KOLLAM: Private sector cashew processors have decided to close their factories indefinitely from February 8 in response to a call given by the Cashew Manufacturers and Exporters Association (CMEA) in protest against the alleged negative attitude of the State Government in addressing long-standing problems of private sector cashew processors and exporters. This will result in about 600 factories remaining closed, affecting the livelihood of over three lakh cashew workers, a big majority of them women.

CMEA secretary A. Abdul Salam told The Hindu on Thursday that the closure decision was in spite of the fact that there had not been any labour dispute in the sector of late. Though the recent wage hike is double compared to what is given in the neighbouring Tamil Nadu, the manufacturers here have readily implemented the hike. Also, good employer-employee relationship exists in the sector now.

Zero-tax sought

But there is harassment on the part of the Commercial Taxes Department though there is no tax evasion in the sector. Vehicles transporting cashew kernels are seized without any reason and heavy fines slapped on them.

Kerala processes nearly 5 lakh tonnes of raw cashew nuts annually. Of this, 4.5 lakh tonnes are imported and only the remaining is procured domestically. This invites purchase tax. Imported nuts are fully tax-free. The purchase tax earned from 50,000 tonnes of raw nut annually comes to about Rs.6 crores. That too is refunded as input tax if the kernels are exported, under the provisions of the Value Added Tax Act. Thus the revenue collection from purchase tax is virtually zero. As in the case of walnuts in Jammu and Kashmir and marine products, raw cashew nuts have to be declared as a zero-tax product, he said.

Plea for 4 per cent VAT

Mr. Salam said that domestic consumption of cashew kernel in the processed form is very minimal. Value-added cashew products are highly costly because of the VAT rates.

Taking these factors into account, other cashew producing States have reduced the VAT on cashew kernel to 4 per cent by treating it as an industrial raw material. The CMEA wanted the Kerala Government to follow suit for the survival of the cashew industry in the State.

While the State Government makes an average annual allocation of Rs.50 crore to public sector cashew factories which provide employment only to about 20,000 workers, there is no such encouragement for the private sector which employs more than three lakh cashew workers in the State. The CMEA would like the Government to consider some incentive for them.

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