The government is set to control jute prices and has proposed to empower the jute commissioner to decide on the price ceiling.
Apart from the spot market, the move to tighten control can impact futures trading in jute. Any price indication from the government affects trading in the commodity futures exchanges.
The proposed move may be aimed at facilitating the availability of raw jute, but industry sources feel that in reality, it could well benefit mill owners in the form of extra margins, while impacting jute growers
JK Sharma, joint secretary, ministry of textiles, said in the order: "Jute commissioner by notification in the official gazette will fix the reasonable price at which any variety of raw jute or any grade of such variety may be purchased or sold, and different prices may be fixed for different areas or for different varieties of raw jute and grade thereof."
S Majumdar, jute commissioner of India, told ET that the price will be fixed in such a manner that market participants are not disturbed and most importantly farmers get their due. The jute commissioner will consider freight cost, processing charges and current economic parameters while fixing the price, he said.
However, several traders are critical of the government's decision. MK Khemka, a trader from Kolkata said the current high price of raw jute at Rs 1,450 is due to the good demand in the market. In fact, prices have slid from Rs 1,650 a few months ago, he added.
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