Burmese teak profitable for Indian traders

The pressing need for foreign exchange is being cited as the reason for the government giving in to demands from timber traders to be allowed to export.

 
By Anumita Roychowdhury
Last Updated: Saturday 04 July 2015

PRESSING need for foreign exchange is pushing the country on to the international timber trail. Though the ministry of environment and forests (MEF) chooses to be tight-lipped, official sources admit timber exports have been given a green signal. To begin with, timber traders will be allowed to re-export teak wood bought cheaply in Burma.

MEF's export decision has reportedly come after considerable persuasion from the commerce ministry in response to continued demands from timber merchants. A highly placed official in the commerce ministry conceded, "It is being done with the definite target of bringing in more foreign exchange."

Anil Garg, a Delhi timber merchant representing the All India Timber Importers Association in Delhi, explaining the profits inherent in timber exports, said, "We are buying Burma teak at the rate of $600 per cubic metre (cum). It can be sold in Europe for about $2,000."

Re-export of imported timber was proposed initially by the ministry of commerce in July 1990, but received a cold shoulder by the MEF, which was concerned it would encourage pilferage of indigenous timber and depletion of India's teak stocks. Only three months ago a confidential MEF memorandum on timber exports noted, "In view of the inadequate regulatory machinery available in the country, it may not be possible to control the export of indigenous material, as it is likely that items such as Burma teak may be sold in the domestic market at a very high price and the indigenous teak may be exported in lieu of Burma teak."

However, under pressure from the timber lobby, the commerce ministry refused to take no for an answer. Instead, it proposed recently that the re-export of timber should be allowed under advanced licenses, after value addition to the extent of 25 to 30 per cent. Timber processed into planks have more value and fetch better prices in the international market.

MEF officials are reluctant to comment on why they agreed to consider the commerce ministry proposal. They prefer, instead, to draw attention to the safeguards they want to prevent any loopholes through which Indian timber may be exported. MEF has stipulated that only 50 per cent of the wooden planks converted from the imported logs could be exported. MEF sources assert this will ensure the domestic market is not manipulated by the timber lobby.

MEF also wants imported timber to be sawn only in the free trade zones administered by the commerce ministry. All timber export assignments will need a certificate to this effect from the regional chief conservator of forests.

Timber exporters, however, are opposing this requirement tooth and nail and their association has made it clear that it does not want any restriction on the free movement of imported logs within the country or the choice of saw mills for conversion of imported logs. "If the movement of logs is restricted within the free trade zones," warns Garg, "we will just let the 40 per cent of logs that come off in the form of cuts and sawdust go waste. This can easily be sold within India." He discounted MEF concerns of losses of Indian teak stock and asserted, "Burma teak meant for re-export can be easily identified."

Garg also said, "Almost half a million saw mills are lying idle in the country because of restriction on tree-felling," a joint secretary explained. "Sawing of imported logs will generate employment opportunities. This way we can use existing labour and skills."

Sources at MEF fear some of the stipulatory regulations sought for timber exports will almost certainly be diluted and timber exporters will be allowed to move their stock freely throughout the country.

"All for the sake of greenbacks," an MEF official said resignedly. "It is an almost farcical example of missing the wood for the trees."

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