More on imports of marble blocks

The recession bug seems to have hit the stone industry really hard. Exports have taken a big beating. All those connected to the stone industry, including me, have been working hard not only to maintain the sales at comfortable levels, but also to keep the costs low. Margins have been severely affected with business to the major importer of stones, read the US of A, dropping down to just 40% of what it was. This, coupled with defaults or delayed payments from major buyers has been of great concern for the industry.

Now let us reflect of marble block imports that has been the major issue for the domestic marble industry as well as those thriving on imported material. It is important to examine whether the consumer, supposedly the king has benefited or not by the government's move to increase the license quantity for import of marble blocks into India and changes in method of entitlement for the additional quantities licensed.

• The premiums have dropped from Rs.11,000 per ton to Rs.4,000 per ton. This is positive as it is translating to higher profits for the factory owner or importer.
• Unfortunately, there is no remarkable reduction in prices to the ultimate user of imported marble slabs or tiles. There is an increase in imports of low priced junk blocks and the price benefits have not been passed on fully to the consumer. The consumer is receiving lower grade materials with deterioration in quality but not sufficient reduction in price.
• Materials that are in short supply or reasonably good quality materials continue to be priced higher than what they are worth.

Although this step is in the right direction, it is high time that government ensures in spirit that the quality of imported blocks should meet certain standards. Specifying a floor price does not help as our traders know very well how to circumvent such rules. We need a non corrupt method of certification of blocks imported to ensure that good quality material is imported. This is important taking into account environmental concerns and reducing the pressure on existing quarries in India that are still in operation after many quarries have been shut down by the Supreme Court Directives for environmental concerns.

Privacy Policy Revision 1

Enactment of new laws in various jurisdictions compels us to post revisions to our privacy policy rather than amending the existing privacy policy.

Our privacy policy initially posted on August 24, 2008 in its revised form from time to time continues to be applicable with following additions and / or revisions effective April 1, 2009:-

1. Any changes with respect to our method of collection and handling of the visitors' Personally Identifiable Information or Sensitive Information will be effective from the date of the post only on data collected on or after that date. For Personally Identifiable Information and Sensitive Information already collected under the previous Privacy Policy, revisions will apply only with the consent of the person submitting the information.
   
2. The Privacy Policy posted on http://www.stoneint.in/privacy.htm is applicable to this blog and has undergone revisions. Please refer to this document for definitions of Personally Identifiable Information and Sensitive Information as well as procedures to opt out of third party data collection.
   
3. Effective April 8, 2009 Google will change the method of delivering ads to this blog as well as our website. Advertisements may be placed based on your interest and / or the contents of our website / blog.
   
4. To enable serving ads based on your interest, Google, as a third party vendor, places cookies in your web browser to determine your interests.
   
5. Google uses the DoubleClick DART cookie that enables it to serve ads to our visitors based on their visit to our site and other sites on the Internet.
   
6. Visitors may opt out of the use of the DART cookie by visiting the Google ad and content network privacy policy.
   
7. Links to OPT OUT procedures are also available on the DoubleClick DART cookie pages.
   

Google or DoubleClick do not collect any Personally Identifiable Information or Sensitive Information to determine your interests. Google, its services providers and its advertisers do not share with us any information that they collect during course of serving ads on our website / blog.

Changes to our Privacy Policy will henceforth be notified as a separate post.

Further Increase in quantity for new licenses to import marble into India. More needs to be done!

The DGFT has issued another circular dated August 28, 2008 stating that quantity for the new licenses has been raised from 110,000 tons to 140,000 tons. This is only for the actual users owning gang saws and having a domestic turnover of Rs.1 crore and above during each of the previous 3 years. Those already having Special Import Licences and 100% Export Oriented Units cannot avail of quantities under these licenses.
What is good to note is that the Government recognises the need for gang saw owners who have invested very heavily in machinery to source good quality blocks. This will go a long way in ensuring that the quality of slabs and tiles produced by these units are of acceptable standards for the domestic market. It is important that our domestic building and construction industry uses materials that are comparable with international standards. After all we are sick and tired of seeing sub standard quality of slabs and tiles in the domestic market even from our indegeniously quarried blocks.
It is high time that marble slabs and tiles sold in India is of acceptable quality and at the same time we should not degrade our environment by quarrying indiscriminately. We need to ensure that our quarries in India also invest adequately in modern quarrying equipments to ensure better quality of blocks and at the same time ensure environmental protection. Henceforth, the Government of India and of the states having viable reserves of marble should frame policies in such a way that quarrying in India is suitably modernized and import of blocks should be free from all controlls by allowing traders also to import and sell blocks to factories. This will help the factories to raise adequate financial resources for sourcing blocks as the factory owners need to ensure that they do not get stuck with dead inventory in case certain colors of blocks have a drop in demand and they could have cancellations of orders for projects that can cause more strains. After all, if a factory has to import blocks, the planning has to be done at least four months prior to the requirement and that translates into a considerable amount of money to be financed and blocked. This causes financial strains to the factory owners.

