The jute industry of India is confronted with many problems and jute mills hardly operate to their full capacity.
(a) Shortage of raw materials-Non-availability of sufficient quantity of superior quality raw material is one of the major problems of the industry. To meet this shortage, raw material is imported. Efforts are being made to augment the domestic production by introducing jute cultivation in non- traditional areas.
(b) Competition from substitutes-Jute industry is largely an export oriented industry. Prior to Independence India had virtual monopoly in raw jute and manufactures. Not only countries like Bangladesh, Philippines, Japan and Brazil etc have come out as stiff competitors but use of paper, cloth and plastic etc as substitute for jute goods is badly affecting the export market. To overcome these problems there is a need to modernise the jute industry, bring down the cost of production and diversify production to find out new uses of jute goods.
(c) Lack of modernisation of plant and machinery-the jute industry is faced with the problem of obsolete and worn-out plant and machinery. This hampers the quality and quantity of jute manufactures. The continued dependence on an antiquated labour intensive technology has now turned 70 per cent of the jute mills sick (Ganguli, R, Economic Times, July 7, 1994).
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(d) High prices-The jute industry is also plagued with high prices due to obsolete machinery, existence of inefficient and uneconomic units, high price of raw jute and unreliable supply of raw jute for the mills. A sizeable number of jute mills are sick and the profitability of the industry has been low.
(e) Fluctuating Production-the production of jute manufactures has been fluctuating from year to year. This is due to irregular and inadequate supplies of raw jute, shortage of power, slackness of export demand, and lack of incentive. Measures have been taken to improve the production and regular supply of raw jute.
Jute industry is a vital industry. The government has taken a number of measures to tackle these problems. The Jute Corporation of India at Kolkata in 1971 is engaged with stabilising the prices of raw jute.
The UNDP caters to the needs of the jute sector from production to export stage. The National Centre for Jute Diversification (NCJD), established in late 1995), has played an important role in commercialisation of technologies for the manufacture of jute diversified products and creating awareness about the uses of jute in non-conventional applications. With the launching of the National Jute Programme (NJP), a few years ago, aided by the Government and the United National Development Programme jute has received the fillip it deserved to surge ahead.
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The International Jute Organisation (IJO) held a conference recently for drafting specifications for hydro-carbon free jute bags to be used as packing material for food grains. There are 23 research institutions and over $23 million has been spent by the UNDP with matching grants by the Government of India under its National Jute Programme (NJP).