1 2 17 2005-06 5 1 5 9 3 6 3 0 5 37 ( No. of Mills) 2006-07 4 2 6 12 3 2 3 1 4 37 2007-08 5 0 5 10 3 2 2 4 6 37

3.3.12.

From the above it may be seen that 22 to 29 mills out of 37 had earned positive return during 2003-04 to 2007-08. Overall Return on Capital Employed of the Jute Mills during 2003-04 to 2006-07 ranged from 1.12% to 8.11%. the Strike which took place in January 2007 to March 2007 had impacted the trend in the year 2006-07.

3.3.13.

Though the average ROCE is 3.81% during the year 2007-08, 14 mills have registered ROCE of 10% and above and overall 17 mills have ROCE of more than 5%. Ten mills have registered negative ROCE. Remaining Mills are marginally surviving. It may also be seen that normally Return of 12% is considered as a fair return. From the table 12 it may be seen that, 12 mills earned a return of 12% during the year 2007-08.

214

Profit Before Tax ( PBT)

3.3.14.

An analysis of Profit Before Tax indicated a mix of profit making mills and loss making ones. Out of 39 mills the profit making mills which were25 in the year 2003-04 increased to 32 mills in the year 2007-08. During the same period there was steady decline in the numbers of the mills reported losses. As against 14 mills which reported loss in the year 2003-04, only 7 mills have reported losses in the year 2007-08.

215

3.4 ISSUES
AGRICULTURE
3.4.1.

The area, production and yield have been subjected to various fluctuations due to varying climatic conditions, lack of adequate availability of certified and HYV seeds, lack of awareness of HYV seeds developed, low incidence of mechanised farming, poor farm realisation, increase in preference for alternate crops, shortage of farm labour and limited demand for jute products and price fluctuations of raw jute. Lack of adequate availability of certified and HYV seeds :

3.4.2.

Earlier jute seed was harvested from a patch of un-harvested fiber crop. But changes such as growing of jute seeds as a sole crop and shifting of jute seed production to Maharashtra and Andhra Pradesh (non- jute growing areas) occurred through intervention of various stakeholders and adoption of government policies to strengthen the seeds sector.

3.4.3.

The present level of requirement of jute seed in the country is near about 5000 MT. The present certified jute seed production can cater to the need of nearly 30-35 per cent of the total jute area. The rest of the demand is met through Truthfully Labeled (TL) seeds and local seeds. The seed production process starts with the development of breeder seeds in the laboratories of CRIJAF under controlled conditions. The breeder seeds then are taken by the National Seeds Corporation or the Private Seed Producers and converted to foundation seeds and finally into certified seeds, which are then sold to the farmers through different dealer network of NSC and private producers.

3.4.4.

Due to non availability of adequate quantity of certified seeds large quantities of spurious seeds are in use. Also, most of the seeds requirement of Bangladesh is routed from India across the porous Indo Bangladesh borders.

3.4.5.

There have still not been any major breakthroughs such as cotton seeds e.g. BT Cotton (Bacillus Thuringiensis Cotton), which has helped increase cotton yield multi-folds. Monsanto, a seed company based in the US, introduced the BT Cotton seed in 2002, which has almost doubled the yield between 2002 and 2008.

3.4.6.

Lack of awareness of HYV seeds developed: New varieties of seeds are being developed by CRIJAF from time to time, but except for JRO 524, none of the other seeds have been accepted extensively. JRO 524 constitutes 60% of the total seeds production. JRO 524 was developed in 1977 and since then has been the key seed of the jute sector.

216

3.4.7.

Low incidence of mechanised farming: There are different technologies and dosages of fertilizers that have been developed and prescribed by CRIJAF to increase yield and reduce wastage but few farmers have adopted the technologies and prescribed dosage norms. Farmers are still using age old broadcasting method, which consumes about 1520% more seeds than the desired seed rate of 6 kg/ha. Small size of land holding (0.20.3 ha) limits the adoption of mechanized equipments by farmers. Due to low adoption of the new techniques currently there is a wide gap between the potential yield i.e., 2.7 tons/hectare and the actual yield i.e., 2.1 tons/hectare.

3.4.8.

Poor farm realisation: Jute crop changes multiple hands before it is actually sold to the jute mills. Month-wise transaction of raw jute is as follows. Exhibit 3.4.1: Months August September October November December May Total % of raw jute traded 20 17 23 17 23 100

Exhibit 3.4.2: Different tiers in raw jute market Village / doorstep Primary Market / Haats Secondary Market Raw jute traded 37% 56% 7%

3.4.9.

Farmers have to sell large portion of their jute crop to middlemen. By October most of the produce shifts hands from farmers to middlemen as out of the 710 markets, 500 markets do not have the necessary marketing infrastructure.

217

3.4.10.

Due to the non existence of growers groups and absence of facilities in most markets, farmers are deprived of the proper price for their produce. The loss for the farmer impacts his portfolio decision in the next growing season and affects the availability of right quality and quantity of jute.

3.4.11.

Further variation in jute crop prices is quite high, with lower prices at the start of the jute season and higher prices at the end of the season. Exhibit 3.4.3: Monthly Average Price of Raw Jute (TD-5 Ex-W.B)

3.4.12.

Apart from the sale of raw jute, farmers revenue base is also dependent on the sale of jute sticks, which also have a good commercial value. It is not just being used for fuel in villages but also for fencing of houses. Yield of jute stick is 5 ton/ha. Increase in preference for alternate crops

3.4.13.

The higher realization in other crops like till, resulting from increase in MSP and market prices has motivated many farmers to shift from jute to till / other crops. Shortage of farm labour

3.4.14.

Jute is a labor intensive crop with a contribution of 45% of energy requirement and 80% of the total cost requirement. Sowing, weeding, fertilizer application and fiber extraction (retting) are all labor intensive processes. A new four row seed drill has been developed, which can sow one hectare of land in five hours. Also mechanical weeders have been developed, which together with the advantages of line sowing reduces the number of man-days for weeding from 135 in broadcast field to 87. Different retting technologies have been developed to reduce the retting time, labor requirement and improve the quality of raw jute. But none of the technologies so far have been successful on a large scale. Farmers are still largely using the broad casting method for sowing and traditional retting methods.

218

Ineffective price stabilization mechanism

3.4.15.

Multiple factors affect the prices of raw jute prices. Agro climatic conditions in jute growing areas, inadequate availability of quality input e.g., seeds, fertilizers, etc., futures market/speculators, size of the carryover stock effect market sentiments and cause fluctuations in price.

3.4.16.

The year 2004 has also seen the advent of trading of raw jute on the commodity stock exchange i.e., NCDEX. Initiation of raw jute trade on the commodity stock exchange and advent of JCI in commercial operations that year have been perceived to have triggered the prices of raw jute northwards.

3.4.17.

Raw jute trade can be fluctuated easily considering regional focus i.e., focused around West Bengal and some parts of Bangladesh as demand and supply estimates are easily available.

INDUSTRY
3.4.18.

The challenges currently faced by the jute industry pertaining to market and sales are as follows: a) Demand constraint. b) Dominance of single product - sacking c) Dominance of domestic consumption. d) Non exploitation of full export market potential. e) Absence of institutionalized marketing effort at an industry level f) Lack of awareness about jute in developed nations

Demand constraint:
3.4.19.

The demand for jute goods suffers from various constraints like stagnant volumes, types of products and low global market share.

Stagnant volumes:
3.4.20.

The production of the Jute Industry has largely remained stagnant during the last decade growing only at the rate of 0.1% CAGR during this period. One of the major reasons of this stagnancy is severe competition from cheaper alternatives which has been gradually eroding the traditional market of the jute products. The jute industry due to various reasons could not respond and come up with cheaper products to counter the threat of such alternatives. In order to protect the interest of the farmers and 219

the workers, the government in the year 1987 stepped in and provided a protected market for traditional jute goods mainly sacking by mandating packaging of certain commodities in jute materials. This protection today creates a market of around 50% of the total production of jute goods.
3.4.21.

