By Jyotsna Bhatnagar

In spite of being one of the largest producers of salt in the world today, India has not been able to make a dent in the international salt market.

In volume terms, exports have fluctuated widely between 2.52 lakh tonnes in 1984 to 6.66 lakh tonnes in 1990, which is considered the best export performance so far.

Industry observers point out that the Indian salt industry has been unsuccessful on the export front although salt from India is probably the cheapest in FOB terms compared to other large exporters. They feel India has not been able to export to its full potential largely on account of high trade logistics costs compounded by infrastructural bottlenecks which cause interminable delay in turnaround of vessels and also result in phenomenal increase of Indian salt's CIF value.

While traffic at major ports has been growing at an annual rate of 8 per cent in the past decade, physical infrastructure, support facilities and cargo handling productivity have shown only marginal improvement. And in their attempt to combat increasing congestion at ports, port managements are giving short shrift to low value items like salt. "Salt loaders invariably have to suffer several weeks of pre-berthing detention on each call," lamented an industry insider.

Not surprisingly, the freight rates demanded by the owners and operators of salt loaders have an in-built component to compensate for idle time delays. These uncompetitive freight rates eat into the shippers' margins. They have no choice but to live with it since any increase in the delivered price of the commodity at the destination would serve to neutralise whatever little price advantage the consignors may have over their rivals in the international market.

"This largely explains the aversion displayed in the past by Indian shippers to contract deliveries on a CIF basis," said a source. Not only that, even though shippers generally offer old vessels of 18-20 years vintage for transporting salt in view of its highly corrosive nature, no concessions are given in freight rates.

Another factor that has contributed to India's poor performance on the export front is the fact that there is no institutional mechanism in place for disseminating information about real and potential buyers in foreign markets.

Salt manufacturers contend that the government should change its "step-motherly attitude" towards the industry. Though salt is a low value and highly corrosive commodity, its potential for earning foreign exchange on a sustained basis should not be underestimated, they say.

The obvious bias against what is considered a not-so-lucrative commodity also explains why the domestic industry's breakthrough in raising the NaCl content of solar salt to 99.25 per cent, close to the world's best of 99.5 per cent offered by Mexico, has not reaped the dividends it deserves.

Clearly, the government does not seriously consider salt an export earner. Proof of this is the fact that the Navalakhi-based Chowgule Salt Works was forced to down its shutters almost two years ago pending cancellation of its lease by the Gujarat government over the issue of environmental degradation. It was the only export oriented salt unit in the country, and had made an entry into the Japanese market, the largest market for salt exports in the international arena. It had been exporting around 2 lakh tonnes of salt annually. The Salt commissionerate has taken up cudgels on behalf of the company and is hopeful that the lease will be renewed. But the signals this has sent out in the world market about the unreliability of the Indian industry, have already done considerable damage, according to industry experts.

Apart from lack of infrastructure and mechanised loading facilities at ports, what has hindered India's forays into the export arena is the relatively poor quality of salt. Industry observers opine that since the washeries in the Kandla region, one of the most fertile in terms of salt production, are equipped with the obsolete sprinkler technology, there is little possibility of any improvement in the quality of salt.

"What we need is centrifuge technology which would require substantial initial investment but will reap rich returns later," said a salt manufacturer.

But in this case too, the bottleneck, apart from infusion of fresh funds, is the mindset. "Since manual labour is far cheaper and available in plenty, manufacturers are content with maintaining the status quo," observed an industry source.

For the moment, the writing on the wall is there for all to see. The cost of setting up state-of-the-art washeries and the resultant increase in cost of refining will have to be borne by the trade till export volumes increase substantially or till the price situation in the international market turns more favourable.

Once these pre-conditions of containing trade logistics costs and setting up mechanised handling facilities at ports are fulfiled, India, which is today ranked the fourth largest producer of salt, has the potential to emerge as a dependable source of supply. This is because India has large tracts of wasteland available for harnessing seawater for producing solar salt. Gujarat, in particular, has large tracts of wasteland available for salt cultivation.

Already increased exports to the large salt importing countries namely Japan, the two Koreas and Malaysia, are being projected. Traditionally, exports from India have largely been confined to the small markets of Bangladesh, Nepal, East Africa, and some of the South East Asian countries. Though India succeeded in making entries into the large salt importing markets of Japan and DPR Korea as far back as the mid sixties, it could not sustain this for long.

Japan turned its back on imports from India because apart from the quality differential, the vessels engaged for transporting this cargo had to suffer idle time delays because of pre-berthing detention and slow turnaround because of poor cargo handling productivity. Mexico, another major exporter of salt, exploited the situation. It not only improved quality standards but also developed state-of-the-art loading facilities at ports.

Despite the passage of time, the situation at least in India is still very much the same. Not only has cargo handling not graduated from physical to mechanised but freight rates also continue to be uncompetitive as they invariably include compensation for idle time delays at ports.

Turning India into a global player
Despite its large salt production and immense export potential, turning India into a global player may still be an uphill task. To begin with, it has been projected that salt production must increase annually by at least 4.6 per cent to keep up with international demand projections. This seems well nigh impossible since the prospects of any increase in the per acre yield (presently in the range of 60-65 tonnes per acre in Gujarat and well below that in other states) is remote.

Attention will therefore have to be focussed on bringing more land under salt cultivation. As in the past, demand for exports will have to be largely met by Gujarat. The Kandla port will therefore have to be geared to take on the task by not only installing mechanised salt handling facilities but also considering setting up a dedicated jetty for the salt industry, according to industry sources. Licensing new salt works in close proximity to the port may also serve to minimise inland transportation costs.

Increasing exports is a lucrative proposition in view of the rising price spiral of salt in the international markets. The export demand for bulk salt has already been pegged to increase to an overly optimistic 1.2 million tonnes by an industry study done by the Gujarat Chamber of Commerce and Industry. The export demand for bagged edible salt has been projected at 50,000 tonnes.

While Japan and the Koreas are undoubtedly the largest markets for bulk salt, the markets with the best potential for absorbing edible salt exports are Kenya, Nigeria, Tanzania, Zambia, Zimbabwe, Dubai, Muscat, Kuwait and Oman.

Absence of large refineries
One of the major reasons for India's inability to make its presence felt in the international salt market is the absence of big refineries that can supply large quantities over a long period. "What any importer looks for is not only large supplies from a single source but also the assurance of uninterrupted supply over a long period," maintained an industry observer.

Unfortunately, in India, barring the Tatas' Mithapur works which has a capacity of producing over half a million tonnes of salt (the refinery has a capacity of 20 lakh tonnes), there is no single player in the salt sector with the capacity of supplying more than 5 lakh tonnes of salt. And even the Mithapur unit is mainly producing for its in-house consumption and has not entered the export arena in a big way.

Laments a senior bureaucrat of the salt department,"Though we do have excess production, it is scattered since it is concentrated in the small and medium sector. The problem is that to make a large export consignment, several small quantities have to be transported from various places to a port by which time the transportation costs themselves have become prohibitively high."

He adds that for India to become a global player more mechanised export oriented units, which can produce large quantities of international grade salt and are preferably located near ports, are needed. Preferential treatment to salt consignments specially by ports located in major salt producing states such as Gujarat may also go a long way towards eliminating the low priority status accorded to the commodity.

The salt industry and the Salt Commission are also lobbying for a separate port or at least a dedicated jetty in ports like the Kandla port, which handles a bulk of the salt cargo. This is to ensure elimination of another major infrastructural bottleneck.