Tobacco trade suspended to help buyers migrate to GST regime

Uncertainty looms: Tobacco bales pile up as trading comes to a halt in Ongole on Wednesday.

Uncertainty looms: Tobacco bales pile up as trading comes to a halt in Ongole on Wednesday.   | Photo Credit: Kommuri Srinivas

Growers keep their fingers crossed over market behaviour

Virginia tobacco auctions remained suspended on Wednesday to facilitate migration of the manufacturers and traders to the GST regime even as farmers kept their fingers crossed over the direction the market would take next week.

“There will be no trading for the rest of the week to enable the buyers to migrate to the GST regime,” said Tobacco Board Southern Light Soil (SLS) regional manager G. Ratnasagar.

The market remained lacklustre as the Centre imposed GST on tobacco leaves and unmanufactured tobacco from July 1.

Small players worried

While the manufacturers and big exporters will be able to wait and claim reimbursements on GST paid after 12-18 months, the small players will lose on account of interest on additional capital needed to hold on till they are reimbursed, according to Indian Tobacco Association sources.

The traders, especially small players, fear they would be out of business with the Centre imposing 5% GST on tobacco leaves and 28% on unmanufactured tobacco.

“We are worried over the fall in the market rates, especially for low and medium grade varieties, though rejection, which had been over 20% earlier, came down to 11% on Tuesday,” said Ongole II Farmers’ Association president V.V. Prasad. Though they had been insisting on an average price of ₹90 per kg for low grade varieties, the price dipped to ₹60 per kg since the GST on the agricultural produce was announced by the Centre, lamented Ongole I Farmers’ Association president S. Gurava Reddy. Medium grade varieties, which had fetched ₹90 per kg earlier, went down by ₹20 per kg earlier this week, another farmer leader P. Venkateswarlu said.

The cigarette manufacturers should come to their rescue, taking into account the fact that they had a bad cropping year this year in view of prolonged dry spell and parasitic weed Orabanche cernua infestation after two bad cropping seasons, for them to continue growing tobacco next year.

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Printable version | Feb 25, 2020 7:27:03 PM |

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