The 5 per cent GST (Goods and Services Tax) rate on cashew will provide an impetus to capacity addition and boost cashew consumption, feel cashew manufacturers.

The GST Council, which met on Sunday, lowered the rate to 5 per cent (from the earlier proposed rate of 12 per cent) on raw cashew nuts and cashew kernels, and to 12 per cent (from 18 per cent) on value-added products such as roasted and salted cashews and flavoured cashews.

Prakash Kalbavi, partner of the Mangaluru-based Kalbavi Cashews, told BusinessLine that India is poised to increase its cashew processing capacity substantially, and the 5 per cent GST rate will help.

A low tax structure, he added, will boost consumption and help increase processing capacity. Cashew growers will directly benefit as they will realise better rates for their produce. This will render cashew cultivation viable.

The cashew industry was concerned by the GST rates as announced earlier, fearing a huge drop in the consumption on account of high taxes.

Walter D’Souza, former Chairman of Cashew Exports Promotion Council of India, said the existing rate under the VAT regime is 5-5.5 per cent in many States.

Cashew is the only dry fruit that is processed 100 per cent in India. Raw cashew nuts, which are imported as raw material, are converted into cashew kernels and as value-added products in the processing units.

He said that over 80 per cent of other dry fruits are imported as finished products, and there is not much value-addition in them.

Kalbavi said that cashew, a home-grown industry, provides jobs to many people in rural area. This sector will get a right impetus now as other dry fruits such as almond and walnut will attract 12 per cent tax under GST.

Ganesh Kamath, president of Karnataka Cashew Manufacturers’ Association, noted that the cashew processing sector is a major employment generator in rural areas.

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