The United Planters' Association of Southern India (UPASI), the sector's apex body of planters, wants an urgent overhauling of the archaic Plantations Labour Act to save the Rs.43,000 crore industry now reeling under high rates of taxation, unremunerative returns and commodity price fluctuation.
In its pre-Budget memorandum to union Finance Minister Arun Jaitley, UPASI has demanded that until changes are made to the 1951 act, all expenses under this category should be given weighted deduction to the extent of 200 percent of the expenditure.
UPASI president N. Dharmaraj said that they have asked for full expenditure allowance for replanting, temporary ban on rubber imports pending disposal of safeguard duty application, exclusion of tea exports from the ambit of cess and concessional import tariff for plantation machineries.
Plantation business in India is estimated to be around Rs.43,000 crore and 60 percent of it comes from south India.
It employs 24 lakh people (of which 60 percent are also in south India), besides playing a significant role in supporting the rural infrastructure.
"The PLA was enacted at a time when plantations operated in extremely remote areas with no external infrastructure support. Today plantation areas are no longer rural but semi-urban. As such, the legislation has lost its relevance and therefore needs to be amended," said Dharmaraj.
"Currently, commodity prices are at its lowest, which make plantation producers vulnerable for price manipulation since they are at the lowest rung in the value chain," he added.
Conceding that the recently amended bonus act is laudable in its intention, he said it would severely impact the plantation business where 60 percent of the cost is on employee remuneration.
"We also hear about proposed changes in the gratuity and maternity benefits act, all of which will hugely increase the production cost of plantations, making it totally unviable," he added.
He also pointed out that the plantations are subjected to both Central Income Tax (CIT) and Agricultural Income Tax (AIT) and the weighted average rate is higher than CIT and hence rebate should be provided.
The memorandum drew the minister's attention to the significant role of the plantation sector in the economy, especially the large number of workers it supports in backward regions.
"Unless and until there is guaranteed stability to the sector, it is going to be very difficult to enthuse interest and draw fresh investments to the sector," said Dharmaraj.
