The starch industry, incurring a 10 per cent excise duty on tapioca starch production, is facing a bleak future.
Saying that the 10 per cent duty on the production exceeding Rs. 1.5 crore per annum has brought down the production of tapioca starch to a dismal 20 per cent, the Salem Sago and Starch Merchants' Association in a representation to Union Finance Minister Pranab Mukherjee, pointed out that unless the government came to their rescue, the starch industry would be forced to shut down, which in turn would trigger a chain of reactions affecting nearly 5 lakh farmers, mostly tribals, labourers, manufacturers and traders.
The heavy Excise Duty had forced the 400 and odd sago and starch units in the districts of Salem, Namakkal, Dharmapuri, Coimbatore, Erode, Tiruchi and Villupuram to stop production.
During the 2010-2011 Budget, the excise duty was levied on the units that registered a production turnover exceeding 1.5 crore per annum.
Since tapioca starch was produced mostly by cottage industries, the duty was “arbitrary and unwarranted”.
It had brought down the total net production to a mere 20 per cent today.
The merchants had pointed out that the excise duty was levied by previous regimes too.
“But when we took up the issue they understood the situation and withdrew the same to save the industry,” said an Association member.
Tapioca starch was also being used as raw material for the manufacturing units of gum, pharmaceuticals and adhesive industries located in Northern States. The consumption in Tamil Nadu was negligible.
The starch being sourced from the tubers of tapioca was a perishable agri product and hence the Centre should withdraw the duty and save the industry.