The Hindu Business Line : Capexil moots Rs 5,000-cr mineral upgradation fund

Capexil figures
India accounts for nearly 30 per cent of the world's export of high quality natural stones. Export of natural stones has grown from Rs 28,780.5 crore (between April 2004 and January 2005) to Rs 31,150 crore (between April 2005 and January 2006).

Mumbai , July 26

Sensing the need for an immediate upgradation of the minor extraction industry, the Chemical and Allied Products Export Promotion Council (Capexil) has presented a proposal to the Government for creating a Mineral Upgradation Fund worth Rs 5,000 crore.

The fund, if approved by the Ministry of Commerce, will be used to provide subsidies to modernise technology used in the extraction of natural stones (or minor extraction) and upgrade stone products processing units.

"Mining and extraction is a capital-intensive industry and needs huge investments on a long-term basis.

"If the Government helps us to create a corpus fund which is made available to the industry at a concessional rate of interest (in line with the textile development fund), it will support us to develop the country's mineral resource in a systematic and scientific manner,'' said a senior official of Capexil.

The minor extraction industry is passing through a buoyant period with Indian exporters working overtime to meet overseas demand.

India accounts for nearly 30 per cent of the world's export of high quality natural stones (granite, marble and sandstone).

But there is always fear of losing out to competitors from Brazil, Spain, South Africa and China.

As per Capexil figures, export of natural stones has grown from Rs 28,780.5 crore (between April 2004 and January 2005) to Rs 31,150 crore (between April 2005 and January 2006).

"The Ministry has responded positively to our submission. We expect some allocations to this effect in next year's budget,'' said an official.

Technological constraints

Only 20 per cent of the total 10,000 quarries (large and medium-sized) in India resort to mechanised extraction of stones. Technological impediments have severely impacted demand-supply chain.

Modern methods such as wire-saw cutting and jet piercing are not popular among quarry owners, who still use the blast method.

"There is a need to modernise and standardise our extraction procedures. The blasting method adopted by quarry owners result in huge scrap losses. This will severely affect our productivity,'' said a technology expert of Capexil.

Disproportionate demand-supply

A 20 per cent increase in international market and a near 15 per cent hike in the domestic market have literally mopped dry the stocks of Indian natural stones exporters.

The industry is finding it tough to meet the influx of demand from international markets, the backlog spanning from 90 to 120 days.

"We are finding it difficult to meet big orders from Europe and America because of the non-availability of rough granite and marble blocks,'' said Mr Narpat Singh Shekhawat of Mahadev Marmo Pvt Ltd, a leading exporter.

Closure of several quarries in Karnataka, Maharashtra and Andhra Pradesh has also affected the supply chain.

The closure of Kanakapura mines in Karnataka has cut short the supply of premium granite variants such as Red Multicolour and Indian Juprana.

Other premium granite brands such as Black Galaxy, Absolute Black, Madurai Gold and Kashmir White are also low in supply.