Jute Industry in India

In this article we will discuss about the jute industry in India:- 1. Ownership of Jute Industry 2. Ownership and Management of Jute Industry 3. Profits and Wages 4. Problems.

Ownership of Jute Industry:

The manufacture of jute fibres into coarse cloth by hand-spinning and hand- weaving was a very old industry in India. “Practically, every homestead in the jute tracts had a few bundles of jute suspended from a beam in the roof of the verandah. The fibre was spun into twist or yarn, and worked up as required into string or rope, or was woven into gunny cloth or bag.”

In-fact, considerable quantities of this woven material were exported to America and certain Asiatic countries. In 1850—51, these exports amounted to more than 90 lakh pieces valued at Rupees 20 lakhs.he manufacture of jute on a large scale started in India in 1855 when Mr. George Ackland imported a jute spinning machine from Dundee and set it up at Rishara, near Serampore, in Bengal.

The first power loom was established in 1859 at Baranagar near Calcutta. In the beginning, the progress was very slow so much so that between 1854 to 1863—64, only one more mill was built.

From 1863—64 onwards, however, growth of the industry was fairly rapid, occasional set-backs notwithstanding jute was the monopoly of India, and in this, the Bengal industry “furnished with the best mechanical appliances moved by steam” had a strong advantage.

It naturally led to the industry’s expansion which had the inevitable result of “shutting Dundee out to a great extent from the Asiatic, Australian and even a part of the American markets.”

The progress was slowed down during 1890-95 on account of the prevailing famines in India which indirectly hit the export trade and hence the demand for gunny hags in the country. From 1900 onwards, the industry again grew at a fairly rapid pace and by 1913—14, the number of jute mills had risen to 64 with 36,000 looms and employing 2.16 lakh workers.

The First world war created a large demand for sand-bags and other jute manufactures. In order to economise on shipping which was scarce at that time, the govt., encouraged the export of jute manufactures in place of the raw-fibre.

The shipping difficulties were so acute that between 1917—19, even exports of just manufactures was prohibited except under license. However, the war demand was so great that these restrictions could not seriously hinder the growth of the industry.

In 1919, the industry comprised 76 mills which employed 2.76 lakh workers. In addition, there were 211 jute presses in which 33,316 persons were employed. It is worth noting that the jute growers of Bengal did not share this prosperity of the industry.

On the contrary, export markets having been closed by the war and there being acute shipping shortage, the farmer was forced to dispose of his crop at whatever prices the industry chose to pay.

The industry was overtaken by a crisis as soon as the war ended. Production was far in excess of the world’s dislocated trade requirements. Therefore, in order to adjust production to world demand, the mills agreed to work fewer hours a week. Fortunately, the demand picked up again with die revival of international trade and the industry continued to make fair progress till it was overtaken by the World Depression.

The Depression brought about a calamitous fall in agricultural prices. In 1930 — 31, for example, the aggregate value of the Bengal jute crop was “not more than 1/5 of what it had been in 1926. The result was financial paralysis met by voluntary crop restriction.”

The mill industry was also severely hit partly due to an actual decline in demand for packing materials and partly due to competition from substitutes which was further aggravated by the depression, and by the in­tensification of economic nationalism.

The main trouble of the industry, however, lay in its excess capacity. Even during the depression, the number of spindles and looms continued to increase so that the industry came to have an estimated excess capacity to the extent of 30% A rational solution would have been to scrap the excess capacity and prohibit the establishment of new mills.

In practice, the adjustment was made through the notorious device of reducing the number of working days as well as the hours of work and a scaling of a part of the machinery.

However, with the recovery in the world trade, the demand for jute manufactures began to increase and from November 1934, jute mills decided to increase production by gradually unsealing the looms. By 1937—38, all restrictions were withdrawn and jute exports, which stood at 6.7 lakh tons in 1933 — 34, exceeded 1 million mark.

The second world war brought about a sea-change in the industry. From an era of short working hours, sealed looms, quotas and gentlemen’s agreements in 1938, there was a change in 1939 to working on double shifts, unsealing the looms, rise in wages and increased activity to the extent of seeking exemption from the operation of the Factories Act. The boom, however, proved short-lived.

The stimulus fell-off and the industry took an erratic course due to loss of markets, transport difficulties and fluctuating demands. This is manifest from the volume of jute manufactures which rose to 12.8 lakh tons in 1939 only to fall to 11 lakh tons in 1940—41; it again improved to 12.7 lakh tons in 1941—42 but declined to 10.6 lakh tons in 1943—44 The year 1943 was particularly characterised by an acute shortage of coal so much so that the Indian jute mills Association had to establish its own depots for distribution.

On the whole, the war was a period of prosperity for the industry whose profits recorded substantial increase.

