The Indian government Thursday approved a proposal to make jute packaging mandatory for all food grains. The move is aimed at giving a fillip to the jute industry, increasing the quality and productivity of raw jute, and raising the income of farmers.

As per the decision, all food grains and 20 percent of the sugar produced need to be packaged in diversified jute bags. Earlier, it was compulsory to pack 90 percent of the food grains and 20 percent of the sugar in jute bags.

According to Indian media reports, the jute industry is predominantly dependent on the government sector, which purchases jute bags worth more than IRs65 billion every year for packing food grains. The move will benefit farmers and workers in West Bengal, Bihar, Odisha, Assam, Andhra Pradesh, Meghalaya and Tripura.

Last January, India imposed anti-dumping duty ranging from $6.30 to $351.72 per tonne on the import of jute and jute products from Nepal in a bid to protect its jute industry. The duty will remain in effect for five years.

The import-restrictive levy has been imposed on jute yarn/twine, Hessian fabric and jute sacking bags in ‘all forms and specifications’. The Indian government claimed that its decision to implement the tax prompted the revival of 13 closed jute factories in Andhra Pradesh and created 20,000 jobs. The initiative also increased domestic jute demand by an additional 200,000 tonnes, according to Indian authorities. Prakash Mundra, first senior vice-president of the Nepal Jute Mills Association, said that the anti-dumping duty and the new policy of the Indian government could severely affect Nepal’s jute factories which are already fighting for survival. He added that the Indian government had taken the decision to protect Indian industry.

“The decision is good because it will expand the Indian jute market although Nepal will not benefit directly from the policy. In order to protect Nepal’s jute industry, the government should make efforts to remove the anti-dumping duty imposed by India on Nepali jute products.” Nepali jute producers import 70 percent of their raw materials from India and export finished products to the southern neighbour. Nearly 95 percent of Nepali jute products are exported to India.

Traders said that most of the local jute factories had closed down due to the government’s indifference towards the industry. Among the 12 jute factories in the country, only four—Arihant, Raghupati, Baba and Swastik—are still in operation. These mills employ 12,000 workers.

The industry has been dropped from the government’s priority list even though demand for more ecological packaging globally has strengthened its export potential. Three decades ago, the country used to be a major exporter of jute to Europe, and the golden fibre was one of the major sources of foreign exchange.

Jute was grown on 56,000 hectares, but now the acreage has shrunk to 11,000 hectares. The government has also removed subsidies on fertilisers, seeds and pond

construction.

The country used to produce 150,000 tonnes of jute three decades ago. Production has plunged to 17,000 tonnes currently.