Demand drop leaves jute industry in doldrums

- binod bhandari, BIRATNAGAR
Demand drop leaves jute industry in doldrums

Sep 21, 2014-

Nepal’s jute industry has been fighting for survival after orders from India dropped, and it has appealed to the Indian government for help to revive demand.

Entrepreneurs said that they were having a hard time finding markets in India due to the higher cost of Nepali jute which has forced many factories to close down. In the last one month, Biratnagar Jute Mill, the country’s oldest jute factory, and Baba Jute Mill have shut down.

Jute entrepreneurs said that they had requested the Indian Embassy for its help to urge Food Corporation of India (FCI) to purchase their products. FCI has been buying jute from Indian manufacturers. “We have submitted our proposal to the Ministry of Commerce and the Indian Embassy in Nepal for such an arrangement,” said Raj Kumar Golchha, president of the Nepal Jute Industries Association. “The embassy is positive to our proposal and we hope that FCI will purchase our jute if the government makes some efforts.”

Industrialists said that they would get some respite if FCI bought their products. They added that Nepali jute became uncompetitive compared to Indian and Bangladeshi products after the government stopped subsidising electricity. The government used to provide a 70 percent subsidy on electricity to jute mills until recently.

“There have been hardly any orders for jute produced in Nepal for the last two months,” said Golchha. If Nepal does not request FCI to buy its jute, all the mills are most likely to close down one after another, he added. Nepal’s jute industry imports raw materials from India and Bangladesh. According to

the Jute Industries’ Association, Nepali jute prices are 10 percent higher compared to India.

While Nepal has removed the subsidy on electricity, the Bangladeshi government has been providing subsidies on jute exports, said entrepreneurs.

Of the 11 jute mills in the country, five have already shut down. They are Biratnagar Jute Mill, Baba Jute Mill, Niki, Pathivara and CM.

The six factories that are currently in operation are Raghupati Jute Mill, Guheswori Twain, Nepal Jute, Arihant Multi-fiber, Swastik Jute and Chandra-Shiva Jute Mill. They have reduced their production by 40 percent, according to Golchha.

Nepal’s jute mills provide employment to more than 20,000 people. Their exports amount to Rs 5 billion annually. As per a report prepared by Nepal Rastra Bank, entrepreneurs have invested Rs 2.61 billion in the jute industry.

 

Published: 22-09-2014 10:08

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