India’s monopoly in the world trade of jute manufactures was brought to an end by the Partition of the country. All the jute mills but only 19% of the area under jute cultivation came to India’s share while Pakistan got 81% of the jute area but not mill. This made the supply of raw-jute a major problem for the industry.

The problem was further aggravated when Pakistan imposed an extra duty on the jute exports to India and also when she refused to devalue her currency in tune with the rupee devaluation in 1949. The Govt., met the situation by prohibit­ing the export of jute on one hand and initiating steps for increasing the home production on the other.

The success of the “Grow More Jute” compaign is evident from the fact that while imports from Pakistan declined from 45 lakh bales in 1948—49 to 14.7 lakh bales in 1955—56, home production during the same period increased from 16.58 lakh bales to 42 lakh bales. Yield per acre, however, remained almost the same-being 2.5 bales per acre, in 1947—48 and 2.4 bales per acre in 1955—56.

The progress of the industry in the era of planning was rather irregular. The programme formulated for the industry in the First Plan did not envisage the establishment of new mills or the expansion of the existing units in view of the shortage of raw jute since the Partition of the country and the existence of unused capacity in the mills.

The objective, instead, was to more fully utilise the existing capacity by provision of larger supplies of raw jute. Assisted first by the devaluation of the rupee and later by the war in Korea, production of jute goods increased by 28% over the period of the First Plan.

The industry was caught in difficulties even before the First Plan was over. In 1956, the mills were already faced with accumulating stocks due to larger production, falling prices and rise in raw-material prices.

Increasing use of bulk- handling techniques and a rapid spread of synthetic packing materials further made an already difficult situation still more difficult. At the same time, there was a near stagnation, if not a decline, in the world demand.

The situation somewhat improved in 1958—59 only to deteriorate again in 1960. In the middle of 1961, nearly 30% of the looms in some of the biggest factories were sealed and some of the units had also reduced the hours worked per week. All these factors had a telling effect on jute production which rose by a mere 2.4% during the Second Plan.

Since the beginning of 1962, the outlook for the industry improved and most of the mills started working to their full capacity. The progress was especially remarkable during 1963—64 when the industry surpassed both the production and export targets set for the Third Plan.

There were some difficulties in 1965- 66, but taking the period of the Third plan as a whole, there was a 21.6% increases in the production of jute goods.

In 1965, there were 97 jute mills in India representing a capital investment of rupees 87.46 crores and employing 2.17 lakh persons. The production of jute goods stood at 13.35 lakh metric tons and the value of jute goods exported constituted 20.5% of India’s total exports in 1964—65.

Ownership and Management of Jute Industry:

Since its inception, the industry remained a close preserve of the foreigners who owned, controlled, and managed it. While Indians furnished land and labour for growing jute and labour for manufacturing, Scotland furnished the “brains and the far sight”.

Enormous profits made by the industry soon attracted the attention of the Americans as well who promptly invested several million dollars. As late as 1951, the British capital controlled 89% of the jute industry. The reasons for this are not far to seek.

The nature of the markets, predominantly foreign, and the development of non-Indian business agencies and financial institutions in Calcutta, were mainly responsible for this state of affairs.

In the first place, foreign units, with the help of their foreign agencies and links, could manage to find fresh openings for their manufactures in the overseas markets. Indians had no such connections to push their goods. Indian steamer companies were denied even insurance facilities for their jute consignments by European interests.

Secondly, the foreign banks gave “undue preference to European merchants and companies under European management to the exclusion of Indians.” By reason of such financial preference and also on account of the fact that the buyers and sellers in the U.K. and other parts of the British dominions generally preferred British import-export houses, Indians were very much handicapped in the race.

Although Indians controlled 60% of the shares in the companies owning jute mills, European managing agents bought their jute only through European brokers even if it meant excess payment. At the time of sale, they “sold even to Japanese in preference to Indians.” It is on account of such determined opposition that Indians could not enter the industry.

The Independence of the country brought about some change in the pattern of ownership. A section of the British businessmen was unable to reconcile itself to the political change and sold its interests. On the other side, industrialists, who had amassed fortunes during the war, offered fabulous prices and the British businessmen were quick to part with their interests.

Thus, the Sooraj Mull Nagar- mull group came into possession of Macleod and company; the Goenka Group bought controlling interests in two British managing agencies—Duncan Brothers and The Octavious Steel while the Bangui’ Group acquired Kettlcwell Bullen and Company Ltd.

With the replacement of the British Managing agencies by the Indian ones, there was some increase in the Indian’s share in (he Management also. In 1920, the proportion of Indian Directors in the industry was a mere 3.85% but rose to 49.39% in 1958.

This, however, made no difference as one monopoly group was replaced by another. The industry remained in I he hands of the monopolists and the factory workers as well as the jute grower continued to be exploited as before.

