Asia’s largest timber industry incurs Rs 1,500-crore loss due to coronavirus

The industry, which flourished in the bordering Kutch district, has already incurred loss of Rs 1500 crore since the lockdown was announced first from March 25.

Financialexpress – With almost 70% timber units shut down, even after the government’s nod to run business operations, Asia’s largest timber cluster in Gujarat, situated near Kandla port, may take a year to function normally.

The industry, which flourished in the bordering Kutch district, has already incurred loss of Rs 1500 crore since the lockdown was announced first from March 25. According to sources, the Rs 10,000-crore industry’s loss is constantly increasing in absence of buyers based in states like Rajasthan, Punjab, Delhi, Uttar Pradesh, Bihar, Madhya Pradesh and parts of Maharashtra.

Although the government has decided to grant permission to recommence operation of sawing mills and plywood units after the implementation of lockdown 2.0, most of the timber units are still closed as demand has gone down by nearly 80%. Even after the rise in demand in coming days, it would be difficult for the sawing mills as well as plywood manufacturers to start in full swing as the exodus of migrant labourers has started. There are nearly 2,000 saw mills and more than 100 plywood units in the proximity of Kandla port where 80,000-1,00,000 labourers are employed directly. Most of them are migrant workers from Odisha, Andhra Pradesh, Bihar, Uttar Pradesh and Rajasthan.

“In absence of buyers hardly 30% units are functional in Kandla-Gandhidham area that too with limited capacity. For the first 40 days of ongoing lockdown, the owners of timber units somehow persuaded labourers to wait.

“Now, the migrant labourers have become impatient over the prevailing uncertainty over Covid-19 pandemic. Since last 10-12 days, 50% of the labour force went back to their native places and more are in the process to return to their home-states,” says Navneet Gajjar, president of Kandla Timber Association (KTA). He adds that looking at the situation, it would take at least a year to bring normalcy in the industry as those labourers who have gone back to their states wouldn’t come in next 4-5 months.

Every year, Kandla based timber industry imports around 40 lakh cubic meter of timber from different countries, which is over 65% of India’s total timber import.
“Those who had given import order before March 25 are in complete mess as their goods are coming at Kandla port. With work at sawing and plywood units have coming to a halt, these importers are not able to receive the timber due to liquidity crunch,” says Gajjar.

The importers are supposed to pay 18% GST and 5% import duty, he says, adding that in case of non-payment the imported timber would go to custom bonded warehouses. Post lockdown, nearly 3 lakh cubic meter timber is lying in these warehouses, he lamented. Sooner or later, the importers will have to release timber from these government warehouses and at that time they need to pay extra money in form of ground rent, he adds.

Most of the sawing mills and plywood owners in the district believe that in order to restore normalcy, the government should reduce GST from 18% to 5% as relief to the timber industry due to such an unprecedented situation.

Vietnam Film Faced Plywood

Vietnam Plywood