The move, notified by the Jute Commissioner, follows a sustained surge in raw jute prices, which have remained well above the Minimum Support Price (MSP) for the 2025–26 season. Tight arrivals, speculative stocking, and uneven distribution have been cited as key reasons behind the supply crunch flagged by industry stakeholders.
India has reduced raw jute stock limits to zero, mandating liquidation to address supply shortages and curb hoarding.
The move is expected to release stocks, improve availability for mills, and stabilise prices.
While mills may benefit from smoother operations, traders may face short-term margin pressure due to forced liquidation of higher-cost inventory.
Under the revised order, registered raw jute balers must sell their entire stock by May 5, 2026, with physical delivery to be completed by May 15. Unregistered balers and other stockists must also reduce their holdings to zero. Jute mills and processing units are allowed to retain stocks equivalent to up to 45 days’ consumption, based on current production levels.
All entities are required to declare stock positions fortnightly on the Jute SMART portal. Enforcement agencies have been authorised to inspect premises, verify records, and seize excess stocks. Violations will invite action under the Essential Commodities Act, 1955, including penalties, confiscation, and prosecution for false declarations.
India is the world’s largest producer of jute, with West Bengal accounting for the bulk of output, followed by Assam and Bihar. The sector supports millions of farmers and workers, while jute mills rely heavily on consistent raw material supply, particularly for packaging mandated under the Jute Packaging Materials Act (JPMA), which requires foodgrains and sugar to be packed in jute bags.
The immediate impact of the order is expected to be a release of hoarded stocks into the market, improving availability for mills that have been operating under tight raw material conditions. This could stabilise or soften raw jute prices in the near term, easing cost pressures for manufacturers of jute bags, yarn, and diversified products.
For traders and stockists, however, forced liquidation may lead to short-term margin compression, especially for those holding inventory purchased at elevated prices. The directive could also discourage speculative stocking in the coming months, promoting a more transparent and evenly distributed supply chain.
Jute mills are likely to benefit from improved access to raw jute, enabling smoother production cycles and timely fulfilment of government and export orders. This is particularly significant as delays in raw material supply have previously disrupted deliveries under mandatory packaging norms.
From a broader perspective, the measure aims to protect employment across the jute value chain by preventing supply shocks that could otherwise lead to mill shutdowns or reduced operations. For farmers, sustained high prices above MSP have been beneficial, but stabilisation may moderate extreme price volatility.
Overall, the government’s intervention signals a firm regulatory stance against hoarding and speculative practices, with the dual objective of ensuring raw material availability and maintaining price stability in a sector critical to both rural livelihoods and industrial output.
Fibre2Fashion News Desk (KUL)
