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The United Planters’ Association of Southern India (Upasi) has demanded overhauling the archaic Plantations Labour Act (PLA), 1951, saying it would save the ₹43,000-crore industry now reeling under high doses of taxation, un-remunerative returns and commodity price fluctuation.
Until changes are made to the PLA, all expenses under this category should be given weighted deduction to the extent of 200 per cent of the expenditure, Upasi said in the pre-Budget memorandum to the Finance Minister.
Infra support The other major demands in the memorandum are full expenditure allowance for replanting, temporary ban on rubber imports pending disposal of safeguard duty application, exclusion of tea exports from the ambit of cess and concessional import tariff for plantation machineries, said N Dharmaraj, President, Upasi.
Plantation business in India is pegged at ₹43,000 crore and 60 per cent of it comes from South India.
It employs 24 lakh people (of which 60 per cent is also from south India), besides playing a significant role in supporting the rural infrastructure.
According to Upasi, PLA was enacted at a time when plantations operated in extremely remote areas with no external infrastructure support.
Today, plantation areas are no longer rural but semi-urban.
As such, the legislation has lost its relevance, is a burden on the production cost of plantations and makes Indian plantations uncompetitive internationally.
Upasi drew the government’s attention to the commodity price fluctuation that hugely impacts plantation business.
“Currently, commodity prices are at its lowest, which makes plantation producers vulnerable for price manipulation since they are at the lowest rung in the value chain,” he pointed out.
Wage hike, bonus The recently amended Bonus Act would also severely impact the plantation business where 60 per cent of the cost is on employee remuneration.
Besides, the proposed changes in the Gratuity and Maternity Benefits Act would increase the production cost of plantations making it totally unviable.
Plantations are subjected to both Central Income Tax (CIT) and Agricultural Income Tax (AIT) and the weighted average rate is higher than CIT and hence rebate should be provided to offset the additional liability of tax paid on account of higher AIT.
Rubber sector The memorandum brought into focus the domestic rubber plantation business which is ‘gasping for breath under the impact of extremely un-remunerative prices’.
“Though international prices are low, unbridled imports, over and above the production, have hugely impacted domestic prices of natural rubber. The government has increased the import duty to the maximum, but it has failed to check imports. Hence, a levy of safeguard duty on import of natural rubber is requested to protect the livelihood of small producers and keep intact its production capacity of the country,” it submitted.
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