The inordinate delay in the grant of quarry leases, a lack of transparency and investor-unfriendly policies of the state gover-nment have pushed Karna-taka to the bottom of the list of granite exporting states in the country.
Karnataka, which held a numero uno status in granite exports for a long time, has lost the place to neighbouring Andhra Pradesh in recent years. Andhra Pradesh, despite the effect of recession, has emerged as the top exporter. Andhra Pradesh accounted for 40 per cent of national granite exports in 2008-09.
According to All India Granites and Stones Association (AIGSA), Karnataka’s share in all India exports has dropped to around 10 per cent to Rs 480 crore in 2008-09 from about 60 per cent about 10 years ago.
“The main reason for Karnataka’s poor show in granite exports was due to the negative leasing policy followed by the state government. The existing quarry operators are unable to get more production of granite. Some quarries in areas like Kollegal are not released for mining,” R Vee-ramani, chairman, GEM Granites, a Chennai-based granite export firm and founder president of AIGSA said.
He said already the industry is in a bad shape due to the depressed condition in the construction industry, the main user of granites. Due to recession in major consuming countries like the US and Europe, we can hardly achieve exports of Rs 5,000 crore during 2009-10, a growth of 10 per cent over the previous year, he said. There are about 1,500 granite and other stone exporters in the country. The industry made a cumulative investment of Rs 1,500 crore in 2005-06.
According to R Shiva Kumar, executive member, AIGSA, the Karnataka government’s Rule 11 committee is the main roadblock for the industry in getting fresh quarry licences.
“The state government has constituted a Rule-11 committee comprising of secretaries of commerce and industry, forest and revenue departments as members, which will screen all applications for fresh quarry licences and issue no objection certificate. The main problem is that this committee hardly gets any time to meet. In over 10 years the committee has met 60 times and presently 2,000 applications are pending for a grant of new quarry licences,” he said.
Unless the government abolishes this committee and gives full freedom to the director of mines and geology department, there is no hope of growth for the granite industry in Karnataka, he told Business Standard.
In addition to this, the royalty charged by the state government is also higher when compared to Andhra Pradesh, Orissa and Tamil Nadu. The state charges an exorbitant Rs 2,000 per cubic metre of granite blocks, whereas Andhra Pradesh charges hardly Rs 1,92,000 for one full year. Assuming that an SSI unit extracts 400 cubic metres of granite a year, it ends up paying Rs 8 lakh as royalty alone, close to four times than in Andhra Pradesh, Shiva Kumar said.
According to AIGSA, Karnataka government is also losing out on tax collections. For example, a SSI unit in Andhra Pradesh pays an average Rs 13 lakh as VAT per year.
“Due to these unfriendly policies granite firms are shifting their base to Andhra Pradesh and Tamil Nadu. There has not been any new investment in the granite sector in Karnataka in the last decade,” he said.
M E Shivalinga Murthy, director, department of mines and geology, government of Karnataka said it was nec-essary for Rule-11 committee to clear the fresh applications because they have to establish whether a quarry is located in the forest area or nearby. There is a ban on quarrying in forest areas in the state, he said. According to him hardly 50 applications are pending for clearance before the Rule-11 committee.
During the present fiscal more than 100 applications have been cleared and quarry leases are issued, he said.
