Jute mill on the verge of closure

The owners are preparing to close the factory citing citing losses due to irregular power supply and lack of incentives from the government PROPRIETORS of CM Jute Mill have started the process of closing down the factory, citing losses due to irregular energy supply, expensive electricity demand charge and the lack of incentives from the government. The factory employs 500 individuals and produces 22 tonnes of jute every day. “Due to the government’s apathy, we are not in a position to operate the factory,” said Nandu Rathi, proprietor of the factory. “We found it worthwhile to shutter it down instead of incurring millions of rupees of losses.” He said energy problems and increased labour costs have been a big burden for the factory, which has been incurring losses for the last five years. Local industrialists said other jute factories will also be forced to close down if the government fails to provide regular energy supply, export incentive, spare parts and store material. There are 11 jute mills in operation in the country. Failing to compete in the Indian market due to higher operation costs, two jute mills have already been closed down. Rajkumar Golchha, central chairman of Nepal Jute Industry Association (NJIA), said all jute industries will ultimately close down is the current problems are not solved. “The government should introduce incentive packages in the upcoming budget for jute industries that have been employing thousands of individuals,” he said, adding the exemption of customs duty and value added tax (VAT) on the import of spare parts and store materials should be continued, and similar exemption should be given on diesel and furnace oil used operate generator during load-shedding. Although the Ministry of Commerce and Supplies had promised to offer a 10 percent cash incentive on the export of jute items to India, no jute factory has received the facility so far, according to industrialists. Stating that the Bangladeshi government offers a 10 percent cash incentive on the export of jute items, the industrialists said domestic jute products could become competitive in the international market if the Nepal government offers a similar facility. Golchha said jute factories export more than 95 percent of their products, amounting to Rs 5 billion, to India annually on an average. Mohan Chandra Ghimire, a jute expert, said the factories could also get some relief if the dependence on imported raw materials could be minimised by increasing the production of jute in the local level. The industries are forced to import more than 70 percent raw materials from India and Bangladesh. “An institutional provision is required for the development and expansion of jute farming in the country,” he said.