Jute mills default on Govt supplies

07 Jul '10

2 min read

By selling off 41,730 bales of B-Twill jute bags at a cost higher than the market price and also failing to meet with their delivery promise, which was made to the Punjab Government last year in December, 33 jute mills have turned defaulters in the Government of India's (GoI's) list, thereby, pushing the already besieged jute industry in yet another fresh controversy.

Punjab, apparently, is the biggest buyer of B-Twill jute bags in India, totaling for more than 65 percent of the jute sacks market, and the approximate size of this is assumed to be around Rs 60 billion. Haryana, Uttar Pradesh, Orissa, Bihar and Chattisgarh, are the other foremost buyers of such variety of bags.

Sources reveal that, GoI is most likely to commence stringent action against the corrupt jute mills, if they fail to provide the pending supplies of 41,730 bales of B-Twill jute sacks to Punjab by July 7, 2010, at the initial price, which was quoted in the months of November and December 2009.

Government might also discontinue future orders and withdraw the existing orders, if the defaulting jute mills do not follow these orders.

However, if the defaulters work as per the government orders then, they will have to face a loss of Rs 12,000 per ton of jute bags, as against the current prices. But on the other aside are also those mills, who are likely to fall in line with the government orders, so as to avoid the latter's anger and penalizing actions, that might come out in the future.

With government pondering over cracking down on jute mills, not complying with their orders, Indian Jute Mills Association (IJMA), apex body of the jute industry, is currently facing tough times.

Fibre2Fashion News Desk - India

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