India-Bangladesh trade row is hitting Bengal jute mills and mill workers badly. Jute industry in West Bengal is currently navigating an unprecedented crisis in late 2025. What began as a mismatch in supply has intensified into a deep-rooted structural and financial crunch that is forcing mills to shut down and putting thousands of livelihoods at risk.
The crisis is primarily driven by three interlocking factors: raw material scarcity, record-high prices, and declining demand.
1. Raw Material Scarcity and Price Surge
The most critical issue right now is the extreme shortage of raw jute.
Acreage Shift: Due to unremunerative prices in previous seasons, many farmers in Bengal have shifted to more profitable crops like maize. Jute acreage dropped significantly to around 5.56 lakh hectares in 2025.
Price Explosion: Raw jute prices have skyrocketed, crossing ₹11,000 per quintal in December 2025—more than double the rates from a year ago.
Bangladesh Unrest: Supply chains have been further choked by political unrest in Bangladesh, which has restricted its own raw jute exports, cutting off a traditional backup supply for Indian mills.
2. The "Price Cap" Trap
Mills are caught between high costs and fixed selling prices:
Cost vs. Selling Price: While raw material costs have doubled, the government's pricing formula for the finished jute bags (sold to the government for food grain packaging) hasn't kept pace.
Losses per Day: Many mill owners report losing substantial amounts daily because the cost of raw jute is far higher than the price they receive for the finished bags.
3. Falling Demand and Plastic Competition
Packaging Dilution: Due to the shortage of jute bags, the central government has allowed a "dilution" of the Jute Packaging Materials Act, permitting more food grains and sugar to be packed in plastic bags.
Demand Slump: Demand for jute bags has dropped by nearly 30% in the 2024–25 period. This creates a vicious cycle: when jute is scarce, plastic takes its place, and once the market shifts to plastic, it is hard for jute to win it back.
Impact on Workers
The human cost of this crisis is severe. As of late 2025:
Mill Closures: Several major mills (like those in Jagatdal and Mahadev) have suspended operations indefinitely.
Shift Reductions: Many remaining mills have cut down to just 10–15 shifts per week, leading to massive wage losses for daily-wage workers.
Uncertainty: Over 5,000 workers in a single mill alone were recently left in limbo, and industry experts warn that without policy intervention, large-scale permanent shutdowns are likely.
Possible Solutions Under Discussion
Export Bans: Industry bodies like the IJMA have called for a ban on jute seed exports to ensure domestic farmers have what they need for the next season.
Formula Revision: Constant pressure is being put on the Ministry of Textiles to update the pricing formula for B.Twill bags to reflect current market realities.
Anti-Hoarding Measures: There are calls for strict regulation to prevent stockists from hoarding raw jute to drive prices even higher.
As of late December 2025, the crisis in West Bengal’s jute sector has shifted from a general slowdown to an active industrial emergency. Several major mills have officially suspended work, and the state government is now launching specific revival plans for older units.
1. List of Recently Closed or Distressed Mills
Several mills have issued "Suspension of Work" notices this month, citing the unviable price of raw jute and a lack of stock.
Industry experts warn that if the current "price freeze" on finished bags continues, up to 50% of the state's 60+ mills could face closure by March 2026.
2. Government Response & Policy Shifts
Both the State and Central governments have taken contrasting stances to manage the fallout:
West Bengal State Government Actions:
Revival of Sick Units: The state has launched a structured revival plan for the New Central Jute Mill (NCJM). A transaction advisor has been appointed to find a financier, aiming to make this a "model" for other defunct units.
Direct Intervention: Following the closure of Mahadeo Jute Mill, the state labor department has been mediating between mill owners and unions to prevent long-term lockouts.
Political Pressure: CM Mamata Banerjee has criticized the Central government’s "price freeze" on jute bags, arguing it makes production impossible when raw jute costs ₹11,000/quintal but the selling price is pegged to much lower historical costs.
Central Government & Jute Commissioner Office:
Inventory Caps: On December 18, 2025, the Jute Commissioner issued orders fixing maximum holding limits for raw jute to prevent hoarding by stockists and middlemen.
Minimum Support Price (MSP): The MSP for the 2025-26 season was set at ₹5,650 per quintal, but market rates are currently nearly double that, rendering the MSP irrelevant for farmers but a hurdle for millers who want the government to pay more for bags.
Plastic Dilution: To avoid a packaging crisis for food grains, the Centre has officially allowed the use of plastic (HDPE/PP) bags for a large portion of the 2025-26 Kharif season.
3. The "Bangladesh Factor"
A major driver of the December surge is the trade dispute with Bangladesh. Bangladesh has restricted raw jute exports to India to protect its own industry. In response, the Indian Jute Mills Association (IJMA) has formally requested the Indian government to ban the export of jute seeds to Bangladesh to safeguard India's future crop.
