India’s jute industry feels pinch of recession

November 16th, 2008 - 2:53 pm ICT by IANS  

Kolkata, Nov 16 (IANS) India’s jute industry, which bags large orders from the Middle East and Europe, is likely to take a big hit from the ongoing global recession, and a strike in West Bengal next month will worsen the situation, say experts.Up to 30 percent of the export order may be cancelled due to the global economic meltdown, says Indian Jute Mills Association (IJMA) chairman Sanjay Kajaria.

“A lot of export orders are getting delayed. If this continues this will lead to job losses. Recently, a big order from Turkey for carpets got cancelled,” Kajaria told IANS.

A similar concern was echoed by Binod Kispotta, jute commissioner, when he said: “If the demand for commodities that are packed in jute bags falls worldwide, it is evident that the demand for jute bag exports will also fall.”

Indian jute and jute products are popular in countries like Turkey, Syria and Saudi Arabia and also in European nations like Germany.

The amount of jute exported during the last fiscal (2007-08) was 250,000 tonnes and raked in Rs.8 billion. In the current fiscal, the total export will be around 200,000 tonnes but the revenue earned from export will remain the same as the rupee has depreciated.

Jute is a natural fibre and is grown in extensive parts of West Bengal, Bihar, Assam, Orissa and Uttar Pradesh in India.

The industry also fears a loss of Rs.10 billion from the imminent jute workers’ strike in West Bengal from Dec 1 at 59 jute mills covering about 250,000 workers.

According to industry estimates, Rs.5 billion may be lost because of no offtake of bags by the sugar industry due to the strike. An equivalent sum will be lost as other agri-commodities like food grains, oilseeds, guars and lentils will also have to make do without jute bags.

“The workers will go on strike due to non-payment of dearness allowance (DA) by mill owners since April 2007,” Kajaria said.

“There are dues of Rs.20,000 DA per labourer. The labourers are not getting provident fund, gratuity after retirement,” Congress leader and veteran trade unionist Subrata Mukherjee told IANS.

The Indian National Trade Union Congress, the trade union wing of the Congress, is an active participant in the strike. However, the Centre of Indian Trade Unions (CITU)-affiliated Bengal Chatkal Majdoor Union has decided not to participate in the indefinite strike.

The jute industry had witnessed a 63-day strike from Jan 5 to March 8 in 2007.

If the proposed strike lasts long it might prove counter-productive as the industry may have to lose many upcoming orders, Kajaria said.

The jute industry expects to bag an order of about 180,000 tonnes of sacks for packing the government’s procurement of foodgrains during the Rabi season in November-February.

“The government will inform us about the quantum of procurement for the Rabi season on Nov 20, but we expect it to be around one million bales (180,000 tonnes),” Kajaria said.

Kajaria expressed concern that if the jute industry failed to supply the required amount of gunny bags, the orders might go to competitors like synthetic bag manufacturers.

“If the jute industry fails to supply the requisite bags due to the strike, the government then has to look for other options,” Kispotta added.

Under the Jute Packaging Materials (Compulsory Use in Packing Commodities) Act, 1987, all sugar and foodgrain procurement has to be done in jute sacks.

Describing the strike as unfortunate, Kajaria said it was not the right time to go for such an agitation, with the world reeling under the heat of recession.

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