India –Karnataka, the Indian state with more than half of the country’s granite resources, is finding itself bested by a neighbor, according to the Delhi-based Financial Express.

The state of Andhra Pradesh is making enough inroads to top Karnatka in granite exports, according to RR Hegde, general secretary of All India Granites & Stone Association (AIGSA).

Hedge told the Express that delays in licensing quarries, higher royalty fees and stringent rules in Karnataka are shifting production to Andhra Pradesh.

R Shiva Kumar, a AIGSA executive member, noted that Karnataka accounted for around 60 percent of India’s foreign exchange earning related to granite exports a decade ago. Now, the state’s share is below 20 percent, while Andhra Pradesh provides between 40 percent to 50 percent.

Some of the shift involves treatment of India’s Small Scale Industries sectors of smaller companies. The Andhra government collects royalties for granite blocks under three classes, including a “small” block category that benefits SSI companies. And, Hedge said, it also gives a 40-percent royalty concession to SSI firms during the recession.

Meanwhile, Karnataka assesses a standard royalty on all quarried granite, with no separate fee structure to benefit smaller processors. Karnataka quarry owners include the royalty fee when selling blocks to processors.

Hegde said that officials in the Andhra government deal with new quarry leases within 120 days; however, in Karnataka, a new license hasn’t been granted for at least six years.

He added that Andhra officials are granting 20-year licenses to granite developers while following granite conservation rules introduced by the central Indian government in 1999. Karnataka, he said, hasn’t acted to adopt the rules.

The AIGSA adopted a natural-stone annual export target ten years ago of Rs 7,000 crore ($1.5 billion in 2010 value), said R Veeramani, chairman of Chennai-based Gem Granites and the AIGSA’s founding president. The country still hasn’t achieved that level, earning Rs 6,226 crore ($1.3 billion) in the latest measurement during 2008-2009.

“Unless and until all states in the country implement uniform policy on granite quarrying, it will not be possible to revive the industry,” Veeramani told the Express.