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Indian jute mills upset over price cap

Jute mills fear a financial crunch in the wake of the jute commissioner’s decision to fix the price of bags for January and February. They fear an estimated loss of Rs 70 crores in the two months following enforcement of the price cap (at around Rs 79,000 per ton).

The decision to fix price followed the spiraling rates of the raw fiber owing to excess rainfall, shrinking area under cultivation and an export ban imposed by Bangladesh. Average raw jute prices have increased to Rs 5,357 per quintal in January from Rs 4,034 per quintal in August.

This decision to fix prices has led to a situation where many mills are unable to manage their minimum working capital requirements, including wage payments and clearance of statutory dues. The stock limit of raw jute for traders has been lowered to 500 quintals from 1,700 quintals.

Meanwhile the new national textile policy may be unveiled by April. The policy aims to reach an export target of $300 billion by 2024-25 besides creating an additional 35 million jobs. The policy seeks to address concerns related to skilled workforce, labor reforms, investments and a road map for the textile and clothing industry.