The provision of unconditional protected market over the years coupled with administered cost plus pricing system for such products has its own draw-backs.

3.4.22.

Even though the government has been providing a sizable protected market (without any conditions) for nearly two decades, the Industry has been unwilling to make concerted efforts to safeguard its existing markets by developing price competitive traditional goods through new product development and technological up-gradation / adoption nor has it been able to venture out in creation of innovative products with new technology development neither has it been adopting the existing developed technologies. The unwillingness of the Industry, to develop processes and products and failure to adopt new technologies has only complicated matters. The markets are gradually shrinking, the products are being priced out and worst of all most of the machine developers and manufacturers have withdrawn from the field. The stagnancy in production also causes substantial carry over stock of raw jute after each cropping season, which affects farmer sentiments and impacts his portfolio decision in every growing season.

3.4.23.

Dominance of single product: As a result of substantial demand of sacking goods under reservation under JPM Act and administered cost plus pricing system for such products the Industry has been reluctant to put in much effort in diversification and new product development. Thus all along the product mix of the Industry is heavily lopsided in favour of the traditional products like sacking and hessian which constitutes more than 80% of the total production.

3.4.24.

Low global market share: Presence of a secured domestic market under the

Government

patronage wherein profitability is assured without making much of investment either in manufacturing or market development, the Industry have been soft pedaling on exploring new markets specially in markets abroad. As a consequence Bangladesh has been increasing its share in the global market. Bangladesh is the key competitor of India in exports of jute products. Bangladesh contributes to almost 70% of the export volume. Yarn, sacking and hessian are key exporting products for Bangladesh. The yarn market has increased manifold over the years in Bangladesh. The Bangladeshi jute industry is characterized by large number of yarn units. Of the total 129 units in Bangladesh, 52 are yarn units. Even though the Bangladeshi jute industry scores less compared to India technologically, they have higher grade jute availability compared to India. The reasons for higher share of exports of Bangladeshi jute as compared to India are: i. availability of good quality jute (price is almost equivalent or slightly higher compared to India), ii. lower cost structure (low wage and power cost),

220

iii.

export cash incentives 7.5% - 10% of FOB value in 2009, compared to zero at present in India

iv.
3.4.25.

very low domestic market contributing to 20% of share.

The key advantage that the Bangladesh industry enjoys is a leaner cost structure and cash incentives for exports, which are making Bangladeshi products price competitive compared to India making India the residual supplier of yarn, etc.

3.4.26.

Preoccupation of the industry with the domestic market and its unwillingness to innovate processes and products has out priced many of their products in the global market. India has become the residual supplier of yarn and exports as Bangladesh is not able to supply.

Absence of institutionalized marketing effort at industry level

3.4.27.

The industry has been largely operating in silos with limited sharing of market intelligence on type and quantity of jute products required for an export market. Marketing efforts have been at best piece meal with no concerted industry wide effort. Key challenges faced on the marketing front are as follows. i. ii. iii. iv. v. Push-based rather than pull-based marketing; Absence of fabric standardization policy for a given end use requirement; Inadequate sales infrastructure at mill level; Inadequate technical selling capabilities for technical products like technical textiles. No long term realistic export promotion plan.

Lack of awareness of jute in developed nations

3.4.28.

Jute is largely a product of India and Bangladesh, as compared to other natural fiber e.g. Kenaf. Popularity of kenaf is its wide global acceptance as substitute for wood. Kenaf-based particle wood boards are predominantly used in countries such as the US, China, Indonesia, Thailand and Malaysia. Hence, it is important to understand the significance provided to other natural fibers e.g., kenaf to understand the industrial and commercial use by advanced countries.

221

TECHNOLOGY
3.4.29.

Jute industry predominantly produces traditional products like sacking and hessian using age old technology. Stagnant worker and machine productivity is a key area which has led to the high conversion cost.

3.4.30.

Some specific areas of concern are as follows: There has been no major technological breakthrough that has been adopted by the jute industry after the change from rove to sliver spinning system in early 1960s. Efforts by the government to enhance the level of technology in jute industry through various schemes did not have the expected impact so far. The processing stages involved in manufacturing of jute goods remained same, for example, 2 stage cardings and 3 stage drawings, and no major technological change has taken place. Few mills have upgraded to advanced technologies such as Ring Spinning & Shuttle less looms (One Mac). Most of the mills have added capacity vs. modernization by replacing old machines with new ones of same technology. Very few mills have installed shuttle less looms capable of making sacking. Varying levels of efficiency and utilizations for same machines and product mix across mills It has been observed that in mills of similar capacity, that have similar product mix and use similar technology there is a wide degree of variation in operational efficiency. It has also been observed that few mills, after installing shuttle-less looms, were not able to run them efficiently, which resulted in low machine utilization. Smaller number of new jute technologists joining the industry: Due to the tough working conditions compared to the textile industry and poor compensation structure in the jute mills, Jute Technologists are not keen to join the jute industry preferring to work in other textile industry, resulting in lack of new pool of management with technical skills to oversee jute production inside mills. Poor work culture within the mills, lack of proper training for running machines, breakdown maintenance, lack of suitable ergonomic working conditions etc.

Technology Development in jute industry

3.4.31.

During 197095, the manufacturing of jute products gradually got concentrated in the raw jute producing countries of India and Bangladesh. At the same time machinery manufacturing technology got concentrated, with some renowned European machine manufacturers, such as Mackie, Fraser etc. They started offering new jute machinery with improved features (adopted mainly from flax or 222

worsted systems). The jute industry, mostly engaged in manufacturing conventional sacking and hessian, showed limited interest in installing the entire range of such machinery. Only selected machines, such as Spreaders, JF Cards, Scroll Winder, Beaming, Hemming and Herackle (Sewing) machines were adopted by the industry. The motivation for installation of these machines was cost reduction for manufacture of existing product range.
3.4.32.

Interestingly, even modern Mackie and Russian Looms, exclusively designed for weaving hessian/sacking fabrics with improved quality and productivity, were not found suitable by the industry to replace the conventional flat bed looms with 100 year-old technology as these modern looms require improved yarn quality as well as better yarn preparation for higher efficiency.

3.4.33.

Industrys inability to modernize is evident from its limited adoption of newer machines despite soft loan availability since 1986 through GOIs Jute Modernization Fund scheme. Another case in point was the poor acceptance of apron-draft (AD) jute spinning machine, developed by Mackie in 1960s. This machine is capable of producing better yarn (of below 8.0 lb/spy quality) as compared to slipdraft spinning machines. Presently, the share of AD spinning frame is below 10%. The key reason for slow adoption of AD is its lack of cost-effectiveness for production of conventional sacking and Hessian products.

3.4.34.

Batching: Prior to 1990, Softener was used to soften the raw jute. Now Spreader is gradually replacing the Softener. The difference is saving of man-power and space, automatic doffing and ejection of rolls.

3.4.35.

Carding: Prior to 1990, there were three stages in carding: breaker, inter and finisher. After 1990, it has been reduced to two stages breaker and finisher, but still the industry has not been able to reduce stages of carding or increase the speed of existing cards. Wooden cylinders have been replaced by steel cylinders with the cards being same Mackie/JF cards. Mackie and JF exited the business in early 1990s but Indian counterparts have been manufacturing the Mackie and JF design cards with not much difference in speeds and quality.

3.4.36.

Drawing: The stages in drawing has remained same (1st drawing, 2nd drawing and 3 drawing) and speeds have also not gone up significantly. The only change has been that push bars have been replaced by screw and rotary gill resulting in productivity enhancement, but these were also done prior to 1990.

rd

3.4.37.

