New Delhi, April 16 -- A legal battle is unfolding in India as sugar producers challenge the federal government's push to enforce a 1987 law mandating that 20 per cent of sugar be packaged in jute bags.

The government, led by Prime Minister Narendra Modi, argues the rule supports the jute industry and rural livelihoods. But sugar mills claim the law is outdated and costly.

According to court filings, sugar producers say jute bags increase the risk of contamination and add about USD 76 million in annual costs compared to recyclable plastic alternatives.

They also claim major buyers like Pepsi, Coke, Nestle, and ITC reject sugar delivered in jute bags due to food safety concerns.

The government, however, maintains that jute bags are mor...