Rajasthan govt lifts entry tax on guar

Removal of entry tax by Rajasthan government on guarseed is expected to increase trading activities in the state. Though any impact on the price front has been ruled out, experts say abolition of entry tax will prevent guar mills from shifting their base to neighbouring states.

The guar industry in the state suffered due to the state government levying 2 per cent entry tax (apart from 4 per cent value-added tax) on the commodity, entering the state from neighbouring states like Haryana and Gujarat.

Earlier, VAT from guarseed and guargum was also removed in February this year. The entry tax was removed in the state budget presented on March 9. Rajasthan is the leading producer of guarseed in the country.

"This season, number of guar mills in Haryana rose to 27 from 12 last year. Now that the entry tax on guar has been removed, the guar mills shifting their operations to other states may stay back," said Purshottam Mundra, a Jodhpur-based trader. Subscribing to the view, commodity analysts said guar-based industry as a whole will be benefitted. Mundra added that Jodhpur, in particular, was on the receiving end as mills were closing down.

On Monday, the spot prices of guarseed in Bikaner was quoting at Rs 1,820 a quintal and in Jodhpur, it was Rs 1,915 a quintal. Navratan Daga, a Bikaner-based trader said that entry tax removal would facilitate better inter-state movement of guar. He,however, declined any probability of bearish market.

Market sources said due to export demand, mainly from China and the US, the guar prices are getting support. According to commodity analysts, the export demand may go up from April. Due to good crop in Pakistan this season, domestic exports have not yet picked up substantially. Sources maintain prices of guarseed will remain between Rs 1,800 to Rs 2,000 a quintal.