Spinning: In spinning the 5 frames with 80 spindles have been replaced by 4 inch pitch frames with 96 spindles, thereby improving the productivity by almost 40%.

3.4.38.

However, the speeds of spinning frames have largely remained unchanged. Apron draft has come in place of slip draft, which improves the yarn regularity, and the two legged flyer has mostly been

223

replaced with Baxter flyer. Ring spinning has been very limited in the jute industry as it requires better back processing system and higher quality of raw jute.
3.4.39.

Weaving: The industry is still running traditional shuttle looms that are mostly used for hessian and sacking. These looms run at slower speeds, create a lot of noise and produce a lower quality output compared to shuttle less looms. There is a large number of suppliers for shuttle looms and typically one can produce these looms for as low as Rs 50,000 compared to Rs 5, 00,000 for a shuttle less loom. However, very few mills have installed shuttle less looms such as STB, Rapier which can make both sacking and Hessian products. The speeds of conventional looms making sacking and hessian, which are the mainstay of the jute industry has remained the same over time.

3.4.40.

The jute industry has vintage machines which evident from the following facts as reflected in IJIRA Study (2005): a) In the softener section only 2% of the machines are less than 20 years old; b) In carding only 8% of the machines are less than 20 years old; and c) In spinning and weaving sections only 7% of machines are less than 20 years old.

3.4.41.

The reasons for no major technology development in the jute industry have been: i. All European machinery manufacturers such as M/s Mackie, Fraser etc. which were earlier responsible for the technology developments in the jute industry, exited the business in the early 1990s as many of the machines developed by them were not successfully adopted by the jute industry which had got concentrated in India and Bangladesh and were predominantly interested in producing traditional products like sacking and hessian. ii. As in the case of the international jute machinery manufacturers, the domestic textile machine manufacturing industry were also not inclined to develop jute mill machinery and as a result the development of new technology machines did not take place baring a few exceptions. iii. Heavy dependence on reservation under JPM Act provided little incentive to the industry to innovate and look for newer technologies. The price of B. Twill is administered by the government, which is a cost plus arrangement and there is little or no impetus from the industry to either improve quality or cost. iv. Ineffective technology development by Indian machinery manufacturers precludes their effective commercialization: Technology developments by Indian machinery manufacturers such as Lagan, Milltex etc., have been ineffective and their commercialization have not taken place.

224

3.4.42.

The Government of India has taken several steps for the modernization of the jute industry since 1980s, these are: 1. Jute Modernization Fund Scheme and Special Jute Development Fund both launched in the year 1985 failed to enthuse the jute industry. 2. The UNDP assisted CCF I programme (2000) specially meant for new technology machinery development have not also met with the desired success. 3. There have been the Technology Up-gradation Fund Scheme (1999 onwards) and the JMDC Incentive Scheme for Modernization of Jute Industry (2002 2007) for technological upgradation in jute industry, which has achieved limited results. 4. The ongoing Jute Technology Mission (2007 onwards) is making an effort to address the issues in a comprehensive manner however the utilization of funds in the three years has not been encouraging.

Slow adoption of advanced technologies

3.4.43.

The jute industry has been slow to adopt the existing advanced technologies such as Ring spinning and One Mac looms. From 200208, of the total 173 spinning frames that have been installed, only 17% were Ring Spinning (Figure below). Similarly, in the same period, of the total 1,402 looms installed, only 13% were shuttle less looms. Majority of the mills still use old technologies, even when technologies that are proven for the jute industry are available. For example in batching, 70% of the machines installed are softeners and only 30% are spreaders, a better technology to soften jute as it gives a better sliver quality and reduce man power requirement. Similarly in the carding section, out of the total number of cards installed across mills, 53% are Non JF/Mackie cards highlighting the use of other local cards. In material handling also, it is observed that 29% of the mills still do not have a forklift relying on traditional manual operations.

3.4.44.

The reasons for slow adoption of advanced technologies have been: i. Lack of availability of high quality raw jute (TD3) and weak backend processes. The adoption of advanced technologies such as Ring spinning and One Mac looms require strong backend processes along with higher quality of raw jute so that the sliver can be operated at higher speeds. It is observed that most mills, due to lack of process and quality controls coupled with inferior quality of raw jute have been unable to adopt advanced high speed machines. ii. Administered price given by government. The JPM mandatory act to package all food grains and sugar in jute packaging has not only safe guarded the industry but also, in a way, stopped the industry to innovate and improve processes as well as look to diversify and reduce cost. The administered price by the government on B Twill bags for packaging food

225

grain follows a cost plus pricing mechanism and there has been no thrust by the end customers, in this case the government, to push the industry to become price competitive. iii. Lack of concerted effort by industry to customize existing textile machines. There has been a lack of a collective effort by the industry to customize existing textile machines be it Thibeau Card from NSC or other machines such as One Mac loom, Ring spinning etc. iv. v. Government intervention to modernize the jute industry has not been successful The government has supported the jute industry in its modernization efforts but with limited success. The industry has added capacity by replacing old machines with new ones but only few mills have actually installed advanced machines, which can run sacking, the conventional product of the jute industry. vi. The Jute Modernization Fund was initiated in 1986 and TUFS launched in 1999 to help jute industry modernize. Only a few mills have taken advantage due to the limitation of banks coming forward to finance the modernization drive of jute mills due to poor financials of the jute mills and because of the preoccupation of the mills with traditional products. There after the JTM scheme for Acquisition of Plant and Machinery was launched with an outlay of Rs. 100 cr. The assistance is 20% capital subsidy or Rs 75 lac per mill (whichever is lower). The off take of funds under this scheme has so far been poor primarily because of the low subsidy cap.

Varying efficiencies and utilizations of machines across mills

3.4.45.

The jute industry shows varying efficiencies and utilizations across same machines for same product mix. The reasons for varying efficiency and utilizations of machines across mills are as follows: i. Varying batch mix by mills: It is observed that not all mills use superior quality of raw jute for the same machine condition and same product mix. Also there is a general shortage of high quality raw jute, which results in varying batch mixes by jute mills. ii. Lack of proper maintenance of machines: In most of the mills cheap non-standard spares of relatively low quality are being used. Most mills procure non-standard spares from local vendors and do not approach the OEMs. In most cases, the mills do not even have the standard drawings of spares. It is observed that most vendors for spares give mills a credit period of four months to a year to pay back thus compromising on the quality of spares for giving this credit period. Adding to this is the problem that most mills fail to maintain machines as per the instructions given by OEM s .The mills operate 3 shifts (8hr each) and 7 days a week and machines are run on continuous bases to offset the lower efficiency. iii. There is a severe shortage of quality staff in the maintenance department and there is a lack of proper training in maintenance. 226

iv.

Age of the machines: The machines in the jute industry are generally old and machine conditions in different mills vary depending on maintenance practices followed, worker training on the machines, age of machines etc., which results in variation in machine breakdown and quality of output produced.

v.

Lack of new jute technologists coming into the industry: Due to the tough working conditions compared to the textile industry, low compensation structure in the jute industry and outstanding statutory dues by jute mills, Jute Technologists are not joining the jute industry.

vi.

Absenteeism and shortage of workforce: Absenteeism and shortage of workforce in certain sections, such as spinning and weaving, is a major problem in most of the jute mills. This has resulted in varying utilizations of machines across mills. In contrast there are excess workers in some sections such as batching. However due to wage discrepancies the workers are not interested to move to jobs requiring higher skill and more effort jobs such as spinning and weaving.

vii.

