The Hindu Business Line : Upasi seeks low interest working capital for tea, coffee estates

THE United Planters' Association of Southern India (Upasi) has urged the Centre to extend all possible assistance in the Union Budget to alleviate the unprecedented and serious crisis in the South Indian plantation sector.

Speaking to Business Line, Mr Anil Kumar Bhandari, President, Upasi, said through its pre-Budget proposals presented to the Union Finance Minister, Mr P. Chidambaram, early this month, the Association had requested the Finance Minister to extend all possible assistance to this ailing sector.

"The crisis in the plantation industry is unprecedented in many respects and has affected the livelihood of lakhs of growers and threatens to jeopardise the livelihood of lakhs of workers," he said.

To make the situation further worse, the present tax system prevalent in the plantation sector does not provide any scope for investment in developmental activities even in good years, he said. Among the plantation crops, price decline was severe in the case of tea and coffee. The magnitude of the crisis is stunning if one compares price realisation with the cost of production.

The value loss on tea and coffee arrived on the basis of difference between the value realised in 1998 and 2003, indicate that the loss in value is to the tune of Rs 770.30 crore and Rs 1,210.3 crore respectively. This, he said, did not take into account the similar value loss incurred during the interim period 1999-2002.

The UPASI's proposals, he said, included abolition of additional excise duty on tea to prevent further distress in South Indian tea industry and other important items such as: * Evolving a debt relief package to enable the coffee industry to rebound and stay healthy besides including tea and coffee in the 4 per cent classification under VAT.

* Issuing a clarification stating that 2 per cent educational cess is not applicable on tea cess, since it is not levied by the Department of Excise/ Customs.

* Extending fresh working capital for tea and coffee industry at 7 per cent interest.

The proposal also demanded that the time limit for the concessional import tariff be extended for one more year from May 2005 and also include machineries such as vending machine for tea and coffee, Chain Saws for shade lopping, cutting and felling, Versatile Hedge trimmers for bush skiffing in tea, Earth Augers/ Soil Augers for making planting pits and fencing, Telescopic Pruners for shade lopping, Coffee Espresso Machines, Electrical Home Coffee Brewing Machine and Mechanical Driers for drying coffee.

Issuing of suitable clarification regarding the reassessment on the income for the assessment year prior to 2002-03 with respect to tax on income from the manufacture of rubber.

Weighted deduction under Section 35B of one and one-third times the expenditure incurred by plantation commodities such as freight, insurance, foreign branch office cost and commission paid outside India be granted in order to encourage exports and make plantation commodities competitive in the international market.

Section 80 HHC should be made available for 100 per cent of the profit, as was the case earlier.

In respect of producer-exporters of tea, coffee and rubber, since the assessment of income in the case of growing and manufacturing of tea, rubber and coffee are covered under Income-Tax rules 8, 7A and 7B respectively, it is suggested that the deduction under 80 HHC be allowed before apportionment.

Considering the difficulty in measuring the installed capacity for allowance of depreciation, it is suggested that the criteria should be, increase in the quantum of output by more than 25 per cent compared to immediately preceding year.

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