Boost for Indian Jute Mills: New Pricing Model Unveiled

The Indian jute mills are set to earn an 8.19% return on capital for supplying jute bags, according to the new pricing framework by the Ministry of Textiles. This formula will result in a price increase of about 4-8% for gunny sacks and is retrospectively applied from September 2016.

The Indian jute industry is poised for a significant financial uplift after the Ministry of Textiles announced a revamped pricing framework that promises an 8.19% return on capital for mills supplying jute bags. This framework guarantees a predetermined profit margin, irrespective of input cost variations.

While the Indian Jute Mills Association estimates a modest 4-5% price increase for gunny sacks, the Office of the Jute Commissioner suggests a broader benefit margin of 6-8%. These changes come in response to the Tariff Commission's recommendations and are effective from September 2016.

Union Textiles Minister Giriraj Singh remarked that the revamped pricing not only supports mills but also benefits around 4 lakh jute mill workers and 40 lakh farmer families. Moving forward, innovation and reduced reliance on government contracts are encouraged to enhance the jute sector's value.

(With inputs from agencies.)