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REGISTERED NO. D. 221

The Gazette of India

EXTRAORDINARY

PART I—Section 1

PUBLISHED BY AUTHORITY

No. 277] NEW DELHI, TUESDAY, DECEMBER 12, 1972/AGRAHAYANA 21, 1894

Separate paging is given to this Part in order that it may be filed

as a separate compilation

MINISTRY OF FOREIGN TRADE

RESOLUTION

New Delhi, the 12th December 1972

No. 16016/l/71-Tex(D).—The Government of India, being of the opinion that an examination of the price structure of certain varieties of jute goods (namely, carpet backing, hessian, sacking, and jute specialities) was necessary, requested the Tariff Commission, in July, 1969, to conduct an inquiry. On conclusion of the inquiry, the Commission submitted its report to Government in April, 1971. A summary' of the conclusions, suggestions and recommendations made by the Commission is appended to this Resolution.

2. Subsequent to the submission of its report. the Commission has, at Govern- ment's instance, re-worked the estimates of cost of conversion i,n regard to one of the items covered by its inquiry, viz., B Twills (a variety of sacking). A further re-working of estimates for all types of jute goods had to be undertaken by the Commission as a result of changes in the wage structure of jute mill workers.

In working out the estimates, the Commission has inter alia taken into account:—

(a) the raw jute price at Rs 50 per md. for Assam Bottom. (b) the element of compulsory Bonus (at 4 per cent) as part of cost of

production; and

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26^6 THE GAZETTE OF INDIA EXTRAORDINARY [PART I—SEC. 1]

it.) j leturn on capital Ht 15 per cent for Caipet Backing and 13 5 per cenr for othe: goods

1 he Commission has also lecommendcd a formula to regulate the batch cost of raw jute,

1 The assessment by the Cvinumsuon ol the cost of conversion of raw jute mtu iute goods has been of considerable assistance to Government. The prices ol different varieties of jute goods vi7 carpet backing and hessian of which the Hulk of pioduction is exported are governed by the normal conditions of supply and export demand In the case of sacking (B Twill Bags and DW flour bags) it has been found necessary to fix statutory maximum price¹* It na** accordingly been decided that fixation of prices on statutory basis, on the basis of i ommisslon's recommended estimates, after applying the formula for raw jute cost, will be confined to B Twill bags and TJ "W flour bags The Government has iccepted the re-worked estimates of the Tariff Commission in respect of these two categoues of sacking subject to the modification that minimum bonus will not be included in the calculation ol cost The statutory prices will be ftxed accordingly for these bags lor each month from Decembei 1971, onwards after doteimining the raw |ute cost in the light of Commission's foimula

4 While le-working the estimates, the Tmiff Commission had also examined the question of a pi ef ei ential treatment in the matter of prices in lespect of old nd non-modeimsed jute mills The Commission has, however come to the conclusion that theie is no justification for any separate higher cost of production to be allowed to such mills The old and modernised mills will have to improve their eflkirncj m then own mteiest to keep .ibrcist of the progress in the industry Government accepts this view

ri The other amillaiv ir-toriin eiulatiout, have been noted by ihe Government who wil] Take such action as iTiav be considered feasible

C Oidticd that a copy oi this Resolution be tommi.init.ited to all concerned v nd thai it he published in the Ga/ettr ol India

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_. (vi) Spinning efficiency hag been adopted at 100 for the fine side and 101 for the coarse side, on the basis of a stnndard norm, worked out by us in consultation uflth our Technicnl Exports.

(vii) The overall loom efficiency has been adopted .it 70, 7i and HO ucr cent lespectivplv for C:irpet Backing Hessian and Sacking,

(viii) In the estimates the element of statutory minimum bonus of 4 per cent shown as a separate item and included in the cost of production. The ad. hoi¹ additional interim bonus of 3 ppr cent is shown separately as a part of the Return.

(ix) The demand for jute Roods for the next two years 1071-72 and 1972-73 can' reasonably be placed at an annual offtake (domestic demand plus exports) of 400,000 tonnes of Hessian, 525,000 tonnes of Sackings, 250,000 tonnes of Carpet Backing and 125,000 tonnes of other Jute goods making up an overall average annual demand of 1.3 million tonnes which form the basis of our estimates.

(x) In computing the requirements <>i Working capital stocks of raw jute have been reckoned at three months for Carpet Backing and two months for Hessian, Sackings and other products. For finished goods, one and half months for Carpet Backing and one month for the other types of products have been assumed. A uniform stock level of three months for consumable stores for all products has been also provided.

(xi) An overall return at 13.0 per cent has been allowed on the Capital employed sub-divided into 15 per cent lor carpet backing and 12 per cent for Hessian and Sackings (as against 15 per cent provisionally recommended in our two Interim Reports). This is equivalent to 4.4 per cent on sales and 5.1 per cent by way of Net Profit on Net worth. Variations in the actual quantum of return consequent changes in raw .into prices have also been worked out.

Ancillary Recommendations:

(xii) Between 1950 and 1067 India's share of World production of Jute goods fell from 67.3 to 39.7 per cent and the combined share of Ir.din and Pakistan from 67.2 to 53.0 per cent.

(xiii) Global consumption of Jute goods is expected to grow around 3 per cent per annum through 1973, and In the light of this growth rate the world consumption of jute goods has been placed at 3.a million tor.nes and 4 4 million tonnes for 1970 and 1075 respectively.

(xiv) The installed capacity as on 31st March, 1970 was 539,210 spindles and 39 871 looms (6,173 broadlooms, 20,914 Hessian looms, 11,277 Sacking looms and ],507 other looms). Over the period from lfffil-62 to 19G3-70 the Industry recorded a decline of 6 per cent in production.

fxv) Except for Carpet Backing there has been a steady decline in the total despatches of Jute goods. While the despatches for Internal consumption indi- cated a mixed trend, there has generally been a downward trend in exports.

(xvi) In the interests of the Industr\ itself as well as lor other valid reasons. Government may consider subjecting this Industry to the statutory obligation for the maintenance of a uniform system of cost accounting as has been laid down in respect of some other Industries like Automobile and Cement.

(xvii) The movement in the price of Jutp goods is not strictly in consonance with that in the prices of raw Jute.

(xviil) Strikes cannot be recognised as a regular economic phenomenon to be separately provided for in arriving at the cost of commodities in a fair price onquiry.

(xix) We hope that the revised wage structure for the Industry when finalised would be suitably incentive-oriented.

(xx) Consumers have generally expressed satisfaction in regard to the overall quality of Jute goods. Some of them have, however, complained that products do not conform to the 1ST specifications

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(xxi) We endorse the suggestions of the Indian Standards Institution that preferential treatment should be accorded to such varieties of Jute goods as b$ar the I.S.I, mark over those that do not carry it, as this would help in bringing a greater variety of Jute goods under the fold of quality control and pre-shipment inspection.

(xxii) We commend to Government for its sympathetic consideration the plea made to us by the Indian Jute Industries Research Association far an increased Central grant for its research activities.

B. D. KUMAR, Jt. Secy.

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PRINTED BY THE GENERAL MANAGER, GOVERNMENT QF INDJ(A P^IESS, MINTO ROAD

NTW D K Un AND PUBLISHEB BY THK MANAGBH OF PUBUCCATICH"r, DBlLHI, 1 9 72