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Plantation sector to debate post-WTO strategy

PLANTATION PANORAMA

P. S. Sundar

THE captains of the plantation industry in the South will assemble in Coonoor in September to consider in detail the strategy to be adopted to face the emerging challenges in the post-WTO phase. This is from the realisation that escaping from the implica tions of the WTO would be impossible and the only way to survive is to learn to face the challenges. By now, the plantation industry has realised that the most vexatious issue before it is that imports cannot be avoided and, so, it has to learn to live w ith it rather than plead with the Government to stop imports.

The focus on WTO implications is highly relevant. Partially, the Commodity Boards are also to be blamed for not focussing sharply on WTO until now. How can the Commodity Boards and the plantation industry associations miss this development?

When tea imports were being allowed under the aegis of SAARC free trade, the plantation industry urged the Government to raise the import duty on tea from 15 per cent to 35 per cent holding this as the permissible limit under the WTO. And, the Government obliged by raising the duty to 35 per cent, except in the case of Sri Lanka where the concessional duty of 7.5 per cent prevails. Only after that the industry realised that under the WTO, the bound rate is 150 per cent for tea. Now, it is urging the Gov ernment to raise the duty to that maximum level to protect the domestic producers from the possible flooding of the imported teas.

The Government had clearly sent the message to all exporters in the country when the Finance Minister, Mr. Yashwant Sinha, presented his last Budget. By withdrawing 20 per cent exemption of the export profit under Section 80 HHC of the Income Tax Act, he made it clear that in the next five years, there would be a steady withdrawal of 20 per cent exemption each year so that at the end of the fifth year, the entire export profit would be subject to income tax. This is part of the country's move towards th e WTO regime and no one will be exempted from this. But the plantation industry had been wasting all these months in asking for exemption from this. And, a plea has been that while manufacturing industries were benefitting under Section 80 HHC, only the plantations suffered because the States were also collecting agricultural income taxes.

Subsidy is another aspect which runs counter to the WTO norms. At various points of time, all the plantation crops enjoy an element of subsidy dished out from the Consolidated Funds of India. Under the WTO, anti-subsidy norm has a weightage. But, the ind ustry continues to seek subsidies for various aspects and, in cases where a subsidy has not been asked, it has been granted also. This refers to the recent price subsidy of Rs. eight per kg of black tea produced by the small scale sector in the Nilgiris, subject to certain conditions. The small growers are asking for a floor price, but the Centre has given them a price subsidy instead.

All such subsidies will have to go once the WTO norms come into operation. Can the industry do well without subsidies? If not, how can it continue to benefit from Governmental assistance without incurring the wrath of the WTO managers? One suggestion has been that the Commodity Acts have to be amended to provide for assistance directly from the cess collected from the industry.

As for import, already, the Commerce Minister, Mr. Murasoli Maran, has lifted the quantitative restrictions (QR) on 714 items. These are now under the OGL purely because of the commitment India has made to the WTO. Some 220 more tariff-linked commodities will be brought under the OGL effective from April 1, 2001. So, from then on, the plantation commodities should expect open competition on the Indian soil.

Seeking tariff protection is one way to face cut-throat competition. The WTO-bound rates are 150 per cent for tea, instant tea and instant coffee, 100 per cent for coffee beans, cardamom and pepper and 35 per cent for latex rubber, and 25 per cent for ot her natural rubber. On the one hand, the prevailing import duty is lower than the bound rate for some commodities and hence, it makes sense to raise the duty to the bound rate. On the other, as in the case of natural rubber, there is a need to classify i t as an agricultural commodity, rather than an industrial raw material and re-work the bound rate to protect the indigenous producers. Already, the producers of centrifuged natural rubber (cenex) are adversely affected by a recent circular from the Comme rce Ministry allowing direct import of natural rubber latex, unlike the hitherto requirement of their procuring the material only from the STC.

In short, the Government cannot blindly go for the adherence to the WTO norms jeopardising the genuine interests of the lakhs of growers engaged in the production of plantation commodities as also the lakhs of workers dependent on these commodities. To t hat extent, the Government should prepare itself in respect of tariff protection and anti-dumping provisions. But, the question is: will the Government do this? A Government that has imposed a lower import duty when it could have had a higher one, a Gove rnment that has offered concession to tea imports from Sri Lanka on no acceptable economic ground other than to promote free trade amidst SAARC countries, cannot be easily expected to fight for anti-dumping or higher tariff to protect the domestic planta tion industry. But that is one of the aspects the industry should be able to make the Government do in the post-WTO regime.

So, the agenda before the industry in facing the challenges in the post-WTO regime include preparing adequately to fight for justice, but simultaneously, produce quality commodities at competitive prices and launch aggressive marketing to find new buyers . The survival of the plantation industry in the post-WTO scenario depends on this.