How Jute, the golden fibre gained and lost its lustre in Mithila (and India)

Rameshwar Jute Mill

Jute has been known to have been grown and used in Mithila region since 1750s. It was widely prevalent in areas of Purnea, Saharsa, Katihar, Muzaffarpur and Darbhanga. Purnea was the dominant grower with 80% cultivation in the district. However, Mithila area had no mills and all processing was manual till early 20th century.

As the demand for jute textile/fibre went up in European markets, British investors started setting up Jute mills in Bengal and producing fibre for export to UK. From 1850s to 1910 this saw growth of 20+ mills in Bengal. The growth in demand during the 1920–1930 era saw three jute mills being setup in the Mithila region as well:

(i) Katihar Jute Mills Ltd. Katihar

(ii) Rameshwar Jute Mills Company Ltd. Muktapur

(iii) Motilat Chamariya Jute Mills, Katihar

[Fun fact — where did the marwaris of Calcutta get the capital to move over to industrialist from being traders and brokers? It’s the jute business — stalwarts like GD Birla, Goenka, Bangur, Bajoria were trading in raw jute and making money on jute futures “fatka” in early part of 20th century]

By 1939, Purnea mills were employing nearly 3800 people and the Darbhanga mill had about 1400 workers. By 1956, the 1000 odd looms in these three mills were producing nearly 23 tonnes of the product. Over 10,000 workers were employed across all mills (Bengal at the same time had nearly 100 mills and was a dominant force in the Jute industry). The jute industry got a big fillip in between the two world wars of the 20th century, but the mills had old machines and soon fell behind. The profits from the wars enabled many Marwari traders to move to “own” mill stocks, enter boardrooms and in fact start their own mills.

Initially the Rameshwar Jute Mills was buying raw materials from Bengal but by 1950 all of its raw materials were procured from Gulabganj and Forbesganj in Purnea. Also the jute grown in Jhanjharpur and Nirmally was supplied to the factory that employed around 1800 workers. The mill was producing jute twine, gunny bags and hessian. It was selling to M/s. Associated Cements Company, local sugar mills and also to the markets at Kanpur.

However, the period of 1930–1940 saw significant investments in Jute mills and the competition started to impact profitability of the mills. The. Second world war improved profitability but restricted technology upgradation and new investments. The partition at the time of Independence saw most of the mills stay in India but the major jute producing areas going over to East Pakistan (now Bangladesh). The mills obviously suffered in raw materials access as supply was halted. The one statistic that captures this disruption is the production of jute in 1947–48 which fell to 1.6 million bales from 5.69 million bales in previous year (1946–47).

India moved to expand cultivation and by 1958, it could meet nearly 90% of the requirements of its jute mills. This led to a period of growth from 1950s to mid 1960s but ageing machines, poor management, labor strife and general economic conditions led to production challenges. The decline accelerated post 1965 as competition from polypropylene as cheap packaging substitute meant significant loss of markets as packaging materials. The devaluation of the Rupee in 1966 and imposition of export duty (unbelievable today!) made Pakistan competitive in world markets and exports from India got hit (glory be to our politicians and highly-educated bureaucrats!!). As British capital was withdrawn and replaced by Indian capital, the local greed and profit making at all costs further pushed the industry to ruin. The labour conflicts of the 1970s ensured many of the units went “sick” and the rest has a familiar pattern — corruption, inefficiency, short-term revival plans all failed to revive this industry not only in Mithila but everywhere in India.

The Rameshwar Jute Mills Limited was run by Maharaja Kameshwara Singh till 1954. It was then taken over as an amalgamation by the Birla Gwalior Limited, which managed and operated it till 1976. The company sold its jute mill in 1986 to Winsome International Limited owned by former coal minister Santosh Kumar Bagrodia under Congress, who later sold it to the West Bengal-based industrialist Binod Nath Jha — the present owner of the mill. The mill was shut down in 2017 after its disputes, debts and dues spiralled out of control.

On 13th September 2020, the mill was restarted with a grant of Rs. 26.6 crores to the company by the govt. It plans to produce gunny bags. Its future remains to be seen but at-least there is some cheer for its 3700 workers.

Is there a big future for revival of jute industry in Mithila? I don’t think so. The area under cultivation has dropped significantly and the industry continues to struggle even in dominant Bengal. It may be better for Mithila to find other “cash” crops than turn the hands of the clock backwards and aspire for the glorious days of 1920s.

Innovator. Entrepreneur. Mentor. Investor. Learner. Love technology, sports, arts and literature. Strive to be fair. http://t.co/UFEkCAnU