Effects on Indian marble industry with changes in import policy

Earlier, I had posted a review on the new policy circular 13/2008 by DGFT regarding issue of additional licences for import of rough marble blocks / slabs into India. There has been a lot of hue and cry that the indegenous marble mining industry will be adversely affected with this increase in quantity of imported marble blocks. The question that comes to mind is whose interest is to be protected?

1. Do we have to protect the interest of highly influential quarry owners who have cornered control of majority of the legally available marble mining leases in India, especially in Rajasthan State?
2. Should we take measures to ensure that marble processing units that have comitted huge investments are able to deliver acceptable quality processed slabs and tiles at economical prices?
3. Should we not take measures to protect our environment by restricting indegenous quarrying?

Whenever most governments frame policies, the person whose interests should be taken into account first is the end user and the ultimate consumer. However, ite seems that the consumers' interest is least important. The end user in India, i.e. the person using marble slabs for his home, office or construction projects should get acceptable quality of slabs / tiles at reasonable prices. What is happening today is that quarry owners in India charge exhorbitant prices for blocks that otherwise fail to meet acceptable standards by a processing unit even in a banana republic. Factories have little choice other than to process sub standard blocks to be able to supply slabs and tiles to consumers at accpetable prices. Indiscriminate quarrying is detrimental to the environment. Now who should governments look after? In my opinion it is the ultimate consumer. Let us hope the new policy changes will have a positive impact for the consumer.

The persons who are adversely affected by this change are the few quarry owners who have cornered large chunks of mining leases as well as those who just have namesake factories (read gang saws) on paper and have been hitherto cornering licences from the initial policy of 140,000 tons per annum. These are the people who are really affected. The former should now think of investing moneys in systematic quarrying techniques and supplying acceptable quality of blocks competitively without degrading the environment. We can do without the services of the latter. They have been cornering licences unjustifiably and selling them at premiums of over Rs.10,000/- per ton. What does this amount translate into? Rs.60 per square feet for a 2cm thick marble slab. If you take a floor price of Rs.14,000 C&F and add the premium, the raw material cost is already Rs.145 per square feet for what should have been Rs.85 (at the port before payment of duty and transportation and processing). This is really very uneconomical. What steps does a factory owner resort to?

1. He will saw 18mm thickness and sell as 20mm. Consumer is already compromised at this stage. This is definitely happening.
2. He may resort to over invoicing of imports. He may purchase substandard or maybe rejected blocks and have it over invoiced to comply with floor prices. This is detrimental to the economy. In case the processor is relieved of this burden of getting a licence alone for Rs.60 per sq. feet, hopefully he will avoid resorting to such measures.

The consumer is compromised by such measures. It is an accepted fact that the competition is between artificial materials (ceramics, concrete etc.) against the natural stones for use as floor and wall coverings indoors as well as outdoors. The demand for natural stones is very high in India due to the increased construction activities for new projects as well as renovations. The need of the hour is improving supply of raw materials without degrading our environment and the best way is to free imports totally to ensure that our domestic consumers receive acceptable quality of slabs and tiles and our construction projects are of acceptable quality once the materials of uncompromised specifications is supplied.

Imports of Marble Blocks in India (Policy Changes)

Investment in marble manufacturing and processing units in India is very large but quality of production is always inferior and has been deteriorating over the years due to shortage of acceptable quality marble blocks in India. This shortage has been the result of changes in mining policies due to environmental reasons. Due to this reason alone, many quarries supplying acceptable quality marble blocks to the manufacturing units have been closed down. Giving due consideration to representations by marble manufacturer associations, the Government of India has decided to issue licences for import of rough marble and granite slabs upto 110,000 tons in addition to the existing 140,000 tons for domestic consumption to importers whose elegibility will be determined as follows:-

1. The units should have installed marble gang saw machines. (These licenses are specifically unavailable for 100% Export Oriented Units that already have licenses to import rough marble and to units that have already been granted special import licences from the earlier provisions for import of 140,000 tons per annum.)
2. All units elegible for these licenses should have indigenous sales turnover of marble slabs/tiles only, of Rs.1.00 Crore (Rupees one Crore only) and above in each of the three financial years 2004-05, 2005-06 and 2006-07.

The floor price for imports is the same as per the special import licences issued. The licences will be issued upto 110,000 tons on a pro rata basis determined by the turnover of the elegibile units. There is still a further ceiling on the licences:-

1. Units having one installed gang saw will get a maximum license of 3,000 tons per annum.
2. Units having more than one gang saw will get a maximum license of 3,000 tons per annum for the first gang saw and 1,500 tons per annum for each additional gang saw.

Import is on an actual user basis and as usual returns will have to be filed and a pass book maintained.

For both the licences (140,000 tons and 110,000 tons) a Chartered Accountants certificate will have to be submitted certifying the elegibile turnover.

This change in policy was most needed as the manufacturers will have options of importing good quality rough blocks for processing, thereby making it economically viable and of acceptable quality. This will to some extent improve the quality of processed marble slabs and tiles available in India as many units can save the cost of Rs.10,000 to Rs.11,000 per ton on the licenses and use the amount in importing better quality first choice blocks.