Profits and Wages of Jute Industry:

Jute, from the very beginning, was famous for its high profits. The early mills “simply coined money.” That is why many persons, doing prosperous busi­ness in tea, coal, turned to jute. The boom was so great “that the shares for a mill could be sold in Calcutta during a morning.”

The peak of profits was reached from the I world war until 1930 when, in the words of Buchanan, “it is doubtful if any group of factories in the world paid such handsome profits as the jute industry in India.” It is estimated that during the decade 1915—24, the industry earned 90% per annum on its capital.

During the thirties, the industry was so depressed that in-spite of hours being reduced to some forty per week, and weeks operated to three per month, profits come down and even disappeared for many mills. The total paid profits in 1931 were under rupees one crore as compared with rupees 2.65 crores in 1930 and rupees 7.23 crores paid in 1926.

The industry turned the corner with the start of the second world war. The days of low prices and low profits were left behind and an era of rising prices and high profits started. The index of profits jumped rapidly from 100 in 1939 to 590 in 1940 and 923 in 1943.

Previous losses were more than made up by the unprecedented prosperity enjoyed by the industry. With the end of the war, profits understandably declined from the dizzy heights but the industry continued to earn much more than the normal on the basis of shorter working hours, curtailed production and the sealing of looms.

This may be seen from the fact that the index number of profits declined from 923 in 1943 to 415.4 in 1946 but rose to 679 in 1951 and stood at 277.5 in 1955. As regards wages, no statistics are available on the earnings of jute mill workers during (he early days of the industry.

There is, however, evidence to suggest that the workers were made to work unlimited hours and that “some of the mills, with the object of conserving their labour from encroaching new mills, decided to run their machinery 22 hours.” Even the ‘staggering profits’ reaped by the industry during 1915—29 brought no improvement in the wages of the workers.

The royal commission on labour’ found that the average weekly wage of a worker, working in a single shift factory in the spinning section, amounted to Rs.4.12 and in the weaving section, to Rs.9.50. During the Depression, wages were further reduced by 10-15%. This led to two general strikes, one in 1929 and the other in 1937. In 1937, among other things, the workers demanded a minimum monthly wage of Rs.30/- only.

During the Second World War, the cost of living in the jute mill area rose by 300%, while, on the whole, the war and amenity allowances increased the average earnings of the jute workers by only about 20%. In 1942, when the index of profits stood at 896 (1939= 100), it was found that 56% of the workers earned Rs.15-30 per month; 40% earned more than Rs.30/- per month and 4% earned less than Rs.15 per month.

To add insult to injury, there were heavy fines; often the workers were marked absent for a day or two even when he was present. Wages did not show an appreciable improvement even in the post-Independence period when total wages, including dearness al­low; nee, increased from Rs.58.50 in September, 1948 to Rs.70.60 (including interim relief) in January, 1961—a 20.6% increase.

Problems of the Jute Industry:

The industry’s major problem was that of foreign competition. The most powerful competitor was Pakistan which had the advantage, being a late comer, of installing more productive modern machines as against India’s old factories crying for modernisation.

The industry in Pakistan, assured of ample supply of lower-priced and better quality raw-fibre, enjoying a substantial export subsidy and operating through Bonus vouchers, was able to increase her share in the world jute exports from 7% in the fifties to nearly 30% towards the end of the Third Plan Period.

Indian jute goods had also to contend with synthetics such as Polypropylene which had shown promise of being an effective substitute for jute.

Continuous improvement in the quality of the product and diversification of production were the two major means by which the industry could hope to sustain its competitiveness both against other countries and against the flood of Polymers.

The industry did, with the help of the National Industrial Development Corporation, initiate some programmes of modernisation such as the introduction of the electrically driven looms. But the process was far from complete—only the Spinning section had been modernized.

As regards diversification, the Finlow committee had pinpointed “the distinct lack of variety” as the most striking feature of the growth of the jute industry. The jute Enquiry commission also complained that the industry produced only certain types of goods required traditionally in certain markets and stressed the need for more positive efforts to diversify the pattern of production.

Unlike France, Belgium and Holland which, by installing new machines, were able to produce larger variety of goods, India did not make much progress in this field.

Another problem was that of adequate and regular supply of raw-jute of good quality. One thing was clear. India could not indefinitely depend upon the mercies of Pakistan but had to increase her own domestic production.

A self-sufficiency drive was launched under which the area under jute cultivation was extended but the results were not very satisfactory. Much of the raw-jute produced was “grown on marginal lands and was of poor quality.”

Besides, the supply was not stable; it kept fluctuating. For instance, production of raw-jute stood at 4.2 million bales in 1955-56; it declined to 4.1 million bales in 1960-61; again rose to 6.3 million bales in 1.961-62 but fell to 5.4 million bales in 1962-63 and showed a steep decline to 4.4 million bales in 1965-66. Due mainly to raw-jute shortage, there was under — utilisation of capacity varying between 6-22% in the industry.