Lack of strong process and quality control: In most of the mills, there is a lack of proper process controls along with lack of quality controls. Very few mills have ERP systems for electronic data collection, planning, review and monitoring of processes. More so, most mills do not even have electronic maintenance logs and still maintain primitive hand written logs, which makes it difficult to analyze past data and take corrective actions.

227

3.5 RECOMMENDATIONS
AGRICULTURE
3.5.1.

The Department of Agricultural Research & Education, Ministry of Agriculture, Govt. of India and Agriculture departments in the State Governments are primarily involved in administering the issues pertaining to Raw Jute its production and development. However, to supplement these efforts, Jute Manufactures Development Council (JMDC) is mandated (Section 7 of the JMDC Act 1983) to evolve an integrated approach to Jute cultivation in the matter of formulation of schemes, extension work, implementation and evaluation of schemes aimed at increasing the yield of jute and improving the quality thereof. The National Jute Board Act 2008 (Section 5) also mandates similar functions for the National Jute Board (NJB), under constitution. JMDC / NJB will, therefore, have an important and proactive role to play in jute agricultural sector to supplement the efforts of the Agriculture Ministry and the State Governments.

3.5.2.

In order to overcome the challenges the following four pronged approach needs to be followed: 1. Increase availability of certified seeds and improve distribution of the same through government agencies / channels. R & D of seeds involving reputed seed companies and development and maintenance of buffer stock of seeds. 2. Increase penetration of new farm techniques by conducting awareness programme. 3. Empower the growers, improve the marketing systems and infrastructure and develop buffer stock of raw jute at JCI. 4. Encourage contract farming for jute.

Availability of certified seeds and R & D of seeds:

Direct Government intervention in the production and distribution of jute seeds:
3.5.3.

The total requirement of different kind of seeds per annum is as follows: Breeder seeds: 1 ton Foundation seeds: 70 tons Certified/Truthfully Labeled seeds: 5500 tons

3.5.4.

Out of the total requirement of 5500 tons NSC and other state seed corporations supply around 1000 tons, major private seed producers supply around the same quantity and the rest is supplied by small 228

private seed producers. Majority of the seeds supplied by the small private producer are non certified seeds and non TL seeds. The private producers have the capability to produce more jute seeds, but they will require confirmed indent in advance from relevant stakeholders.
3.5.5.

Government should directly procure seeds through JCI from the private producers apart from NSC and distribute the same at a subsidized rate through its Departmental Purchase Centres, dealers of NSC, Panchayats, Cooperatives etc.

3.5.6.

Further special interventions by CRIJAF and other Agriculture Universities of West Bengal should be initiated to take up cultivation of certified seeds in dry districts like Purulia and Midnapore in West Bengal with direct funding from JMDC from cess fund. This will increase the acreage under jute seed cultivation and add to the availability of certified seeds.

Develop buffer stock for jute seeds by Government

3.5.7.

Total demand for seeds in India is 5,550 tons / annum. Currently no buffer stock is maintained by NSC as well as private producers. Like jute, the yield for jute seeds fluctuates around 1.258 quintal/ha, which makes it important to maintain buffer stock for jute seeds.

3.5.8.

Seeds storage requires special infrastructure i.e., controlled temperature and humidity levels. NSC already has the necessary storage infrastructure in different locations across India. NSC should support the storage of buffer stock of jute seeds by allowing the usage of its infrastructure. Buffer stock planning and coordination with different stakeholders should be taken up by JMDC. Buffer Stock funding will be arranged by JMDC from cess fund.

Set direction for new seed development and involve reputed companies e.g. Monsanto to develop HYV of jute seed
3.5.9.

Jute yield and productivity have hardly changed over the years. In order to provide competitive returns to the farmers it is imperative to increase productivity in raw jute manifold. This can only be achieved through use of high quality seeds. A steep change in cotton productivity was witnessed post introduction of BT seed varieties developed by Monsanto. Direct governmental involvement would be required as neither the jute industry has the capability to fund the research nor is the jute seed market big and lucrative enough to attract private research and development companies to invest in research in jute seed development. The aim of the program should be to replicate the benefits obtained by the cotton industry with the development of BT Cotton, which has doubled the yield of cotton in India.

3.5.10.

Ministry of Agriculture may be requested to initiate the development process.

229

Increase penetration of new developments in seed and farm techniques by conducting awareness programmes.
3.5.11.

The extension wing of the respective State Governments may be asked to intensify their effort in creating awareness among the farmers regarding the new developments in seed and farm techniques. Over and above these joint efforts should be made by CRIJAF/NIRJAFT and JCI in the dissemination of the new developments. Funds may be provided from JMDC cess fund.

Improve the existing marketing systems and infrastructure to improve farm remuneration.
3.5.12.

A sizeable quantity of raw jute passes from the hands of the growers to the traders at the village / doorstep despite the existence of the Agricultural Produce Marketing Act which prohibits any kind of trade ( changing of hands ) (in notified agricultural products including jute) outside the market yard premises. Most of the farmers are small and marginal and are in need of immediate cash flow from their produce. Many of them take cash advance from the traders. Further jute is a high volume low value product. This characteristic constraints movement and adds to cost of selling. These factors are primarily responsible for doorstep/village trade.

3.5.13.

The trade at the village/doorstep level has its advantages but at a price. The grower is freed of the trouble of transporting the produce to the market yard and of the uncertainty of striking a deal at the market yard. He however is exposed to the risk of being paid prices lower than ruling market prices and of being cheated on moisture content and grade.

3.5.14.

The growers at village levels are not organized and are unable to take a collective position. The non existence of effective growers groups/organizations especially at the village level exposes individual growers to the unscrupulous traders.

3.5.15.

Organising the growers into self help groups and empowering them to address their issues will go a long way in reducing the volatility in raw jute prices and ensuring better returns to them. A special program for formation of Self Help groups of growers and their empowerment may be taken up immediately by JMDC through cess fund.

3.5.16.

The state governments may be requested to strictly implement the provisions of APMC act to increase the volume of trade of raw jute in the premises of market yards.

3.5.17.

Out of the 710 markets, 500 markets do not have proper infrastructure. Hence, it is important to study the different markets where raw jute is traded in detail and develop a plan to build marketing infrastructure with initial focus on the four key jute growing districts in West Bengal. Market yards are largely social infrastructure; hence, it is important for the government (state and center) to develop a roadmap considering that other crops will also be a part of the marketing infrastructure. 230

Develop buffer stock of raw jute at JCI.

3.5.18.

Considering the high fluctuation of prices of raw jute, it is imperative to develop a buffer stock, which can be used during upward price revision. The Jute Corporation of India should undertake judicious commercial operations to build up buffer stock and play a price stabilizing role. While carrying out commercial operations JCI should not be solely driven by profit motive. It should not restrict its role to only MSP operations.

3.5.19.

It is suggested that buffer stock should be maintained by JCI, and Govt. should compensate JCI for that. At present JCI carries out MSP operation and sells the jute through linkage with PCO by J.C. office. In a normal jute year (July to June) (yield more than 100 lakh bales), prices generally hovers around MSP during the heavy arrival months August to November, mainly in Sept & Oct. JCI should purchase raw jute at a predetermined price band say 5 to 7% above MSP and keep the jute as stocks in its newly developed godowns under MM-III scheme of JTM and not dispose it through linkage. The cost of holding should be compensated by the Govt utilizing the jute cess fund. During the time of jute shortage and higher prevailing market price (which happens in short crop year) these jute should be sold to mills at a determined price (by a expert committee comprising of JS (Jute), JC, CMD JCI, representative from IFA of Ministry, and IJMA representative). This will act as a hedge against speculation of raw jute and also will stabilize the ruling market price of raw jute. The difference between sale price and purchase price should be treated as the profit of JCI.

3.5.20.

In extreme situations the powers to regulate stock under Clause 5 of the Jute and Jute Textiles Control Order 2000, may be exercised by the Jute Commissioner.

