Farmers in the traditional tobacco growing areas in Prakasam district, who have grown tobacco much against odds after a bad cropping season in the last two years, on Friday decided to stall auctions in all platforms in the Southern Black Soil (SBS) region on Saturday fearing steep fall in the market in the wake of the Centre imposing GST on tobacco leaves and unmanufactured tobacco.
Farmers from different auction platforms in the SBS region took stock of the situation arising out of 5% GST on reverse basis on tobacco leaves and 28% on unmanufactured tobacco, and decided not to bring their produce to the market on the eve of the June 11 GST Council meeting to be chaired by Union Finance Minister Arun Jaitley for a review of the rates and amendment of rules.
“Restore status quo”
“If it was the larger pictorial warning on cigarette packs that triggered the market fall last year, it is the GST that is threatening to bring down the steady market now,” lamented SBS auction platforms farmer associations’ president P. Nageswara Rao. Fearing drastic fall in the market from the current levels if the GST on tobacco leaves and unmanufactured tobacco was not scrapped, the farmers wanted Finance Minister Yanamala Ramakrishnadu to impress upon Mr. Jaitley to restore status quo.
“We will step up the agitation if status quo is not maintained,” they added.
Tobacco being an agriculture commodity had been exempted from taxes since the former Prime Minister, Chaudhary Charan Singh, scrapped excise duty on raw tobacco and unmanufactured tobacco, explained farmer leader P. Venkateswarlu. The GST on tobacco would adversely affect the livelihood of millions of growers, farm labourers, and daily wage workers involved in grading, he added. Meanwhile, a delegation of traders led by Indian Tobacco Association president Mittapalli Umamaheswara Rao, after a visit to the Ongole II auction platform, said: “The flue-cured virginia tobacco production is already well-regulated, accounting for every kg of FCV crop produced and no further curbs are required.”
“Uncompetitive”
Imposing GST on tobacco leaves and unmanufactured tobacco would make the exports uncompetitive and kill the sector, which now earned precious foreign exchange to the tune of ₹6,000 crore per annum to the country, he felt.
Already, the number of small traders had come down to 40 from 400 earlier, as the sector had been subjected to cumbersome regulations, high taxes, fall in export demand, low prices, and fall in production.
Imposing GST at this juncture would cripple the sector, the main revenue generator for the government, he explained.
The farmers in the SBS auction platforms had so far marketed 16.2 million kg and got an average price of ₹139.18 per kg, while their counterparts in the Southern Light Soil auction platforms realised an average price of ₹135.96 for the 14.2 million kg marketed so far. Over 23.8 million kg of tobacco had to be still marketed, Tobacco Board sources said.
