The Hindu Business Line : UPASI seeks special fund, ending of FBT as bailout package

THE United Planters' Association of Southern India (UPASI) has sought assistance from the Centre to bail out the ailing plantation sector from an unprecedented crisis.

The apex body has, in a pre-Budget memorandum to the Union Finance Minister, Mr P. Chidambaram, has urged for the constitution of a Plantation Stabilisation Fund and the abolition of the Fringe Benefit Tax. It has also demanded the exclusion of plantations from the ambit of cash withdrawal tax, the inclusion of tea and coffee in the 4 per cent classification under VAT and the extension of the time limit for concessional import tariff for incorporation in the 2006-07 Union Budget. The UPASI President, Mr E. B. Sethna, said the prospects remained grim for the tea sector, though the prices of rubber and coffee had improved.

The current impasse in the plantation sector is due to uncertainty in prices and steady increase in cost of inputs, he pointed out.

"This will be more serious in the South as more than 67.49 per cent of the total area under the crops are located here and almost 88 per cent of the total number of producing units of the four crops are in South India. Further, the present tax system prevalent in the plantation sector does not provide any scope for investment in developmental activities even in good years," Mr Sethna added.

(Around 13.2 lakh growers and 21.3 lakh labourers are involved in raising plantations, of which nearly 88 per cent of the growers and 56 per cent of the labourers are from the South.)

Pitching for a Plantation Stabilisation Scheme, the UPASI President said plantation crops invariably followed a boom and trough cycle.

"During trough periods, the planters would hardly have funds to take care of plant maintenance, leading to developmental works taking a backseat. In the boom period, they are not in a position to take advantage of high prices in view of depletion of available funds. Planters are unable to save because of the high tax structure, depriving them of retaining any substantial sum for utilisation during the trough cycle."

The Plantation Stabilisation Fund could come in handy. "A planter could contribute to this fund. The amount could be arrived at based on the income from the plantations for that year and the contribution deductible from tax. The maximum amount that could be accumulated should be limited to the average turnover of the last four years."

The UPASI release further stated that the FBT introduced in the last Budget had unjustifiably increased the corporate tax burden, besides causing considerable confusion. The association has demanded the abolition of of FBT.

UPASI has demanded the exclusion of the plantation sector from the ambit of cash withdrawal tax as the planters are mostly located in remote areas where there are no banks in the vicinity and a large portion of the wages has to be paid in cash.

The association has sought extension of the time limit to the coffee growers who could not avail themselves of the relief under Special Coffee Package till March 31, 2006.

The issue of 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.

Extension of time limit for the concessional import tariff by one more year from May 2006.

Import tariff concession for vending machines for tea and coffee, chain saws for cutting and felling, versatile hedge trimmers, , earth augers/soil augers, telescopic pruners for shade lopping, coffee espresso machines, electrical home coffee brewing machines and mechanical coffee driers.

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