Salt industry in Gandhidham seeks rail freight concessions

The ailing salt industry in Gandhidham, which contributes over 40 per cent of the country's salt production and accounts for 70 per cent of Gujarat's salt production, has sent a pre-budget wishlist to the railway ministry.

The industry has demanded the continuation of concessions in freight charges for 'B' category (ordinary, non-refined salt) along with the availability of more railway wagons.

"Gandhidham has contributed 45 lakh tonnes of non-refined salt in the current financial, almost double to the last fiscal's figure, because of the enhanced exports to Japan and China. But due to the rise in railway freight, the industry in Gandhidham is facing a crisis. Soon after the increase in railway freight, the movement of salt from Gujarat has come down by over 40 per cent, especially from Gandhidham." Hiralal Parekh, president, Indian Salt Manufacturers Association (ISMA), told Business Standard.

The railway freight was hiked over 135 per cent for movement of salt in the Union Budget 2002-03, however, it was reduced by around 15-25 per cent in the Union Budget 2003-04 and the Union Budget 2004-05 has maintained the status quo on freight charges for all commodities, while the salt industry in Gandhidham was expecting a reduction in the rates.

"For the domestic market, we suggest that the matter be taken up with the railway minister immediately and the increased rate of 2002-03 be withdrawn immediately to save the salt industry," said Vikash Patel, one of the leading salt manufacturers in Gandhidham.

With Gandhidham being away from the consuming centres in the north, north east and southern part of the country, the increased freight rates have benefited the salt fields of Rajasthan and Tamil Nadu due to their proximity to the consuming centres.

This has resulted in over one crore tonne of excess stock lying idle with various production units in the state.

If a railway rake is loaded from salt fields of Rajasthan to the north and north east states, the freight difference compared with rakes starting from Gujarat works out to nearly Rs five-eight lakh per rake. This is a big disadvantage for the salt industry in the region.

At present, the salt manufacturers get a discount on freight charge upto 25 per cent from the railways for carrying 'B' category salt across the country.

Concession in freight rates for ordinary non-refined salt protects the interest of the small-scale salt manufacturer of Gandhidham. While the refined and free-flowing salt manufacturers, under the 'C' category, do not get any concession.

"Abolition of the present concessions will mean a direct competition with industrial salt manufacturers and small scale salt manufacturers from other parts of the country. The salt manufacturers in the district are compelled to sell their stocks at lower price then their cost of production. Over 50 per cent of the total salt producing units in Gandhidham have been closed down due to these reasons. The industry is also facing the autocracy of the railway administration in allotment of rakes," said Baulal Sangvi president, Gandhidham Chamber of Commerce and Industry.