Economy

Coir industry operations hit on confusion over containment zones rules

V.Sajeev Kumar Kochi | Updated on June 10, 2021

Lack of clarity from district administration on the rules has affected the operations: Exporters’ fraternity

Lack of clarity in allowing the operations of small-scale sector units in containment zones has put Kerala’s coir sector in a very tight position. The problem comes at a time when the sector is gearing up to meet its export commitments for the ensuing Christmas season, especially from the US markets.

Many coir units situated in several panchayats in Alappuzha, the coir hub, could not function after their area was declared as containment or micro-containment zones. Sources in the exporters’ fraternity said that the lack of clarity from the district administration on the rules for the functioning of the small-scale sector has affected the operations of several MSME units including coir.

On the other hand, such units in the neighbouring Ernakulam district are allowed to function. This calls for a uniform policy on the working of units in containment zones across the State. The Union Ministry of Home Affairs has given a clear directive for industries that can work even in containment zones, but the district administration in Alappuzha are not allowing these units to function, the sources said.

Following such decision, the coir sector has been faced with greater difficulties and according to exporters, consignments worth around ₹70 crore piling up at various godowns without taking it for shipments.

To tide over the crisis, the coir sector has sought the intervention of the Kerala Chief Minister Pinarayi Vijayan in allowing a small percentage of workers to report for duty on a continuous basis in containment zones.

Josepaul Mathew, Chairman, Federation of Indian Coir Exporters Association, told BusinessLine that June and July are considered as the peak season for exports for the ensuing Christmas sales. The market trend is very positive with a burgeoning demand for coir in the US, thanks to building of makeshift offices under the DIY concept following the Work from Home culture.

“China has now emerged as a major competitor for Indian coir products in overseas markets. If we are unable to deliver the product on time, it would be an advantage for Chinese products. Last year, the China market was down, and the US customers were very accommodative because of the Covid situation," Josepaul said.

It may be recalled that the coir sector performed well in the pandemic times, fetching an export earning of ₹1,361 crore during the period between April to October last year.

However, the Federation pointed out that apart from the Covid challenges, the shortage of containers, cost escalation for shipments are also adding to the woes of exporters.

Many exporters are not in a position to avail MEIS benefits for the FY2019-20 and FY2020-21. They are hard pressed for funds in the midst of the second Covid wave with an erratic cash flow situation. The Federation urged the Finance Ministry to release the pending MEIS benefits which would be a great help for exporters in this crisis.

Published on June 10, 2021

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