Encourage contract farming for jute

3.5.21.

One of the key challenges currently faced by the grower is that of market linkage and that of the jute mills is the unavailability of the right quality and quantity of raw jute. Hence, the jute mills should adopt on pilot basis 12 villages and enter into legal agreement with the grower in terms of price i.e., market prevailing price and minimum quantity off-take. The jute mills should assure higher of MSP or market prevailing price and ensure adherence of the partnership agreement. The mills should assist in obtaining financial assistance to the grower to buy farm implements and crop loan.

231

Develop effective mechanism for delivery of government interventions

3.5.22.

Adoption of new farming technologies, new variety of seeds, use of fertilizers and pesticides are all dependent not only in their availability but to large extent on the remuneration the grower gets. Unfortunately the raw jute sector is at the mercy of the middlemen and traders. Despite existence of a plethora of laws, rules and state machinery the traders are able to exploit the growers at will. The free play of the traders reduces the remuneration of the farmers which affects their sentiment and impacts their portfolio decision. The jute sector is a strong case for empowerment

3.5.23.

For any governmental intervention to succeed in the farm sector of jute the recipients should first be organized and empowered. Without organizing them and empowering them all deliveries made will have limited impact.

3.5.24.

At present the growers at village levels are not organized and are unable to take a collective position. The non existence of effective growers groups/organizations especially at the village level exposes individual growers to the unscrupulous traders. Organising the growers into groups and empowering them to address their issues will go a long way in reducing the volatility in raw jute prices and ensuring better returns to them. Better returns in turn would motivate the growers to adopt new seeds and farming techniques.

3.5.25.

The government of India and the state governments have been implementing various schemes for empowerment of women and poor in the rural areas throughout the country by forming self help groups. The self help groups not only take care of credit needs (the SHG is eligible for bank credit also) of its members it also organizes them to collectively solve their problems and carry out economic activities. These schemes have met with varied success across the country.

3.5.26.

A special scheme may be taken up under JMDC for organizing and empowering the jute growers by adopting the self help group model.

3.5.27.

It is possible that a large number of jute growers are already members of self help groups in their villages. A survey may be carried out in collaboration with the District authorities to assess the extent of coverage jute growers through existing self help groups. New SHGs may be formed in gap areas and in existing SHGs efforts may be made to focus on jute farming and raw jute trading issues . The same self help groups can be targeted for dissemination of new technologies and knowledge.

232

INDUSTRY
Placing conditions along with government orders and gradual withdrawal of reservation under JPM Act
3.5.28.

One of the most important factors responsible for many of the ills affecting the jute sector today is the unconditional protected market provided over the years coupled with administered cost plus pricing system for such products. As discussed earlier the protection has made the industry lethargic and non competitive. However immediate and full withdrawal of the protection would probably drive the last nail in the coffin especially keeping in view the disappearance of the major players in the machinery development and manufacturing sector. It would therefore be advisable to continue the protection at the present levels for a few years with certain conditions: a) Condition 1: the mills should modernize their processes progressively during this period. b) Condition 2: The man days taken for pricing the government purchase would progressively be reduced from the present level to the best man days achieved in the industry at the end of the third year. c) Condition 3: The raw jute to jute bag conversion would be progressively reduced from the present levels to the best conversion ratio achieved in the industry, at the end of the third year.

3.5.29.

From the fourth year onwards pricing will be based on the best achieved parameter. From the sixth year, gradual reduction of the protection should be introduced . Only mills which are willing to comply would be given the benefit of government orders. In case a mill does not comply and there is change of management even then it would not be given benefit of government orders.

Creation of a Jute Development Fund for R&D efforts:

3.5.30.

At present the R & D is being carried out through a CJMD set up as an SPV on PPP mode. The total funding is around Rs. 28.0 Cr. for development of machinery. This effort need to be intensified further through creation of a jute development fund.

3.5.31.

A jute development fund may be created with a corpus of around Rs. 100 crores to fund the R & D efforts of technology development and commercialization . Industry should have a holistic perspective while developing technological solutions and should ensure adequate returns. The industry may assume a more pro-active role in technology development / modernization. These may be by way of exploring the progress in related areas by making visits to machinery manufacturing

233

facilities, R & D facilities etc. both in India and in abroad. Foreign collaboration in knowledge resources and investment for technology and machinery development may be tied up.
3.5.32.

Modernization and adoption of new Technology: The government may intensify its support to modernization of the Jute industry as well as development and the adoption of new technology. Machines should be categorized and a higher subsidy can be decided for mills installing technologically advanced machines. Government may look to promote special machines such as shuttle less looms, intersecting gill drawing frame, non-woven technology, etc. with regard to allocation of B Twill orders, and linking it to External Market Assistance. The funding for schemes of machinery development and subsidy for investment in new and modern machines under JTM mini-mission IV need to be substantially augmented. Initially the fund size was Rs. 100.0 Cr. which was reduced to Rs. 80.0 Cr. For meaningful Modernization, the size of the fund needs to be increased. The government needs to provide additional funding after the present amount is used up. The Modernization support needs to be continued even after the end of JTM period. The cap of Rs. 75 lakh per mill in the subsidy scheme for acquisition of machinery may be increased / removed.

Improve working conditions at the shop floor, develop better work culture and adopt better maintenance practices.
3.5.33.

The industry will have to improve working conditions in the mills, develop better work culture and adopt better maintenance practices in order to achieve the rated efficiencies of the machineries. a. Mills should improve processes by implementing Total Quality Management: Mills have been installing machines without improving their process and quality controls. Scientific production scheduling needs to be undertaken and bottlenecks needs to be identified and removed to get maximum throughput from the system. b. There is a big need for mills to move to ERP system so that the system itself can build in controls to carry out activities and can help timely relay of information and analysis of past data to make informed decisions. c. Mills should enhance use of statistical tools to improve processes.

d. Mills should look to improve maintenance practices through use of quality spares, by rationalizing vendors and spares, by sourcing all critical spares from original machinery manufacturers, the drawings of all their spares should be standardize . The mills should follow practices as suggested by OEMs and should rigorously follow OEM maintenance schedules and by providing proper training to maintenance workmen. 234

e. Mills should look to adopt automated material handling equipment where possible.
3.5.34.

Assistance for undertaking the above activities, JMDC will continue to extend support from the Cess fund.

3.5.35.

Skill Development and Upgradation of the Workforce: i. Industry may take necessary steps to expand the talent base available with more attractive compensation packages, better working environment etc. They may also play a bigger role in operating skill development programmes in collaboration with Institute of Jute Technology. ii. Industry may create a pool of new well trained work force by imparting training to the new entrants in collaboration with different Government agencies. iii. Industry should take up programmes for continuing up-gradation of skills of workers. Workers should be trained across all sections so that they have multiple skill sets and can be rotated across jobs. More importantly incentives should be given to workers by the mills for skill upgradation iv. For the industry to attract talented people, the image of the industry needs to change. It has to change from being one, which does not comply with the labor laws to an industry, which is 100% compliant with labor laws, is transparent to its employees and has good future growth prospects. A big need of the hour is for the mills to clear off all statutory dues, improve working conditions and strictly follow labor laws. A strong value system needs to be created for the industry to prosper and grow. v. vi. The present workers training programme under JTM needs to be refocused. Further, new scheme with a total funding of Rs 100 Crore for a period of five years requires to be created for all round development of HRD need in the jute sector across the value chain.

Export Market Development:

3.5.36.

Various approaches need to be adopted by the relevant stakeholders in order to increase competitiveness of India in export markets. i. Export incentive schemes need to be revived and the Indian industry may be supported to remain competitive ii. Assist in commercialization of new and innovative jute products and their applications e.g., low cost jute bags, geo-textiles, composites and other technical textiles.

