Rising freight charges hit flower exports through KIA

Nearly 95% of Karnataka’s flower exports are routed through KIA, making it a key player in the global floral trade. However, increasing costs and reduced government support are now threatening Karnataka’s position as a leading exporter of flowers.

Export Decline Post-Covid

The downward trend in flower exports started during the Covid-19 pandemic, when global disruptions affected supply chains and demand. Although restrictions have eased, the industry has not recovered to pre-pandemic levels. Exporters and flower growers cite rising freight charges and a lack of support from the Agricultural and Processed Food Products Export Development Authority (APEDA) as key reasons for this continuing decline.

“In the last 2-3 years, air freight charges have nearly doubled, and there has been no regulation to control them,” explained Aravind T M, president of the South India Flower Growers’ Association. “As a result, many of us have stopped exporting flowers altogether.”

Rising Costs and GST Burden

The financial pressures on flower exporters have been further compounded by the 18% Goods and Services Tax (GST) imposed on air freight charges. Aravind noted that this additional tax burden is making it even harder for exporters to remain competitive in international markets. The combination of escalating costs and diminishing returns has led many flower growers to shift their focus to local markets, where the situation is not much better.

Struggles in Local Markets

Farmers like Devaiah, a veteran rose grower from Doddaballapur, are finding it increasingly difficult to sustain their businesses. Local markets, while accessible, have not provided the returns that flower exports once did. “Over the years, soil quality has also deteriorated, leading to a poor yield,” Devaiah said. “Exports used to give us good returns, helping us manage, but now even the local market doesn’t bring in enough to cover our costs.”

Farmers like Devaiah have been growing flowers for decades, yet many are now considering scaling back their operations or shifting to other crops due to the financial strain.

APEDA’s Withdrawal of Support

A significant factor in the decline of flower exports has been the withdrawal of the transport assistance subsidy by APEDA, which used to help cover the costs of transporting flowers abroad. Aravind highlighted the severity of the impact, stating that without this crucial support, growers are struggling even more to compete in the export market.

An official from APEDA acknowledged that air freight charges are a concern and stated that the agency is working to discuss the matter with the Ministry of Civil Aviation to explore possible solutions. However, APEDA officials also emphasised that the central government’s decision to withdraw the transport assistance subsidy had been final, leaving farmers to seek alternative forms of support.

Alternative Schemes and Limited Relief

In response to the concerns raised by flower growers, APEDA has urged farmers to utilise the newly introduced Transport and Marketing Support Scheme, which provides benefits similar to the discontinued subsidy. “It was the central government’s decision to withdraw the previous scheme, but we now have a transport and marketing support scheme that offers similar advantages. I urge farmers to make use of it,” a senior official from APEDA said.

However, growers argue that the alternative scheme does not fully address the challenges they face, particularly in terms of the high air freight costs, which continue to rise with no signs of regulation or relief.

Impact on Karnataka’s Position in Flower Exports

Karnataka has long been recognised as a top exporter of flowers, contributing significantly to India’s floral trade. The state’s climate and expertise in flower cultivation have enabled growers to produce a variety of blooms, including roses, carnations, and marigolds, which are highly sought after in international markets.

However, as the cost of production rises and support dwindles, Karnataka’s reputation as a leading exporter is now at risk. Without meaningful intervention, growers fear that the state’s share in the global flower market could shrink further.

The Future of Flower Exports

As of now, the outlook for Karnataka’s flower exporters remains uncertain. While APEDA continues to encourage growers to explore alternative support schemes, there is no clear indication that air freight charges will be regulated or that the GST burden on exports will be reduced.

Farmers are calling on both state and central governments to step in with targeted policies that can help revive the flower export industry. “We need more than just words of encouragement,” Aravind said. “Without substantial policy changes and financial support, Karnataka’s flower export industry could wither away.”

The challenge now is whether the government will respond in time to save the once-blooming industry.

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