Tax burden plagues flour mills

Roller flour mills in Haryana are in a shambles. Of the 60 roller flour mills, only 35 are operating, at 10-15 per cent of their capacity.

Entrepreneurs in the region lament that even after introduction of VAT (value-added tax) in April 2003, they have been paying all sorts of indirect taxes. The industry is paying VAT at 4 per cent, market fees at 2 per cent, contributing 2 per cent to the Rural Development Fund and paying commission at 4 per cent to the commission agent (2.5 per cent to kaccha arhtiyas and 1.5 per cent to pucca arhtiyas).

The industry in Punjab is paying VAT at 4 per cent, but in Haryana, entrepreneurs are paying an 8 per cent tax. Hence, Haryana-based nterprenuers want a level playing field and want the state government to merge all the indirect taxes in one tax.

"The success of VAT implementation will depend on uniformity", said Vinod Kapoor, ex-president, Roller Flour Mills Federation of India.

Flour mills expanded their operations in Haryana in the 1980s when the states of Punjab and Haryana were regarded as the bread baskets of India.

These units supplied flour to almost all states in India and some of them exported as well. After the mid '90s, states like Madhya Pradesh, Rajasthan, Gujarat and Uttar Pradesh became self sufficient and the market for Haryana mills squeezed.

Due to a high rate of taxation, Haryana is the most expensive state for buying and selling wheat and wheat flour.

The situation is so alarming that more than 10 bread manufacturing units based at Gurgaon, Faridabad and Sonepat which consume 2,500 tonnes of wheat flour every month buy from Ghaziabad and Delhi instead of buying from Haryana.

"The wheat price surged to Rs 1,040-Rs 1050 per quintal in January 2006", said C P Gupta, president of Roller Flour Mills Association Haryana.

Farmers in the state are ignorant of the impact of global warming on wheat crops and are not taking any measures to retain the quality of crop, said Gupta.

The price differential of wheat purchase between Punjab and Haryana is about Rs 100 per quintal .

"We are paying more and want a level playing field for all", Gupta added.