India is a leading exporter of coir products with an annual export value of nearly R800 crore. The R2,000-crore traditional industry employs more than five lakh workers. Traditional markets for coir exports are stagnating and share of value added products are declining. Internally, the coir sector is faced with rising input costs for labour, coir fibre, transport, land and electricity. Rajesh Ravi of FE spoke to Coir Board chairman VS Vijayaraghavan on the concerns and potential of the sector. Edited Excerpts:

The problems in the euro zone and US seem to be getting worse. Do you think this will impact Indian coir exports?

It is true that the global economic melt down, especially in the euro zone and the US are impacting the export of coir products from the country. However, the trend of export of coir and coir products from the country continues to be consistent. Thanks to the entry of new items in the export basket like coir pith and coir fibre. The export of coir products from India for the last fiscal year reached an all time high of 3,21,016.02 tonne valued at R807.07 crore. In the last fiscal year , most of the traditional items of export recorded a decline both in quantity and value.

Predominantly, customers of coir products belong to the middle and lower income groups. These groups are the ones mostly affected by the economic depression. Hence, there is every likelihood that the export basket of coir would be affected by the ongoing problems.

The coir board has been scouting for new overseas markets in the past few years. Do you see any marked improvement in sales to these markets?

During 2010-11, coir products were exported from India to 111 countries as against 78 in 2001-02. Even though some of the new markets imported only limited quantities, coir was able to make new roads to these countries. This was a remarkable achievement in these periods of global competition when cost subsidised products from China are dominating the world market. Share of traditional export products like mat, matting, rugs and carpets are seen decreasing.

Do you feel that it is a temporary phenomenon? What steps are being taken to reverse this trend?

We see the decline in the share of traditional export products as an effect of the global economic recession. As the disposable income of middle and lower income groups fall, they are likely to cut down the expenditure on luxuries like furnishings or at least postpone the purchase. Once the economy of these countries are back on track, the export of traditional coir products are expected to pick up. The growing affinity for environment friendly products world over can make coir a sought after product for furnishing purposes and several new end uses. The coir board has been pursuing with the Government of India to allow more benefits to the handloom sector of the coir industry under the Foreign Trade Policy. The government has reinstated the incentives under Special Focus Product Scheme and duty drawback.

Exporters are worried about raw material supply and increasing wages. What is your view on the situation?

Shortage of coir fibre and yarn is a perennial problem for the coir industry. Since so many years, the export oriented production sector in Kerala has been depending upon the neighbouring states, mainly Tamil Nadu, for sourcing coir fibre. Production of coir fibre in Kerala has dwindled over the last few years due to reasons like unattractive prices, increasing labour costs, unhygienic working conditions and scattered nature of coconut cultivation. As a long-term measure, recently the Central Coir Research Institute (CCRI) of the board has developed a mobile defibering machine, which has the potential to revolutionalise the production of coir fibre in the country. The board is in the process of popularising the machine both in the traditional as well as non-traditional coir production centres. Board is also in the process of developing a spinning machine to produce better and finer quality of yarn. Trial runs made on the machine have proved to be satisfactory.

As far as increasing wages are concerned, the board is making a multi-pronged approach to this problem. It is now focusing on policy measures conducive for enhancement of value addition and modernisation of the industry, which would enable the entrepreneurs to pay better wages to the laborers. Recently, the board has taken initiative to include coir sector under the purview of National Rural Employment Guarantee Scheme.

Exports to China of coir fibre and rope are seen increasing dramatically. Do you think we can capture the market China caters to in terms of finished goods?

China has been utilising coir fibre imported from India for manufacture of coir mattresses and toys. When compared to the products manufactured by other countries, these mattresses are also reported to be low cost and of inferior quality. However, we do not have any threat from China for the present, as China has not so far ventured into the production of coir floor coverings. It can happen any time and we must focus more or products development and diversification in coir sector.

Even though the domestic market is bigger in revenue share, the market is less evolved/traditional and brings lesser per unit realisation. What are your plans on development of the domestic market?

It is a fact that the domestic market for coir products is about three times bigger than the export market. As a part of the domestic market development initiatives, the board through the CCRI and Central Institute of Coir Technology is taking efforts for product development and diversification. Since coir is an environment friendly product, the ministry of environment and forests, is actively considering a proposal for granting ecomark for coir and coir products. It is expected that these initiatives will enhance the potential for marketing coir and coir products.

The board has been participating in major trade fairs in the country for popularisation of coir products. We have taken initiative to register a Geographical Indication as ?Alleppey Coir? as an intellectual property right for the products manufactured in and around Alleppey.