UPASI seeks govt. support for the survival of plantation industry reeling under a plethora of handicaps

Kochi, Jan 6: The United Planters' Association of Southern India (UPASI), the apex body of planters in south India, has made a strong pitch for overhauling the archaic Plantations Labour Act (PLA), 1951, saying such a step is imperative to save the Rs. 43,000-crore industry now reeling under high doses of taxation, un-remunerative returns and commodity price fluctuation.


In its pre-Budget memorandum to Hon’ble Finance Minister Shri Arun Jaitley, UPASI demanded until changes are made to the PLA all expenses under this category should be given weighted deduction to the extent of 200% of the expenditure.


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 Mr. N. Dharmaraj, President, UPASI.


Plantation business in India is pegged at Rs 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.


Mr. Dharmaraj, who attended the pre-Budget consultation meeting for the agriculture sector called by the Finance Minister here, said plantations are governed by the PLA, 1951 through which this industry provides housing, sanitation, water supply, crèches and medical care.


“The Plantation Labour Act 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,” he pointed out.

“PLA therefore needs to be amended and many government schemes which are available to take care of the facilities provided under the PLA should be extended to the plantations” he said.

In its memorandum, UPASI drew the government’s attention to the commodity price fluctuation that hugely impacts plantation business. “Currently, commodity prices are at its lowest, which make plantation producers vulnerable for price manipulation since they are at the lowest rung in the value chain,” he pointed out.


Conceding that the recently amended bonus act is laudable in its intention, Mr. Dharmaraj said it would severely impact the plantation business where 60 per cent of the cost is on employee remuneration.

“We also hear about proposed changes in the Gratuity and Maternity Benefits Act, all of which will hugely increase the production cost of plantations, making it totally unviable. Almost 60 % of the plantation employees are women and 50% are from the reserved category. Plantations, therefore, are in dire need of the highest level of support from the government,” he added.

“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 additionalliability of tax paid on account of higher AIT,” the UPASI head said.


Replanting is a regular operation in plantations to maintain the agronomic viability. Therefore, Rule 7a, 7b and 8 of the Income Tax Rules, 1962 should be amended to remove the ambiguity with regard to full expenditure allowance for replanting. Also, subsidy for orthodox production which is an export-oriented incentive should not be included as a part of total income under Section 10 (30) of the IT act.


In particular, 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.


Also, there is a crying need to ban imports of natural rubber temporarily pending disposal of safeguard duty application,” UPASI said.

Despite plantation business being an integrated agricultural and manufacturing operation, it is unable to get input credit on agriculture operations under VAT. “This may be allowed under the proposed GST,” it noted.  Further, it requested that plantation commodities be placed as a necessary item/item of basic importance with rate aligned to the prevailing VAT rate of 5%.


The memorandum drew the minister’s attention to the significant role of the plantation sector in the economy, especially the large number of workers it supports in backward regions. “Unless and until there is guaranteed stability to the sector, it is going to be very difficult to enthuse interest and draw fresh investments to the sector,” it said.



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