Planters seek tax relief in 2002-03 Budget

India's planters have urged the government to provide tax relief in the coming Budget to help them weather the crisis due to falling global and domestic prices of tea, coffee and rubber.

The United Planters Association of Southern India, a leading group of planters set up in 1893, in a pre-Budget memorandum to Finance Minister Yashwant Sinha called for measures to save "the industry from perishing" in the 2002-03 (April-March) Budget.

Sinha is due to present his fifth Budget in late February against the backdrop of gloomy domestic and global economic outlook after the September 11 attacks on World Trade Center and Pentagon and its impact on the global economy.

The plantation sector in south India contributed about Rs 62 billion ($1.29 billion) to the gross national product of the country in 2000-01 and provides employment to nearly 1.1 million people.

"Plantation sector in south India is passing through one of the worst-ever crisis in memory," the planters' body said in its memorandum, a copy of which was made available to Reuters on Tuesday.

The association said the average auction price fetched by tea producers in south India fell to Rs 46.07 per kg in 2001 from Rs 68.79 per kg in 1998. The cost of production of tea is estimated at Rs 65 per kg.

Coffee production has increased in the last two years but unit value realisation on exports has been declining and global prices are at a 36-year low. India exports nearly 80 per cent of its coffee output.

Industry officials say the domestic rubber sector has been passing through a crisis with rubber prices falling to an average of Rs 30.99 per kg in 2001 from Rs 51.22 per kg in 1996.

The planters had urged the government to abolish excise duty on tea and concessions to set up tea factories in backward areas. It sought tariff protection for the industry by increasing the basic import duty on the commodities to the bound rate levels conforming with World Trade Organisation guidelines.

The planters said machinery required by the plantation industry should be allowed to be imported free of duty.

The association said the government's move last year to remove quantitative curbs on imports would have "tremendous effect on the plantation sector".

"There is no justification to allow duty-free import of plantation commodities by export oriented units for re-exports. All imports, either for domestic consumption or re-export should attract import duty," the association said.

Reuters

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