3.5.37.

JMDC may fund the above two initiatives from the Cess fund.

235

Product Development and Marketing:

(a) Product Development:
3.5.38.

The industry may undertake more market driven product development to produce innovative jute products and to increase the cost competitiveness of existing product range with the help of R&D institutes. (b) Protection of existing markets and development of new markets i. The industry should adopt a two-pronged approach to reduce the single product dominance. It has to retain its existing market and protect it from loss of share against competing products and at the same time also focus on developing new markets and products. ii. Key lever for protection of existing market is to optimize the cost of production of current jute products and focus on clearing regulatory hurdles for global acceptability of jute products by highlighting the life cycle benefits of jute bags and products over synthetic bags and products. iii. Industry should come up with cheaper and lighter weight bags for government use and for other usage. iv. For existing products the focus should also be on new markets and it is important to identify the key potential markets. v. Regular Market surveys, both for domestic and international markets should be conducted to find new markets for existing products, to find new application areas and their market potential and to develop market intelligence and marketing strategies. vi. In order to support usage of natural fibers over poly propylene, many of the governments worldwide (Hong Kong, Ireland, USA) have imposed pollution tax on plastic bags. Certain states/ union territories in India have imposed a complete ban / restriction on usage of plastic bags. Similar steps are required to be taken uniformly by all State Governments and the Union government. The Jute industry should establish appropriate supply chain to seize the opportunity created due to such imposition and restrictions. vii. Conduct an immediate study to internationally establish the ecofriendliness of jute and develop its hydrocarbon free equity. c) Institutionalized marketing effort at industry level

3.5.39.

Multiple approaches that have to be deployed are: i. ii. Standardize products for given end user applications and branding. Assist efforts in commercialization of jute products through applications in geo-textiles, etc.

236

d) Creation of awareness about jute in developed nations a. Jute has several environmental benefits like bio-degradability, is recyclable in nature and helps in soil fertility improvement. In addition jute has various other properties such as mechanical strength, resistance to heat and high moisture absorption capacity. On account of the detrimental environmental impact of plastic based packaging materials and the increasing focus of countries towards environment friendly products, there is a need for jute to be promoted as the natural and environment friendly fibre to the world. b. Eco-labeling of jute products is necessary to position jute products as environment-friendly, economical and acceptable to developed countries . Increasing awareness of the deleterious impact of global warming to environment must be effectively leveraged by the industry using jutes strong ecofriendly credentials especially to the developed world. c. Besides eco-labeling the industry must make concerted efforts to make jute products hydrocarbon free. d. Creation of mass awareness for jute products and their applications in domestic as well as international market, supported by appropriate supply chain is also necessary.
3.5.40.

JMDC has already conducted a Life Cycle Analysis on Jute on certain products. Their present efforts need to be refocused and intensified in light of the above.

Strengthening of informal sector for production of diversified Jute Products:

3.5.41.

A large number of medium and small sector entrepreneurs, NGOs, SHGs and individuals are engaged in production and marketing of jute diversified products (JDPs) as a result of concerted efforts made by NCJD since its inception in 1994. The efforts of NCJD have not only increased the usage of jute as such, it has also changed the image of jute from that of a packaging material to one that can be used for diversified application including niche products. NCJD is implementing different schemes under the JTM for entrepreneurship development, empowerment of WSHGs, etc. NCJD will continue its efforts and widen its sphere of activities in this direction. The funds allotted for schemes under mini-mission IV of JTM need to be augmented to widen their scope and coverage. This will not only lead to increase the use of jute and jute products but will also help in empowerment of the weaker section in the rural and semi-urban areas and help in generation of employment in the sector.

237

3.6 ROAD MAP

BASE YEAR 2010 NEXT 5 YEARS 1. AGRICULTURE Direct Govt intervention in Direct Govt intervention in Direct Govt intervention in the production & distribution the production & distribution the distribution of Certified of Certified Jute Seeds of Certified Jute Seeds Jute Seeds Develop buffer stock for jute Develop buffer stock for jute Develop buffer stock for jute seeds by Govt. seeds by Govt. seeds by Govt. Set Direction for new seed development & involve reputed international companies Development of new seeds Continue to extend support in collaboration with reputed to self help groups of international companies farmers to reduce the volatility in raw jute prices Increase penetration of new and ensuring better returns developments in seed & Increase penetration of new to them. developments in seed & farm techniques by farm techniques by conducting awareness To utilise and improve upon conducting awareness programme high output retting programme technologies Continue to extend support to self help groups of Organising the growers into Ensure raw jute trading self help groups and farmers to reduce the thhrough market yards in empowering them to volatility in raw jute prices most districts address their issues to and ensuring better returns Continue to hold buffer reduce the volatility in raw to them. stock for raw jute at JCI jute prices and ensuring To utilise and improve upon better returns to them. Continue to spread contract high output retting farming for jute Develop high output retting technologies technologies To achieve a target of Ensure raw jute trading increasing production of Develop market yards in thhrough market yards in higher grade raw jute by key focus districts most districts 45% (over 2010) to around Develop buffer stock for raw Continue to hold buffer 135 -145 lakh bales jute at JCI stock for raw jute at JCI Spread contract farming for jute To achieve a target of increasing production of higher grade raw jute by 35% (over 2010) to around 125 -130 lakh bales NEXT 10 YEARS NEXT 15 YEARS

Encourage contract farming for jute To achieve a target of increasing raw jute production by 25% (over 2010) to around 115 - 120 lakh bales

238

NEXT 5 YEARS 2. INDUSTRY Placing conditions along with government orders under JPM Act Creation of a Jute Development Fund for R&D efforts in developing new machines and Technology Modernisation in jute industry and Development and adoption of new Technology Skill Development and Upgradation of the Workforce Export incentive schemes need to be revived and the Indian industry may be supported to remain competitive Assist in commercialization of new and innovative jute products and their applications e.g., low cost jute bags, geotextiles, composites and other technical textiles. Undertake more market driven product development to produce innovative jute products and to increase the cost competitiveness of existing product range with the help of R&D institutes Protection of existing markets and development of new markets Standardise new products, Conduct study to establish eco-friendliness, assist effort in commercialization of new jute products Eco-labeling to position Jute as eco-friendly product in developed countries. Strengthening of informal sector for production of

NEXT 10 YEARS

NEXT 15 YEARS

Gradual withdrawal of reservation under JPM Act. Continuation of Jute Development Fund for commercialization of R&D efforts in developing new machines and Technology Modernisation effort to continue with lesser Govt support Skill Development and Upgradation of the Workforce to continue Export incentive schemes to continue with lesser Govt. support Assist in commercialization of new and innovative jute products and their applications to continue. Continue to undertake market driven product development to produce innovative jute products and to increase the cost competitiveness of existing product range with the help of R&D institutes Protection of existing markets and development of new markets Standardisation process to continue, conduct study to establish eco-friendliness and disposal protocol, to continue to assist effort in commercialization of new jute products Eco-labeling to position all Jute as eco-friendly product in developed countries as per international norms. Continue to support informal sector for production of diversified

JPM Act operation withdrawn Continuation of Jute Development Fund for commercialization of R&D efforts in developing new machines and Technology Modernisation effort to continue without any Govt support Skill Development and Upgradation of the Workforce to continue Export promotion without Govt. support Assist in commercialization of new and innovative jute products and their applications to continue. Continue to undertake market driven product development to produce innovative jute products and to increase the cost competitiveness of existing product range with the help of R&D institutes Protection of existing markets and development of new markets without govt. support Standardisation process to continue, conduct study to establish eco-friendliness and disposal protocol, to continuer to assist effort in commercialization of new jute products Eco-labeling to position all Jute as eco-friendly product in developed countries as per international norms. Continue to support informal sector for production of diversified

239

NEXT 5 YEARS diversified Jute Products By utilising higher raw jute production, modernisation the production of jute goods to increase by 25% to around 20.00 lakh ton per annum by 2015. To improve the product mix - by reducing the dependence on sacking and hessian from present level of 82% to 70% by 2015. The target will be to achieve a 75:25 domestic: export scenario (by volume) by 2015. The value wise position of domestic: export by 2015 will be 70:30.

