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  • Industry seeks abolition of Karnataka APMC cess on raw cashew nuts

    Feb 12th, 2020

    The Karnataka Cashew Manufacturers’ Association (KCMA) has said that regulation of raw cashew nuts by the Agricultural Produce Marketing Committees (APMCs) in Karnataka has been affecting the growth of the industry in the State. KCMA president Subraya Pai told BusinessLine that the industry would get a major boost if the raw cashew nut is deregulated from APMCs. He said that the total production of raw cashew nuts in the State is around 50,000 tonnes per annum, as against the cashew manufacturing industry’s requirement of four lakh tonnes per annum. To meet this shortfall, Karnataka is importing raw cashew nuts from East and West Africa, to ensure round-the-year employment to the workforce of cashew manufacturing units and to sustain their operations.

    Competitive disadvantage

    Stating that the APMC cess of 1.5 per cent is making the industry uncompetitive in Karnataka, Pai said many other cashew-producing States have not regulated raw cashew nuts. Manufacturers in Karnataka are at a disadvantage on account of this trend. Pai said that APMC cess was not removed after the implementation of the GST, and this 1.5 per cent cess is taking away the competitive edge of Karnataka, as the impact of the cess works out to over ₹10 a kg on the finished goods. 

    K Prakash Rao, partner in Kalbavi Cashews in Mangaluru, told BusinessLine that Mangaluru can become a major raw cashew nut hub if it comes out of APMC regulation. Many importers from Karnataka are importing raw cashew nuts through the Tuticorin port as there is no APMC there. “We can attract over four lakh tonnes of raw cashew nuts to the New Mangalore Port, if the APMC deterrent is avoided,” he said.

    Boost to State revenues

    Pai, too, said that 75 per cent of the imports could happen at the New Mangalore Port, if the regulation of raw cashew nuts is stopped. This will not only provide the fuel for sustaining the growth of this industry in Karnataka, but will also generate good revenues to the State government by way of SGST, as around 50 per cent of the manufactured produce is sold in the Indian domestic markets. The State government collects huge tax revenue as SGST on the sales of this high-value product in the domestic market, and the growth of this industry will only add to the State’s exchequer. Moreover, the APMC revenue does not add to the State’s revenue as most of the market fee collected is retained by the local bodies for its functioning, and only a small portion goes to the marketing board for meeting expenses. There is no share for the exchequer of the government. Pai added the abolition of cess on raw cashew nuts from APMCs will in no way impact the State Budget.