‘Scrap GST on paddy de-husking’

Say tax prohibitive given their scale of operation

Rice millers in the State are demanding that the 5% Goods and Services Tax (GST) on de-husking or hulling be withdrawn.

A large number of mills in the State with a capacity of less than two tonnes each are involved in such activities and they would be badly hit by the GST, said D. Thulasingam, president, Federation of Tamil Nadu Rice Mill Owners and Paddy-Rice Dealers Associations.

“Unlike the large rice mills, they don’t deal with paddy or store, de-husk and sell later when required,” he added.

1,000 small mills

“There are around 1,000 small mills in the State who would hull at the most 1,000 bags of paddy a year and their earnings would be less than ₹2 lakh annually.

They charge between ₹80 and ₹100 per 77 kg paddy bag from which they pay labour and electricity charges and also repay loans. These mills are like cottage industries and are run by small land holders,” explained A.C. Mohan, Federation secretary.

He said hulling was just just like job work undertaken by flour mills in cities where people bring in rice or pulses for grinding and pay the charges. “In the textile industry, those who make yarn have been exempted from the GST; we want a similar waiver,” he added.

Exporters’ woes

Millers and those in the rice trade have also urged that a separate channel or a proper mechanism be put in place for rice exports from the State. “Instances of exporters making losses due to buyers not paying up citing reasons including the consignment not conforming to the approved sample are not uncommon. While there is a huge demand in countries including those in the Gulf and Africa, exporters are afraid to step into unknown markets due to these factors,” said D. Kumar, a miller from Red Hills who supplies to exporters.

A Chennai-based exporter had nearly lost ₹42 lakh as the buyer could not pay that amount. “I had taken a loan to supply the ₹1 crore worth rice and got only half the payment. If the loss were in a few thousands I wouldnt mind bearing it. But this was too big an amount and I had to go to that country and got back the unsold rice so that I could settle my loans,” he said.

Mr. Mohan said that exports would help the trade since it would reduce the stagnation of rice and pulses in the State and fetch better prices for the farmers. “This year, we have had a bumper crop throughout the country. We cannot stock so much paddy and rice. Exports beyond our requirement would help,” added Mr. Thulasingam.