Dutt is undergoing his 42-month prison sentence after being linked to the 1993 Mumbai terror attack. It is his second stint in the jail.
A jail official said the actor will be trained to make high quality, heavy duty paper bags with a capacity of 6-8 kg, which are now gradually replacing plastic bags in the market.
He is likely to get a remuneration of Rs 25 a day for this laborious work. However, depending on his skills and efficiency, the payment could gradually go up to Rs 40 per day.
The official indicated that in view of security concerns, Dutt will undertake this task indoors, inside his maximum security enclosure.
Dutt had expressed a desire to carry out heavy duty work in the prison which would help him keep fit, but this was declined on security grounds.
During his previous prison stint over a decade ago, Dutt was trained to make cane chairs, an outdoor chore.
Other jobs in the prison include making heavy and light furniture, candles, bags and other items of daily use which are sold outside through NGOs or government departments.