However, this still seems to be a half hearted gesture by the government and more should be done by the government regarding imports of marble blocks in India. Marble blocks are very expensive and to ensure smooth running of the units the inventory required is very large. For a unit to maintain so much inventory it is very costly. The Government should ideally free the imports of marble into the country. This will to a large extent reduce the pressure on quarrying operations in India and we can have a safe environment policy and conserve our resources. Trading in imported marble blocks should also be allowed. This way our manufacturing units will find little need to commit vast financial resources in blocks and can source blocks readily from traders as and when needed to fulfil orders. Currently, a manufacturing unit will have to import blocks well in advance considering procedural delays and can also get stuck with inventory that will be lying idle and wasting huge financial resources and costs. Flexibility of sourcing raw materials is the key to economically viable processing and will ultimately benefit the domestic end users who are currently paying through their noses for imported junk.

Marble Blocks import into India

Import of Rough Marble Dimensional Blocks, marble slabs and tiles (other than cut and polished marble slabs and tiles) is allowed only by special licences issued by the Director General of Foreign Trade in India. Till now, annual licences are issued to those elegible to import marble blocks into India. For the year 2008-2009, licences totalling upto 140,000 tons of rough marble blocks, slabs and tiles (HS Classifications 25151100, 25151210, 25151220, 25151290) will be issued to existing marble sawing and processing units in India who have imported rough marble blocks and slabs in preceding years when licensing was applicable. Units who were hitherto elegible to apply for licences are those units that were importing marble blocks in period preceding the year from which restrictions came in force. Out of total licences of 140,000 tons, elegibility for each elegible license holder is normally worked out on basis of turnover for the year 2007-08 i.e. the turnover of the eligible firms for the year 2006-07, or the turnover of these firms for the year 2004-05 with a cap of 10%, whichever is less. The licenses are issued on actual user basis and the maximum entitlement is 14,000 tons for any single license holder.

There are certain points to bear in mind regarding these licenses:-

1. These licenses are not applicable to 100% Export Oriented Units or Units in Special Economic Zones that are eligible to import rough marble blocks and slabs for processing export orders directly or as deemed exports.
2. A passbook is maintained for the imports and the importer has to file monthly returns with the licensing authorities to keep record of the amount of imports and balance available.
3. Import of Dolomite is banned against these licences. Therefore what is known as Thassos White Marble cannot be imported in rough blocks or slabs form other than by 100% export oriented units. For domestic consumption in India, Thassos White marble has to be imported in cut and polished form only.

In case an elegible importer fails to use his full entitlement he sells his licence in the open market. Currently the rate for these licences is approximately Rs.10,000 - Rs.11,000 per ton depending on the demand / availability.

The floor price of imported marble (the minimum import price) should be not less than US$325 per ton c&f for blocks and US$500 per ton c&f for slabs.

Marble manufacturers associations have made a representation to the licensing authorities to review the licensing regime. In my next post I will discuss about the salient features of the review.

The endless journey

By now everyone visiting this blog may have viewed my profile. It is possible that you may have landed up in this blog spot through my website http://www.stoneint.in and may have learnt a lot regarding my commitment to the natural stone industry. I have been dealing in natural stones since 1981 immediately after my father died. Therefore, in addition to the death anniversary of my dad on May 28th every year, I also observe is date as the anniversary of being in business, initially with clearing up the widespread mess left behind by a person regarded as the Stone King in those days. Those were the days of regressive government regimes, spoke in the wheel bureaucracy and the most archaic transportation and communication facilities in place in India. The question everyone asked me is "Why I considered this task as clearing up a widespread mess?" It was indeed widespread. Just consider the size of India and the distance involved in traveling between the locations where different varieties of natural stones are quarried together with archaic transportation and communication systems. To add salt to the wounds the bureaucracy propagated regression with the support of regressive government regimes that has scant regard for entrepreneurship and placed a lot of spokes in the wheel for any progressive developments. However, our family still continued promoting exports and growth of the natural stone industry in India. My father would have loved to witness the growth of this industry to what it is today. In this blog, I mainly post articles on the following subjects:-

1. Problems faced by the Building & Construction Industry in using Indian natural stones.
2. Problems faced by the Indian natural stone industry in general during course of their business.
3. Government policies of the Indian Government as well as the Regional State Governments specific to or affecting the natural stone industry in India.
4. Suggestions for application of natural stones.
5. Suggestions for end users for proper maintenance and care of natural stone products.

Visitors are welcome to leave comments on the posts. In case you wish to make any suggestions for a new post or wish to contribute to posts on this blog, you are welcome to submit the feedback form or use any other contact options available in the Stone International website http://www.stoneint.in/contact.htm and I will immediately respond with more ideas. If you specifically authorise the label of the post will bear your name / contact as desired by you in the post.

Once again I welcome you to this journey of stone through time. This journey started millions of years back at the time of formation of our dear planet earth, and it continues till today when we use the natural stones for various applications that outlive us and still continue throughout the journey that never seems to end.