NEXT 10 YEARS Jute Products By utilising higher raw jute production, modernisation the production of jute goods to increase by 30% to around 22 lakh ton per annum by 2020. To improve the product mix - by reducing the dependence on sacking and hessian from present level of 82% to 60% by 2020. The target will be to achieve a 70:30 domestic: export scenario (by volume) by 2020. The value wise position of domestic: export by 2020 will be 68:32.

NEXT 15 YEARS Jute Product By utilising higher raw jute production, modernizations the production of jute goods to increase by 35% to around 20.00 25 lakh ton per annum by 2025. To improve the product mix - by reducing the dependence on sacking and hessian from present level of 82% to 50% by 2025. The target will be to achieve a 65:35 domestic : export scenario (by volume) by 2025. The value wise position of domestic : export by 2025 will be 65:35.

240

3.7 ACTION POINTS

AGRICULTURE
Direct Government intervention in the production and distribution of jute seeds:
3.7.1.

Government should directly procure seeds through JCI from the private producers apart from NSC and distribute the same at a subsidized rate through its Departmental Purchase Centre, dealers of NSC, Panchayats, co-operatives etc.

3.7.2.

The fund requirement will be the interest burden on procuring the seeds at the beginning of the sowing season and the subsidy of Rs. 40/- per kg. leading to cash outflow of Rs 15 crores in the first five years. This cash outflow can be jointly shared between the different agencies comprising Central Government, State Government of West Bengal and JCI and JMDC. From the sixth year onward no subsidy will be provided. The expenditure will be towards interest payments for placement of Orders which may be @ Rs. 1.0 cr. Per anum. Total fund requirement for 10 years Rs. 20 Cr.

Introduce jute seed cultivation in dry districts in West Bengal :

3.7.3.

Special interventions by CRIJAF and other Agriculture Universities of West Bengal should be initiated to take up cultivation of certified seeds in dry districts like Purulia and Midnapore in West Bengal. This will increase the acreage under jute seed cultivation and add to the availability of certified seeds. An estimated amount of Rs. 5.0 crores may be needed in the next ten years.

Develop buffer stock for jute seeds

3.7.4.

Like jute, the yield for jute seeds fluctuates around 1.258 quintals/ha, which makes it important to maintain buffer stock for jute seeds.. Buffer stock planning and coordination with different stakeholders should be taken up by JMDC and JCI. As the yield fluctuates around 1.25 8 quintals/ha, 20% of the total requirement should be built as buffer.

3.7.5.

Funding required to develop buffer stock for jute seeds a) Working capital required for holding buffer stock - Rs 3-4 Cr b) Funding required (Interest cost for 1 yr) Rs 0.4-0.5 cr (including storage cost) c) Development of Storage Infrastructure (~ 70,000 cu. ft.) Rs 1 1.5 cr.

241

Total fund required for 10 years Rs. 6.5 Cr.

3.7.6. 3.7.7.

Improve the existing marketing systems and infrastructure to improve farm remuneration. For any governmental intervention to succeed in the farm sector of jute the recipients should first be organized and empowered. Without organizing them and empowering them all deliveries made will have limited impact.

3.7.8.

A special scheme may be taken up under JMDC for organizing and empowering the jute growers by adopting the self help group model.

3.7.9. 3.7.10.

The help of reputed and established may be taken for formation and training of SHGs. A fund of Rs. 2.5 crores may be earmarked for the purpose of formation of new SHGs and reorientation of existing SHGs.

3.7.11.

The state governments may be requested to strictly implement the provisions of APMC act to increase the volume of trade of raw jute in the premises of market yards.

Increase penetration of new developments in seed and farm techniques by conducting awareness programmes:
3.7.12.

CRIJAF, JCI should augment the efforts being made by the extension wing of the Government of West Bengal in creating awareness among the farmers.

3.7.13.

Farmers Information Centres may be set up for dissemination of knowledge, price information, and training on grading and other issues and equipment like moisture meter may be provided. These centres may be set up initially at the JCI centres and gradually spread to Panchayat level.

3.7.14.

Total fund requirement for 10 years Rs. 11.75 Cr.

Develop high output retting technologies

3.7.15.

The retting technologies currently used are not economically viable and are time consuming. Thus, moving forward, as labour availability is going to be a concern, it will be imperative to focus on R&D of new machines, which can change the way retting is done. The R&D effort needs to be intensified and if necessary foreign collaboration may also be considered. A fund of Rs. 10.0 cr. may be needed for development of new retting technologies and their adoption.

242

Develop buffer stock for raw jute

3.7.16.

As estimated, the total production of raw jute in a normal year will be around 100 lakh bales. The JCI should maintain a buffer stock around 5% of the quantity, i.e. 5 lakh bales. To maintain this buffer stock it is estimated that around Rs. 200 Cr. Will be needed upfront and around Rs. 25.0 Cr. will be needed per year to maintain the stock. Rs. 25.0 Cr. Includes the interest burden @ 10.0%, insurance cost, cost of holding etc. Working Capital Rs. 200 Cr. Annual outgo Rs. 25.0 Cr / annum.

3.7.17.

Set direction for new seed development and involve reputed companies e.g., Monsanto to develop HYV of jute seed.

3.7.18.

Jute yield and productivity have hardly changed over the years. In order to provide competitive returns to the farmers it is imperative to increase productivity in raw jute manifold. This can only be achieved through use of high quality seeds. A steep change in cotton productivity was witnessed post introduction of BT seed varieties developed by Monsanto. The issue may be taken up with the Ministry of Agriculture.

Encourage contract farming for jute

3.7.19.

One of the key challenges currently faced by the grower is that of market linkage and that of the jute mills is the unavailability of the right quality and quantity of raw jute. Hence, the jute mills should adopt on pilot basis 12 villages and enter into legal agreement with the grower in terms of price i.e., market prevailing price and minimum quantity off-take.

INDUSTRY
Placing conditions along with government orders under JPM Act.
3.7.20.

One of the most important factors responsible for many of the ills affecting the jute sector today is the unconditional protected market provided over the years coupled with administered cost plus pricing system for such products. As discussed earlier the protection has made the industry lethargic and non competitive. However immediate and full withdrawal of the protection would probably drive the last nail in the coffin especially keeping in view the disappearance of the major players in the machinery

243

development and manufacturing sector. It would therefore be advisable to continue the protection at the present levels for a few years with certain conditions: a) Condition 1: the mills should modernize their processes progressively during this period. b) Condition 2: The man days taken for pricing the government purchase would progressively be reduced from the present level to the best man days achieved in the industry at the end of the third year. c) Condition 3: The raw jute to jute bag conversion would be progressively reduced from the present levels to the best conversion ratio achieved in the industry, at the end of the third year.
3.7.21.

From the fourth year onwards pricing will be based on the best achieved parameter. From the sixth year, gradual reduction of the protection should be introduced. Only mills which are willing to comply would be given the benefit of government orders. In case a mill does not comply and there is change of management even then it would not be given benefit of government orders.

3.7.22.

Creation of a Jute Development Fund for R&D efforts in developing new machines and Technology

3.7.23.

The existing JTM schemes of machinery development through CJMD and individual entrepreneurs may be augmented by additional funding of another Rs 30 Crore in first five years. Collaboration with foreign Textile machinery manufacturer to attain break-through technological advances in the jute industry. This will come at a considerable cost which may be to the tune of Rs. 30.0 Cr. for a period of 5 years.

