Kolkata, Dec 23 (IANS): The central government will come up with a new policy early next year on the jute industry aimed at diversifying its portfolio and increasing production, a government official said here Tuesday.

"The central government is devising the scheme. It will be finetuned in consultation with the state government", deputy jute commissioner and secretary of National Jute Board (NJB) Dipankar Mahato said.

NJB and Jute Corporation are currently in the process of drafting the guidelines for the policy stated to be approved by the centre in January next year.

"We are drafting the scheme for subsidizing machines and fertilizers. But the state has to play an active role", Mahato said.

When asked about financial assistance to the jute cultivators, Mahato said: "We will definitely come up with some sort of a scheme by mid-January".

Jute exports amount to Rs. 1200 crores each year and contribute nearly Rs. 110 crores to the national exchequer by means of taxes and cess.

The need for a new jute policy arose primarily on account of the low production level and the expected surge in demand for jute products following the ban on plastic bags etc. The centre has already indicated phasing out of Jute Packaging Materials Act.

Mahato also said reservation law to save the jute industry is not the only solution and the jute industry should respond to market forces while opting for diversification.