Business

Jute Bag Prices: Kolkata High Court Sets Aside Tariff Commission’s Interim Report

The beleaguered jute industry has heaved a sigh of relief after the Kolkata High Court struck down the interim report of the Tariff Commission on jute bag prices.

The commission’s interim report suggested bringing down jute bag prices by nearly Rs 3,000 a tonne. The current government price is around Rs 67,000.

The jute industry supplies nearly 9-lakh tonnes (lt) of ‘580 gm 50 kg’ capacity jute bags, valued at approximately Rs 6,500 crore, to the government for packaging foodgrains, in a year.

According to Indian Jute Mills Association (IJMA) Chairman Manish Poddar, the High Court struck down the report as it was an “incomplete one”.

“The report was incomplete as it was based on the data collected for four months. Moreover, the procedure adopted in formulation of the report has not taken into consideration the actual performance of mills,” Poddar said.

The commission has been given an additional six months’ time to study one year data from April 2016 to March 2017, before arriving at its pricing formula, he said. The data required for the study will have to be submitted by the Jute Commissioner within six weeks.

The Jute Commissioner has also been directed to declare the provisional price of jute textiles for a period of six months from September 2017 onwards by following the methodology of fixation of price of 580 gms B-Twill jute bags on the basis of recommendation of price adopted for September last year.

According to industry sources, the procedure adopted in formulation of the productivity norms for Type ‘A’ and Type ‘B’. B-Twill bags were based on the average of the top quartile individual parameters. However, in practice, it is difficult to find a single mill achieving all the individual parameters.

So the industry was of the view that the pricing of bags should not be based on such benchmark values and actual performance of mills and their norms should be considered while arriving at the correct price.

Between 2013 and 2016 the government set up two pricing committees. During this period, jute bag specifications were also changed from heavy bags of 665 grams to light bags of 580 grams.

This was done so that the government could get a price advantage due to lighter bags, while also benefiting the industry due to lower requirement of raw jute for manufacturing the bags.