Indian granite exports have declined 33 per cent between 2006-07 and 2008-09. The sector, which relies heavily on American and European demand, was among the first to feel the heat of the sub-prime crisis. Its export revenues fell steeply in 2007-08, even before there were visible signs of a slowdown in Indian housing and industry.



According to data provided by CAPEXIL, the value of granite export from India was Rs 2,738 crore in 2008-09, compared with Rs 4,086 crore in 2006-07. In 2007-08, the export value stood at Rs 3,367 crore.



Sub-prime & Volumes



In terms of volume, the country exported 30 lakh tonnes of granite in 2008-09, compared with 31 lakh tonnes in 2006-07. In 2007-08, it was 34.12 lakh tonnes. Unlike the trend with respect to values, volumes actually rose in 2007-08, but fell below 2006-07 levels in 2008-09.



What perhaps explains the increase in volumes in 2007-08 is that polished granite, which commands a better price, was substituted by semi-finished blocks. Yet, prices in the latter category remained unattractive, reflecting the severity of the recession.



Volumes increased by 10.2 per cent in 2007-08 over the previous year, while revenue earned from exports decreased by 17.6 per cent this year. The first effects of the sub-prime crisis were beginning to show.



The decline in export earnings and volumes was more pronounced in 2008-09. Export fell 18.7 per cent in value terms, while volumes were down 12.1 per cent.



Export dependent



"The US market has fallen about 80 per cent, while the European market has fallen between 30-40 per cent," said Mr R Veeramani, Founder President, All India Granite and Stone Association (AIGSA). "About 85-90 per cent of the total granite production in the country is for exports," he added.



The export of polished granites blocks and slabs more than halved in 2008-09 at 2.75 lakh tonnes compared with 5.52 lakh tonnes in 2007, while in 2007-08 it was 4.13 lakh tonnes. Export revenue in this segment declined 51.9 per cent – more than the sector as a whole – to Rs 862.63 crore 2008-09 from Rs 1,791.98 crore in 2006-07. In 2007-08, it was Rs 1,332.56 crore.



The sharp drop in exports has led to a reduction in mining activities, and factories are running at below capacity, said Mr Veeramani. There is some activity only when there are confirmed orders, he added.



Payment problem



Mr Laxmi Kumar K S, Joint Treasurer, AIGSA, said since buyers in US and Europe are facing a credit crunch, payments have also become irregular.



"The signals have been there since July-August 2008. Since September, there has been a steady decline," Mr Laxmi Kumar said. On being asked if there were significant pricing pressure, he said. "There are no buyers. The question of pricing becomes immaterial in such a situation."



The Indian exporters are now looking at other markets such as Russia, Ukraine and the other CIS countries. "I recently took an industry delegation to these markets," said Mr Veeramani. However, the various markets have different tastes and it is difficult to divert the stock meant for one market to another, he added.



Mr Laxmi Kumar said a portion of the stock has been diverted to the domestic market and there is some distress sale taking place.



However, the export of semi-finished blocks to China has not been as badly affected as some of the other sales, said Mr Veeramani. The export volumes of crude or roughly trimmed granite increased to 25.63 lakh tonnes in 2008 from 21.47 lakh tonnes in 2007.



In 2009, it declined to 23.92 lakh tonnes. Exports revenue largely remained flat at Rs 1478.95 crore in 2009, compared with RS 1479.44 crore in 2008. In 2007, it was Rs 1703.37 crore.



Granite accounts for 10 per cent of India's minerals' output.