An order amending the JPMA, issued on March 31, relaxed reservation on use jute packing for foodgrains and sugar from 100 per cent to 90 per cent and for urea from 20 per cent to 15 per cent.

The relaxation would also benefit polyethylene and polypropylene woven sack industry, which is largely dominated by small-scale manufacturers. The industry, highly manpower-intensive, has been faced with the threat of closure of many units, unable to stand up to competition from jute sector. Demand from foodgrains, sugar and urea sectors will improve the business prospect for this industry.

According to industry estimates, the relaxation in JPMA will generate about 15-20,000 tonnes of additional demand for synthetic packaging material. The increase in demand is also expected to help the industry reduce surplus being generated by the newly set up Haldia Petrochemicals.

The decision to partly relax the JPMA was apparently prompted by the growing shortage of jute sack bags, a commonly used packaging material. Cement sector had been freed from the controls of JPMA in 1998 after intense pressure from the cement manufacturers lobby on the grounds that jute sacks were not adequately available and that the losses in transit in such sacks were high.

The JPMA was introduced in the late eighties by the then government in an effort to support the jute producers. The Act, was over the years, diluted when faced with situation of jute shortage and pressure from user industry. Jute sacks cost twice more than synthetic packaging materials.

According to available figures, while commodities requiring compulsory packaging has grown by as 140 million tonnes since the enanctment of the Jute Packaging Material Act , the jute sack availability has been declining over the years.

The introduction of JPMA, favouring jute as compulsory packing for commodities, restricted market access for synthetic packaging and caused additional financial burden on the end user industry. The government too had to incur heavy outgo in form of subsidies. It is estimated that the continued reservation of jut cost the country about Rs 1,000 crore annually.