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One of India's oldest clusters of salt-refining units, at Gandhidham in Gujarat, is struggling for survival. High transportation costs and insufficient allocation of railway rakes are hurting the competitiveness of these small and medium units in the Kutch district of the state.
Over the past year, two of the 14 refining units in this region have closed down, while others are operating at reduced capacity. Salt industry sources said high operational costs and costly transportation hurt the sales of these units. The refining units mainly supply refined salt to the bulk and retail markets.
"Logistics costs have gone up significantly due to costly transport. Salt refineries in the Gandhidham region have almost lost their competitiveness outside Gujarat. Most of the salt in the consuming markets is supplied either from the south or from Rajasthan," said Bachubhai Ahir, former president of the Indian Salt Manufacturers' Association (ISMA).
Salt refining units in Rajasthan and southern India have gained significant market share at the expense of those based in Kutch. Industry sources said six new units have come up in Rajasthan, and they supply salt to the main consuming centres, such as Delhi, Uttar Pradesh and Bihar.
Also, Cuttack - an old salt refining cluster - has a cost advantage and supplies salt to the entire southern market.
In Gujarat alone, different clusters are taking shape. Three refining units have come up around Halvad near Surendranagar, while three more have come up around the Bharuch region. "They can supply salt at a lower transportation cost compared with refiners from Gandhidham," added Ahir.
"Units in Kutch are facing high costs. The only alternative for them if they want to survive is to find local markets for their salt, where they can supply at lower cost," said P N Rao, president, ISMA.
Salt refineries in Kutch have a daily processing capacity of 100-500 tonnes per day. However, most of them are running at less than 50 per cent of their capacity. Government officials maintained that such a situation is a positive development for the industry. "It is a good sign that newer pockets are emerging in the salt refining business. This will create competition and improve quality as well as prices," said M A Ansari, state salt commissioner.
