United Planters’ Association of Southern India (Upasi) is an apex body of planters of tea, coffee, rubber, cardamom and pepper in the southern states due to the fact 1893. In an interview, Prashant Bhansali, president, Upasi, tells Rajesh Ravi about the issues and outlook of the plantation sector. Excerpts:
Are factors back to normalcy in the sector or do you see a prolonged effect of Covid-19 pandemic?
Relatively, the plantation sector was the a single to resume operations fairly quickly as it was largely an agricultural activity. But the bigger challenge in the sector was that it was going by way of a negative phase for some time, due to higher expense of production and low-value realisation, coupled with climate modify concerns.
The initial challenge due to the pandemic have been restrictions on the movement of workers, top to shortage of workforce for cultivation in particular plucking or choosing, delay in streamlining the provide chain, as movement of goods from the production points to consumption or export destinations have been disrupted and the money flow concerns due to the disruptions in the provide chain. This has resulted in direct financial loss due to harm of crop and decline in exports.
How is the South Indian tea market coping in the existing situation?
This year, there is a extreme shortfall in production to an extent of 151.6 mkgs as of October 2020. The drop was primarily in North India [152.24 mkgs]. South India reported more or significantly less similar crop as on date, but 2019 reported a single of the lowest crop from the area. South India has been reporting reduce crop in the course of final 5 years and it maintained status quo in this pandemic year. Prices have been on an raise due to the fact July due to provide concerns which was pretty a great deal required for the sustenance of this sector. However, in the final handful of auction sales, there was a extreme fall in value realisation and quantity sold at auctions, and the most recent rates are on par with November 2019 levels.
Upasi has been speaking about an absurd tax on coffee in respect to worth addition. Can you clarify it ?
A grower of coffee requires to go by way of different stages of processing to make it prepared for sale. At every stage, there is a worth becoming designed for the farmer. Rule 7B(1) was introduced in the year 2001 and to quote, “Income derived from sale of coffee grown and cured by the seller in India shall be computed as if it were derived from business, and 25% of such income shall be deemed to be income liable to tax”. Curing is practically nothing but a course of action akin to Milling exactly where the coffee husk is removed by way of a course of action of hulling, pealing, polishing, grading, colour sorting, garbling, grading and bagging. A farmer, who is processing his generate and generating it match for market place, can’t be termed a manufacturer and be subjected to tax.
The government may well take into account coffee up to the stage of “Curing” as an agricultural generate and not to be taxed below Rule 7B(1). “Curing” is only an intermediary stage ahead of generating the item marketable but not the final item which can be consumed. This Rule 7B(1) dissuades the grower from going in for worth addition. Accordingly, Income Tax Rule 7B be amended to tax coffee only from the stage of roasting and powdering, exactly where the actual worth addition requires location. This would allow the grower to sell his coffee just after curing, thereby enabling them to get a superior value.
What is taking place with the Merchandise Export from India Scheme (MEIS) ?
The MEIS module in the DGFT (directorate basic of foreign trade) internet site was not accepting new applications for uploading claims and shipping bills. This was initiated to limit the issuance of any more MEIS scrips due to shortage of funds, causing extreme hardship for the smooth functioning of export operations.
Exporters element in the MEIS positive aspects though quoting their export value to the overseas purchasers. Hence, any mid-way alterations in an ongoing scheme will place the exporters into tremendous hassle, top to incurring enormous losses apart from hardship in the working capital/money flow concerns.
Exports of plantation commodities want to be supported as they have been at a competitive disadvantage compared to other exporting origins due to infrastructural inefficiencies and other related charges.The scheme requires to be continued till a new scheme is in location.
The positive aspects of MEIS for plantation commodity exports was 5% and was decreased to 3% from January 1, 2020.