The jute sector in Bengal is suddenly seeing chances of resuscitation after being in the doldrums for 50 years thanks to the unexpected boost provided by the worldwide push to go green.
The demand for reusable jute bags is being led by large companies like Walmart, Carrefour, Marks and Spencer, Tesco, and Trader Joe’s, who are present in the American, Japanese, and Eurozone markets. According to spokespeople for the Indian Jute Mills Association, they buy shopping bags worth more than Rs 1,000 crore each year (the total jute packaging material export, which includes burlap, is now worth Rs 3,700 crore). Bengal is home to over 70 of India’s 93 jute mills, and according to business officials, Bengal exports 80% of the country’s jute bag production.
Jute is becoming more popular as a packaging material all around the world, according to IJMA head Raghavendra Gupta. According to experts in the field, opposition to the use of single-use plastic is the main cause. “Jute is currently preferred by manufacturers of coffee and cocoa beans worldwide over alternative materials for packaging, and the global market for shopping bags is expanding as well. Jute shopping bags are showing interest from all the major international retail brands, Gupta continued.
All Indian jute products are sent to the US, but industry titans feel there is still room for expansion, particularly in the shopping bag market. Gupta estimates that the lifespan of a jute shopping bag is 600 times longer than that of a plastic bag in the hopes that the movement against plastic will help jute expand.
However, in comparison, the market is small, and only a few mills have been successful in utilising it. The industry as a whole is heavily reliant on government contracts; small to medium sized mills normally produce nearly all of the government orders, while a few large enterprises with modern facilities derive 30 to 40% of their earnings from exports. Director of CRISIL Ratings Rahul Guha said.
The sector incurred enormous losses in the second part of FY22, which led to the closure of several smaller and less financially stable jute mills because the market price of raw jute was higher due to the shortage of raw jute, according to Bagaria. The industry objected to the pricing fixation, which prompted a review and re-fixation of the price in the second quarter of FY22-23.
Since then, most of the mills have started up again. West Bengal, which has the highest concentration of mills, has three to four that are currently shuttered for a variety of reasons, including financial difficulties.