After COVID-induced economic crisis, the ongoing Russia-Ukraine war is giving sleepless nights for enterprising granite businessmen from Prakasam district, who have been hoping against hope to see an improvement in their fortunes in 2022.
The district attracts global players for its rich variety of granite blocks including the black galaxy granite found in Chimakurthy. The increase in oceanic freight rates by 10 times in the wake of the pandemic and an acute shortage of containers has made the going tough for them.
Exports to China and other countries have been hit hard. As a result granite barons are unable to move 3,500 to 4,000 container loads of quarried material from the quarries, according to industry sources.
Adding to their woes is the skyrocketing price of commercial diesel used by the granite units. They fear that the fuel cost may go up further in the wake of the Russia-Ukraine crisis adding further to the cost of production at a time when they need to cut costs to stay competitive in the global market.
The granite units in Chimakurthy are clueless on running the operations as the demand for imported construction material from China and other countries has come down drastically in the wake of the logistics bottleneck. Chinese firms, which used to garner all the granite material in the past, are now selective in buying the building stone material as there has been a reduced demand for the processed granite slabs as shipping lines have hiked the freight charges, according to a granite exporter N. Sudhakar.
Policy changes
The ‘unimaginative” mining policy of the State government is also a cause of great concern. It is not just royalty fee, which has been hiked by 50% by the government, which is worrying the granite businessmen. Promulgation of an order amending the Mines and Minerals Concession rules, 1966 has caused increase of security deposit by five times from a mere ₹1.30 lakh per hectare. The State government, however, reduced the hike in security deposit by three times after some of the granite businessmen moved the court against G.O. MS No. 65 issued by the Industries and Commerce department during August 2021.
Likewise, the charges collected by the Pollution Control Board have been hiked by 10 times to over ₹15 lakh per unit, laments a group of granite traders at the Building Material Special Economic Zone at Gullapalli. Though they have no objection to the auctioning of new quarries, they are upset with the government which was “bent upon auctioning even the already leased mines”. Though the existing players are provided with the right of refusal, they will have no option but to lose the mining lease if they are not in a position to match the price quoted by the highest bidder during auction.
Only about five containers move out of the SEZ each day now, according to Deepti Industries managing director Mandava Ratnakar. The global logistics players have forced the granite businessmen to buy add-on products like insurance. They are charged 12,500 US dollars per container now as against USD 1,250 earlier. The number of vessels calling on Krishnapatnam port has come down drastically forcing them to send the material to the Chennai port incurring an additional expense of ₹15,000 per container, he says.
A majority of the 1,500 cutter factories, which had shut shop during COVID-19 pandemic, have not reopened yet, explains an entreprenuer from Pernamitta industrial estate G. Koteswara Rao.
