Bengal being the key player in the jute sector, will bear the brunt with the Centre planning to dilute the mandatory jute packaging order from 90 percent to 50 percent for foodgrain packaging where nearly a million people are dependent on the sector.

Starting this year the contingency plan is to reduce the use of jute bags by 5 percent each year and finally bring it down to 50 percent from 90 percent within the next seven years.

For 2017-18, the Standing Advisory Committee on Jute has recommended five per cent dilution for foodgrain packaging to 85 percent, jute industry officials said. Till 2016-17, 90 percent of total foodgrain and 20 percent of sugar was to be packed in jute bags.

The Centre's decision is based on the suggestion made by a Committee of Secretaries (CoS) in April 2016, the sources said.

The Jute Packaging Materials (Compulsory Use in Packaging Commodities) Act, 1987 directs agencies for mandatory use of jute packaging materials for foodgrain and sugar to the extent decided by the government every year based on the Standing Advisory Committee's recommendations.

According to Indan Jute Mills Association estimates, about 40 lakh farm familes and and three lakh workers are associated with the sector.

Jute industry produces around 200 crore bags valued at Rs 8500 crore and the scaling down in mandatory packaging figure means wiping out of Rs 3500-4000 crore business.