India to buy more HDPE/PP sacks after jute fails to meet needs

08 February 2013 07:52  [Source: ICIS news]

KOLKATA (ICIS)--India’s Ministry of Textiles will be have to procure about 0.67m bales (0.221m tonnes) of high density polyethylene (HDPE)/ polypropylene (PP) woven sacks for food grains following the jute industry’s failure to meet demand, a ministry official said on Friday.

The sacks are needed for packaging of winter crop to be harvested till the end of April 2013.

According to the official, total demand for packaging sacks during current crop season of  December-April has been estimated at 1.89m bales. Each bale weighs 0.33 tonnes.

However, the jute industry would be able to supply only 1.22m bales even though under the mandatory Jute Packaging Materials Act 1987 it is obliged to supply the entire requirement.

But last year, before the commencement of the winter sowing season, the Ministry of Textiles had diluted the Mandatory Jute Packaging Order based on production plans submitted by the jute industry at the time, the official said.

It had been decided that instead of procuring 100% of food grain packaging from the jute industry, 10% of the total packaging demand will be sourced from the synthetic sacks industry but deficit in supplies of jute bags has raised that requirement to 37% of the total demand, the official added.

According to industry estimates, the current price of a HDPE/PP woven sack is about Indian rupees (Rs) 12 ($0.22) against Rs28 for jute sack of similar specification and dimension.

The HDPE/PP woven sack manufacturers have complained to the Competition Commission of India (CCI) against mandatory reservation of packaging material in favour of the jute industry and made some allegations of cartelisation and price manipulation.

Based on the complaints and accusations made by the synthetic woven sack industry the Commission has sought replies from the jute industry about their specific prices, actual transactions, quotations, price displayed, and production over the last three years.

A final decision is yet to be made on the complaint.

By: Ajoy K Das
+65 6780 4359

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