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Preeti Mehra

NEW DELHI, April 2

GANDHI'S salt satyagraha may soon be enacted by the Indian Salt Manufacturers' Association (ISMA) against the implementation of value-added tax (VAT) in its sector.

The organised and branded salt manufacturing industry is upset over salt being included in Slab 11 under the VAT system and being levied 4 per cent tax along with other semi-essential products such as bread and edible oils, leading to an increase in its price.

What has angered them even further is that no such tax has to be paid by those who packet unprocessed salt, in other words crystallised salt. ``This apparent oversight on behalf of policy makers — placing processed salt in a 4 per cent VAT segment and unprocessed salt in an exempt slab is likely to have serious ramifications. Not only would this be a hindrance to furthering the consumption of pure salt but also goes against the grain of what the iodisation programmes in India have set out to achieve,'' says ISMA.

According to the salt manufacturers a tax on processed salt is a tax on purity. They say, ``processed salt is the result of removing all impurities such as mud, clay and sand from raw, unprocessed salt and fortifying it with iodine. So, processed, branded salt provides Indian households with better, cleaner salt. Placement of processed salt in the 4 per cent VAT slab and of unprocessed salt in an exempt category is therefore an ironic move on the part of policy makers.''

In India, about 20 per cent of the salt market comprises free flowing, refined salt and is mostly consumed in the urban areas. The other 80 per cent of the market, comprising mostly rural or slum populations, uses unrefined, crystallised salt. In fact, two years ago the Government freed salt from the compulsion of adding iodine. However, being a State subject, apart from Gujarat, Kerala and partially Maharashtra, none of the other States have yet implemented the move.

Meanwhile, ISMA argues, ``Unprocessed salt is largely non-iodised and the differentiation in the tax structures, giving a fillip to the former, is contrary to the efforts of the iodisation programmes. The more a salt is processed; higher is the stability of iodine.''

This is something experts agree with. ``It is a fact that iodine remains more stable in free flowing, refined salt and less stable in crystallised salt and in that sense the city populations will be affected,'' says Dr M.G. Karmarkar, Senior Adviser, International Council for the Control of Iodine Deficiency Disorders (ICCIDD).

According to ISMA, the move to tax processed salt is also likely to impact the multiple small players in the business. As per an ORG survey, over 60 per cent of the branded salt segment is dominated by local brands. Imposition of tax would serve as a strong disincentive to the efforts of this community. It further points out that the move to tax salt can also be considered discriminatory taxation of branded products, which is contradictory to the recommendations of the Nusli Wadia Committee on Food & Agro Industries Management Policy, which clearly stated that no distinction be made between the branded and the unbranded segment.

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