The central government has lifted the cap of Rs 6,500 per quintal on the purchase of raw jute of TD5 grade by the jute mills and other end users. The move comes as a relief to the jute mills of Bengal, many of which had shut shop over the past few months amid a shortage of raw jute.

Jute Commissioner Moloy Chandan Chakrabortty had imposed the cap through a notification in September 2021 whereby no dealer, trader, agency or supplier could purchase or sell raw jute at any price exceeding the cap.

Indian Jute Mills Association (IJMA) had moved court as the market price of raw jute was higher than that fixed by the Jute Commissioner. Due to the non-availability of raw jute at fixed prices, mills had to rely on market purchases at higher prices. With the mill owners being reimbursed at the notified price on the government orders, this led to financial loss as the cost price of the finished product became higher than the selling price.

The Calcutta High Court in a judgment on May 11 had directed the Jute Commissioner to take steps to either implement the notified rate and if that cannot be adhered to, review and refix the rate after taking into consideration relevant factors under the Jute Textiles Control Order of 2016.

According to industry sources, following the court directive, the Jute Commissioner had held meetings with various industry bodies and has subsequently issued the order to withdraw the price cap.

“After careful analysis and considering the present market scenario of raw jute availability, I hereby withdraw the said Notification S.O. No. 4054(E) dated 30th September 2021 with effect from 20-05-2022,” Chakrabortty said in the notification.

Union textile ministry in a statement on Thursday said that the office of the Jute Commissioner has been collecting information about raw jute prices through formal and informal sources and has found that the present prices are ruling around the capped price of Rs 6500.

“It is expected that the cap removal will help the farmers, mills, and the jute MSME sector wherein over 7 lakh people are dependant on the jute trade in addition to about 40 lakh jute farmers. The decreasing trend in prices will also benefit jute goods exports which constitute around 30 percent of the industry's turnover in value terms," the ministry said.

Mill owners in Bengal remained hopeful of market prices prevailing from Friday onwards and improvement in raw jute availability.