Indian jute mills projected to achieve 8.19% ROC through food grain bag supply

INDIA – India’s Ministry of Textiles has introduced a revised pricing framework ensuring domestic jute mills an 8.19% return on capital (ROC) for supplying jute bags used in food grain packaging.

The initiative aims to stabilize the sector by guaranteeing a fixed profit margin, which will protect mills from fluctuations in input costs.

This new policy, as reported by the Press Trust of India (PTI), marks a significant step in securing financial predictability for the jute industry.

The Indian Jute Mills Association (IJMA) projects a modest 4-5% increase in the cost of gunny sacks due to this pricing revision.

IJMA chair Raghavendra Gupta emphasized that while raw jute prices and other factors could influence the final cost, the new framework is expected to yield consistent gains for the mills.

Economic and social impact

Union Textiles Minister Giriraj Singh, during his visit to Kolkata, underscored the new pricing structure’s broader benefits.

It is expected to positively impact 400,000 workers in jute mills and four million farming households involved in jute cultivation, particularly in West Bengal, the heartland of India’s jute industry.

Singh also highlighted the promising outlook for jute product sales, projected to exceed Rs 140 billion (US$1.63bn) in 2025.

The policy revision also aligns with the government’s commitment to supporting the jute sector, a key component of India’s agricultural and manufacturing economy.

The initiative aims to strengthen rural livelihoods and sustain the traditional jute industry by ensuring a stable income for farmers and mill workers.

 Implementation and adjustments

The Ministry of Textiles’ Jute Commissioner, Moloy Chandan Chakrabortty, elaborated on the specifics of the pricing policy.

According to Chakrabortty, the total benefit impact for mills is estimated at 6-8%, depending on various factors in the pricing mechanism.

The revised ROC of 8.19% reflects adjustments made under the Tariff Commission’s recommendations, which were designed to address the mills’ long-standing financial challenges.

Interestingly, the implementation of the policy has been backdated to September 2016, offering mills retroactive financial relief.

The Office of the Jute Commissioner has highlighted this backdating as a strategic move to compensate mills for historical volatility in input costs.

The revised pricing structure positions India’s jute industry for a more sustainable future by ensuring mills’ profitability while supporting a vast network of farmers and workers.

This initiative is expected to bolster India’s efforts to promote eco-friendly, biodegradable packaging solutions, further solidifying jute’s role in the country’s economic and environmental landscape.

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