Modernization and adoption of new Technology

3.7.24.

The existing scheme of acquisition of plant and machinery under JTM is handicapped with a low cap on subsidy. To make any reasonable impact, the subsidy cap has to be increased and funds have to be augmented. It is expected that if the cap is removed or enhanced substantially, the pace of modernization will accelerate. An additional funding of Rs 80 Crore would be necessary under this scheme / similar scheme for meaningful modernization of the industry.

Skill Development and Up-gradation of the Workforce

3.7.25.

The present funding under the JTM scheme is a meager Rs 4 Crore. A total funding of Rs 100 Crore would be necessary for a period of five years for all round development of HRD need in the jute sector across the value chain.

244

3.7.26.

Export incentive schemes need to be revived and the Indian industry may be supported to remain competitive

3.7.27.

There is no specific export scheme for jute products at present. To operate an effective scheme there is a need of funding of around Rs 100 Crore in five years time.

3.7.28.

Assist in commercialization of new and innovative jute products and their applications

3.7.29.

Commercialization of new products may take off after the some time lag for product development. Hence a fund of Rs 5 Crore may suffice.

3.7.30.

Undertake more market driven product development to produce innovative jute products and to increase the cost competitiveness of existing product range with the help of R&D institutes

3.7.31.

Product development decisions will depend on feed-back received fro market research. The funding need may be envisaged between Rs 10 Crore to Rs 20 Crore

Standardize products,
3.7.32.

Product standardization cost will mainly be the bulk trial and testing necessary for the purpose. This may be within Rs 5 Crore.

3.7.33. 3.7.34.

Eco-labeling to position Jute as eco-friendly product in developed countries.

Fulfilling Eco-labelling parameters and implementation may need a funding of Rs 10 Crore

3.7.35. 3.7.36.

Strengthening of informal sector for production of diversified Jute Products

The informal sector will need more support compared to their financial involvement. It may be necessary to allocate an additional fund of Rs 30 Crore over and above the existing schemes.

245

3.8 POLICY STATEMENT

PREAMBLE
3.A.1.

Government recognizes the significance of jute in Indias economy, providing sustenance to more than 44 lakh people including jute farmers, workmen, laborers and self employed artisans and weavers, especially in the Eastern and North-eastern parts of the country, where it is the mainstay of agro based industries. It has been recognized that jute and allied fibers occupy a unique position as eco-friendly, biodegradable renewable natural fibers with substantial value addition at each stage of processing. The policy aims to enhance the welfare and well-being of farmers, farm labour, workers, particularly those in the unorganized sector and assure a secure future for their families in every respect through offering remunerative earnings across the value chain. The policy also aims to increase the use of jute in new areas in order to ensure a sustainable growth of the sector and as a measure towards environment protection.

VISION
3.A.2.

Endowed as the Indian Jute Sector is with multifaceted advantages, it shall be the policy of the Government to develop a strong and vibrant sector that can: 1. Compete with confidence in the domestic and global market and become self sustaining; 2. Ensure remunerative returns to the jute farmers. 3. Produce good quality fibre and products to meet the requirements of the domestic and international demand; and 4. Increasingly contribute to sustainable employment and the economic growth of the nation.

246

OBJECTIVES
1. Enable the jute industry to build world-class state-of-the-art manufacturing capabilities in conformity with environmental standards. 2. Facilitate the Jute Sector to attain and sustain an eminent share in the global and domestic market of technical textiles. 3. Enable jute farmers to produce better quality jute fibre and to enhance yield of raw jute substantially; 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. Encourage stakeholders to collaborate, develop mechanisms and undertake activities that assist in bringing about overall development of the jute sector; 6. Make Information and Communication Technology, 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;

THRUST AREAS
3.A.3.

In furtherance of the above objectives, the strategic thrust will be for a new Commodity Development Strategy incorporating the following: 1. Adopt appropriate marketing strategies for positioning and promotion of jute as eco-friendly fibre; 2. Modernize the jute industry to improve efficiency in production and processing, to reduce cost, enhance product quality and develop new products; 3. Counter the threat of erosion of the market for traditional products and encourage diversification by timely regulatory and promotional interventions. 4. Enhance the productivity / yield of raw jute through basic, strategic and adaptive research and improve on-farm practices to ensure remunerative returns. 5. Address the issues pertaining to the welfare of the large number of workers engaged in the jute industry, which is primarily labour intensive, and to improve their working environment and emoluments of the workers conducive to a reasonable quality of life.

247

6. Involve and ensure the active co-operation and partnership of State Governments, Financial Institutions, Entrepreneurs, and Farmers Organizations in the fulfillment of these objectives. 7. Increase exports through innovative marketing strategies and improvement of product design and quality consciousness in the jute industry;

248

ANNEXURE JUTE FIBRE

1. JCI - Jute Corporation of India 2. JMDC - Jute Manufactures Development Council 3. JTM - Jute Technology Mission 4. IJMA - Indian Jute Mills Association 5. CRIJAF - Central Research Institute for Jute & Allied Fibre 6. NIRJAFT - National Institute of Research on Jute & Allied Fibre Technology 7. NCJD - National Centre for Jute Diversification 8. JPMA - Jute Packaging Materials Act 1987 9. MM - Mini Mission for Jute Technology Mission 10. 11. 12. 13. UNDP - United Nations Development Programme CCF - Country Co-operation Framework NSC National Seed Corporation D & B M/s Dun and Bradstreet Information Service India Private Ltd.

249

3.A.1. ACKNOWLEDGEMENT
3.A.1.

Assistance has been taken from following reports and publication while preparing this Policy Document on jute:1. Ernst & Young Report on Strategic Review of the Indian Jute Industry. 2. Draft Report of Dun & Bradstreet, the knowledge Partner, on National Fibre Policy on jute. 3. Reports and Publications of JMDC 4. Reports and Publications of IJMA 5. Reports of Directorate of Jute Development, Ministry of Agriculture, Govt. of India 6. Reports and Publications of CRIJAF and NIRJAFT 7. Tariff Commission Report 2009 8. Reports and Records of the Office of the Jute Commissioner

250

3.A.2. MEMBERS OF SUB-GROUP (JUTE) FOR NATIONAL FIBRE POLICY

S. No 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Name Shri Binod Kispotta, Jute Commissioner Shri Atri Bhattacharya, Secy. Jute Manufacturers Development Council (JMDC) Dr R. C. Tiwari, CMD, Jute Corporation of India (JCI) Shri Sanjay Kajaria, Chairman, Indian Jute Mills Association (IJMA) Shri Nirmalaya Mukherijee (alt.), Indian Jute Mills Association (IJMA) Col. A. Poddar, Director, Indian Jute Industries Research Association (IJIRA) Shri S. Khaitan, President, Association of Jute & Handicrafts Entrepreneurs of Eastern India (AJHEEI) Shri G. K. Roychowdhuri (alt.), Association of Jute & Handicrafts Entrepreneurs of Eastern India (AJHEEI) Dr. K. K. Satpathy, Director, National Institute of Research on Jute & Allied Fibre Technology (NIRJAFT) Dr. G. Basu, National Institute of Research on Jute & Allied Fibre Technology (NIRJAFT) Dr. B. S. Mahapatra, Director, Central Research Institute For Jute & Allied Fibres (CRIJAFT) Dr. M. K. Sinha (alt.), Central Research Institute For Jute & Allied Fibres (CRIJAFT) Designation Convener Member Member Member Member Member Member Member Member Member Member Member Member Member

13. Prof. S. K. Sett, Institute of Jute Technology (IJT) 14. Dr. S. K. Biswas, Director, , Jute Development, Ministry of Agriculture

251