Tough time for West Bengal jute mills despite political support
Mill owners under pressure from politicians, especially from Trinamool Congress, to restart production
Kolkata: At least eight jute mills in West Bengal have halted production over the past few weeks—an unusual development in the light of the approaching general election.
Despite pressure from local politicians to reopen these mills, the industry is crying foul over tepid demand and there are concerns that more mills may follow suit.
Demand for jute bags has shrunk considerably, but it is difficult to say why so many mills announced a lock-out in such close succession, said Raghav Gupta, chairman, Indian Jute Mills Association (Ijma)—a lobby group. The mills that have suspended operation are the weaker ones, he added.
There are around 59 jute mills in West Bengal, employing close to 400,000 people, and almost all of them are currently making losses because of market conditions, according to Ijma.
Mill owners are under pressure from political leaders, especially those of the dominant Trinamool Congress party, to restart production, according to an entrepreneur, who did not want to be identified. “Unless market conditions improve, the closed mills will not reopen," this person said, adding that this may take months.
More mills would have closed by now had there been no pressure from politicians, said a key official at the ministry of textile. “Once polling is over, many more mills will announce lock out," this person added, asking not to be named.
Former rail minister and Trinamool Congress candidate from Barrackpore, Dinesh Trivedi, said there are two closed jute mills in his constituency. The owner of one has assured him that the mill will reopen before the general election, Trivedi claimed. The other one is a sick enterprise with legacy problems. “I don’t think the closed mills will become an election issue," Trivedi said. Even so, he admitted to persuading mill owners to restart production at closed units.
A large number of jute mills are located in the state’s North 24 Parganas district on the outskirts of Kolkata. In the past few elections, jute mill workers have largely backed the ruling Trinamool Congress party. In 2009, for instance, the party had won in all the five Lok Sabha constituencies in the district. “We aren’t entirely happy with the (Trinamool Congress-led) administration," said the mill owner cited above. “Even among workers, the Trinamool Congress appears to have lost its appeal."
Like always, mill owners blame the Centre for their woes. Former Ijma chairman Sanjay Kajaria said the government tweaked laws in 2012-13 to allow greater usage of plastic bags as packaging material for sugar and food grains. This was done based on the government’s own projections about food grain production, but actual output fell short of estimates, according to Kajaria. The government allowed the sale of more plastic bags than was required in the market and the piled up inventory of plastic bags from 2012-13 is being used even this year, according to Kajaria. The fall in demand has resulted in the market price of jute bags crashing to 46,000 per bale as against the government’s own procurement price of ₹ 55,000, Kajaria said. Typically, mill owners sell about 40% of their produce in the open market.
Synthetic bags are cheaper than bags made of natural fibre, and the jute industry would have been routed by now had the government not made it mandatory under a 1987 law to use jute as packaging material for various commodities. This law is being diluted gradually, but most mill owners haven’t invested in their production facilities to prepare themselves to “give up the crutch", said the government official cited above.
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