Non-GST compliant jute industry to hurt kharif procurement

July 17
19:28 2017

Food grain and sugar procurement in the country during the kharif season of 2017-18 is set to take a blow as supplies of jute sacking bags are in disarray.

The Jute Commissioner’s office is yet to update its Jute Smart portal and make it compliant with the new goods and services tax (GST) structure. According to the Jute Packaging Materials Packaging Act (JPMA)-1987, it is mandatory to pack food grains in jute sacking bags of up to 90 per cent. For sugar, the packaging order is relaxed at 20 per cent.

Punjab, the biggest indenter of jute sacking bags for packing food grains has warned the office of the Jute Commissioner that the situation may go out of control if urgent steps are not implemented to make the jute industry GST ready. In two separate letters to the Jute Commissioner’s office on July 4 and July 10, the Punjab government authorities alerted that kharif procurement operations would suffer as supplies of jute bags were in a quandary. The Punjab government has placed an order for 0.63 million tonnes (mt) or 2.2 million bales (one bale is 180 kg) of jute bags for packaging of food grains and sugar.

The Jute Commissioner could not be immediately contacted for a comment.

Punjab noticed that a mill wise review of the Jute Smart portal on July 3 showed that only zero to 36 per cent bales of jute bags have so far been dispatched to Punjab from 14 mills. The government there has sought for a change of bag supply of orders from non-performing to performing mills overlooking the jute smart problem. It has threatened to review the supply position after July 25.

The present situation has locked up an unbilled amount of Rs 450 crore and the industry is thrown out of gear. Each of the 70 mills in West Bengal, the biggest raw jute producer, is suffering from an average unbilled amount of Rs six crore and there is a huge stock piling of jute bags.

“Before [the] introduction of GST, the Jute Commissioner’s office had issued a notification stopping despatches or accepting bills beyond June 27. Then, a meeting was convened between the Indian Jute Mills Association (IJMA) and the Jute Commissioner’s office. Though despatches resumed after July 3, payments could not be released due to problems with the Jute Smart portal”, said a leading jute mill owner in the know.

From July 1, a five per cent GST has been levied on jute goods. The previous one per cent cess contributed by the industry now stands withdrawn. Jute bags are supplied through Railways, Container Corporation of India (Concor) and by road. The industry is demanding to invoke jute products as a ‘specified category’ item to get relief from government challans.

Each day, the jute industry manufactures 10,000 bales of jute bags. Seventy per cent of this production is consumed by the government. All purchase, billing and invoice used to be carried out through the Jute Smart portal.

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