Granite industry seeks fiscal relief to survive recession

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Post Date: 01 Apr 2009    Viewed: 682

The Indian granite and natural stone industry is in dire straits. With its major market - the US - badly hit by recession, the industry is clueless on survival, other than asking the government for some fiscal help.

 

Some 300 units in Hosur, Bangalore and Hyderabad are about to close down . In Tamil Nadu, some 30 quarries (of the 165) are closed.

 

It is estimated that granite exports this year will be Rs 800 crore less than in 2007-08 (Rs 6,071 crore), but there is more to the story than the loss of revenue and profits. At stake is the livelihood of lakhs of people hailing from the most backward districts.

 

Granite importing countries such as the US, China, Italy have reduced their requirements. India's granite and natural stone exports could be down by 15-20 per cent this year, R. Veeramani, Chairman, Granite, Natural Stones and Product Panel, CAPEXIL (formerly Chemicals & Allied Products Export Promotion Council), told Business Line.

 

Over the last three decades the Indian granite industry has modernised to global standards. Sculptures and monuments made in India are being exported all over the world.

 

With its skilled manpower and stone technology, India has contributed to the world prestigious monuments such as the Holocaust Museum and the Vietnam War Memorial in Washington; Hiroshima Atom Bomb Memorial in Japan and Black Forest of Germany. However, the global recession has dampened India's hopes for bigger exports.

 

"We are just about surviving", says K. Badrinarayanan, Managing Director, Enterprising Enterprises, a granite exporter from Chennai.

 

Major porblems

 

One of the major problems for the industry is the payment of 12.5 per cent service tax on the commission paid to agents abroad for getting business. The agents are willing to get 3-4 containers of business every month on a 10-12 per cent commission (based on invoice price). "We need to give competitive price and work at 5 per cent margin. The tax to the government erodes the margin," he said.

 

N. Mahesh, President, Tamil Nadu Granite Quarry Owners and Exporters Association, says out of the 165 units that provided finished products, nearly 30 have been shut in the last few months. These units were heavily dependent on the US, which is the largest importer of finished products such as tombs. Five years ago, nearly 70 per cent of granite export was rough blocks and 30 per cent was finished product. It is now completely the reverse, he said.

 

The US and European markets have been badly hit, while there is still demand from China for granite blocks. Mahesh, who is the Managing Director of Devinarayan Exporters Ltd, says in this recession time the company had to reduce its price by 25-30 per cent.

 

The recovery in the industry will happen only after September, says L. T. Nanwani, Director, Jubilee Granites India Pvt Ltd. At present, the industry is pushing stocks to close the financial year. The demand from US is down by 50 per cent; the demand from China and Europe has dropped by nearly 30 per cent.

 

Source:http://sify.com