'DNA' investigations: Everything is black about white marble

Licences to import marble are up for sale in the grey market. And it runs to hundreds of crores.

Importers need a licence from the Directorate General of Foreign Trade (DGFT) to deal in marbles because it is restricted item. Also, the licences come with Actual User Conditions: only the licence holder can import, process and sell marble in the
market.  

DNA found licence holders do not give a hoot about rules. They sell their licences to a trader or a customer. But why do they sell their licences? DNA found these people exploit the huge demand-supply gap, arising from the annual import cap set by the DGFT, to earn a fast buck. The DGFT sets the cap to safeguard the interests of the domestic marble industry.

On paper, a licence holder imports marble and sells it to a trader/customer at the prevailing market rate. In reality, he pockets at least Rs10,000 for every tonne of marble imported. For this fiscal, the DGFT has set 5 lakh tonnes as the import cap. But industry experts say the demand is double: 10 lakh tonnes. And this gap is fulfilled by the licensees. Also, there are instances where a person has the licence to import marble but not the money or proper processing facility.

Syed Azeez Pasha, the Rajya Sabha MP from Andhra Pradesh, wrote a letter in June to the prime minister, highlighting how some people have falsely created a monopoly just because they have the licence to import marble.

DNA has a copy of the letter in which Pasha said the going rate in the grey market is Rs10,000 for every tonne of marble imported. 
JB Surana, president of the All India Granite & Stone Association (AIGS), wrote a letter to the Union commerce and industry minister saying some people first bribe officials to get licences and then sell those licences at a premium.

Surana, who has been dealing in marbles for the past 30 years, said the DGFT import cap varies from person to person. The quantity is so low in most cases that licensees have to rule out importing marbles.

“About 50% of the those with a licence prefer selling it at a premium rather than going through the hectic process of importing and processing the marble,” he said. DNA found through RTI that of the 397 licensees this fiscal, 216 have permission to import 500-700 tonnes. This is unfeasible, Surana said. 

DNA contacted some of these 216 traders, posing as a customer. A trader from Jaipur said everything depended on the “package”. “If you go for Vietnamese marble, you will have to pay me Rs15,000 per tonne [this is inclusive of the premium money],” he said.

Once the deal is struck, the trader or the customer goes to a foreign country to select the rough marble block. Selection over, the block is shipped to India under the licence holder’s name. This ensures a proper clearance at the port. After the marble lands on Indian soil, it is taken to a processing unit for the final polish. The paperwork is so meticulous that the trader told DNA: “Don’t you worry sir… nothing will happen.”

A trader from Bangalore told DNA that it was a common practice to buy licence and import marble. “If we don’t do it, we will not survive on local supply of raw material,” he said.

Prabuddha Karnawat of Karnawat International, a Rajasthan-based Natural Stone Manufacturer Company, said, “Most of the import licenses are given to people who are traders only on paper.”

Pasha’s letter to the PM says a meeting was convened on September 11, 2007 at the secretary level to frame guidelines for importing rough marble blocks. Members concluded that the system of quantitative restriction combined with granting licences only to a few importers was unjust and the system needed to be changed.

“Thereafter, the secretary (commerce) in consultation with the secretary (mines) and secretary (micro small and medium enterprises) suggested the removal of quantitative restrictions on import and allow free import under the Open General Licence scheme, but at a higher price,” Pasha has said in the letter.
In 2005-06, a parliamentary committee had pulled up the DGFT for neither verifying documentary evidence nor carrying out physical checks before issuing licences. The committee found 16 of 49 licensees did not fulfil the eligibility criteria.

Anup K Pujari, the DGFT, refused to comment. “I got your email, but I will not reply,” he told DNA. “We are busy framing a policy.”