The salt department deputy commissioner (Ahmedabad) M A Ansari, one of the five deputy commissioners in the salt department and possibly the most crucial in the hierarchy, however, begs to differ with the industry's viewpoint. A bureaucrat with an in-depth knowledge of the functioning of the sector, Ansari, in a hard-hitting interview with Jyotsna Bhatnagar of Financial Express strongly defends the Centre's role in assisting the sector. Yet, he candidly admits to the shortsightedness of both the manufacturers and the government which has resulted in the lopsided development of the salt industry and in its dismal performance especially, on the export front. Excerpts:
How do you assess the present state of the salt industry? Are you satisfied with the way it has shaped up?
Frankly speaking, the present state of affairs prevailing in the salt industry is a matter of grave concern for us. We are faced with a problem of excess production in the market. And the salt prices at Rs 100 to 125 per tonne ex-salt works, are ruling lower than even the production cost of salt against the normal average price of around Rs 140 per tonne or Rs 210 per tonne if, the minimum wages specifications are taken into account. Consequently, the salt manufacturers are experiencing tough times.

Having said that, however, I am not unduly perturbed over the prevailing conditions either, because it is a passing phase for the industry which goes through the cyclic pattern of peaks and troughs every three to four years. I recall the industry had experienced even more difficult times way back in 1986-87. But it bounced back to health within a year. So, I am quite hopeful that we will be able to surmount the present crisis of glut as well.

What do you attribute the existing glut in production to?
There are a variety of reasons for this. To begin with, the industrial consumption of salt for the past two years had been 10 per cent lower than normal. Production also fell significantly by as much as 20 per cent on account of the cyclone in 1998 which wrought havoc with salt production especially, in the coastal regions of Gujarat. In 1999-2000, therefore, production has soared by as much as 30 per cent since both the factors which caused the fall in production, have to a large extent, been nullified. And it is this 30 per cent excess production which has caused the current glut.

What steps is the salt department taking to counter this glut in the domestic salt industry?
Unfortunately, unlike in the case of food products, there is no system where the government buys up the excess production to bail out the manufacturers. However, a recent step by the Centre will increase the offtake of industrial salt by the user industries -- caustic soda and soda ash.

This will, in turn help ease the glut caused by the imposition of anti-dumping duties on the import of soda ash from China -- which had become a major problem for the domestic sector having even resulted in several soda ash units closing shop over the past few years. Not surprisingly, this resulted in a significant slump in demand for industrial salt by as much as 8 to 10 lakh tonnes in the past couple of years and prices had hit a new trough of Rs 14,300-14,700 in december 1999 compared to a healthy Rs 15,500 in 1998.

In view of this, we are hopeful that the domestic consumption of salt will increase to some extent and ease the glut.

Unfortunately, however, it may be difficult to find an export market for the excess production. For, at present, there is virtually no international demand for Indian salt because of the industrial recession worldwide.

Why is it that despite being the fourth largest salt producer in the world, India has been singularly unsuccessful in making its presence felt in the international salt market?
It is true that India has almost no presence in the export market notwithstanding the fact that it produces good quality salt and which is by far the cheapest FOB compared to any other salt producing country. This lack of global presence is despite the steps being taken by both the government as well as the salt manufacturers to promote its exports.

As far as I see it, one of the primary reasons for this is that though India produces good quality salt, it is not available in bulk at any given place since production is scattered in the hands of numerous small and medium producers. Barring Tata Chemicals, Mithapur, we do not have a single refinery which can offer even half a million tonne consignment of salt.

What is therefore needed is, setting up state-of-the-art large refineries that could offer, at least, this amount if not more to the importers along with forging long-term contracts with them. Here, I would categorically like to state that the government is willing to extend maximum support to any salt manufacturer who wishes to export.

That apart, we are keen that the big players -- Tata, Bilt and Nirma -- foray into the large export markets of Japan and the Koreas. The less significant exports of edible salt to Nepal, Bangladesh and the Middle East could be left to the small manufacturers.

Can India ever hope to become a global player in salt?
Undoubtedly yes. At present, we have 26 large refineries representing a total installed capacity of 26 lakh tonnes, which are capable of producing international grade salt. However, we are currently only producing 8 lakh tonnes; the refineries are under-utilised for want of demand.

In case there is an export demand, we are in a position to meet the challenge head-on.

Why do you think the large players have thus far shied away from entering the salt business in a big way?
I think, the fact that salt is a low value commodity with slumping demand both in the domestic and international markets of late, is one of the primary reasons why the big players keeping their hands off. What has also made them chary of entering the sector are the infrastructural bottlenecks -- poor loading rates at the ports and low priority in berth allotments. Once these glitches are removed, we are hopeful that many more corporate bigwigs will enter the field.

What is the Centre doing to make the sector more attractive for potential investors?
We commissioned an in-depth study of the ills ailing the sector by Tata Consultancy Services some years back and, are now working on the recommendations seriously. However, primary among the recommendations was the setting up of a separate port or at least, a captive jetty at the Kandla port -- the main port handling salt exports for the salt industry.

However, since these steps entail considerable expenditure outflows, we are working on the possibility of sharing this expenditure with the Gujarat Government as well as the salt manufacturers. The sooner such facilities are established, the better it will be for the health of the salt industry.

Drastic steps also need to be taken to improve the loading rates which are currently the lowest in the world. Compared to over a lakh tonnes being loaded per day in Australia and 50,000 tonnes in Mexico, India's loading rates are pitifully low at 6-8,000 tonnes a day. At this rate, we can never hope to compare favourably with the other salt producing countries since, our CIF costs become unremuneratively high. We are working at early mechanisation of the loading facilities at least at the Kandla port.

The salt department has been accused of being protectionist towards states like Rajasthan and Tamil Nadu at the expense of Gujarat especially, in terms of its zonal railways scheme for transport of salt. Comment.

It is true that some manufacturers are alleging that we are not allowing free movement of salt throughout the country. But I wish to strongly refute this.

The department has recently permitted unrestricted movement of refined salt. A rake-load (around 2,300 tonnes) of salt has just been transported from Gandhidham to Tuticorin, which is the largest salt production centre in the south.

We have also allocated a wagon quota for the entire state of Maharashtra from Gujarat not only to facilitate availability of cheaper and better salt to the state, but to provide a wider market for the Gujarat salt manufacturers as well.