Kerala beedi industry is in crisis due to VAT, claim makers

Friday, Mar 20, 2015,18:33 IST By metrovaartha A A A

Kannur | The Beedi Manufacturers Collective Forum has demanded the State Government withdraw the move to impose 14.5 Value added Tax (VAT) on Beedis as it would adversely affect the beedi industry in the State.
Talking to newsmen here today, Mr C Rajan, Chairman of Kerala Dinesh Beedi Cooperative (KDBC) and representatives of other beedi companies said around 83000 people were employed across the State under private and Cooperative sector in this industry.   Mr Rajan said the one beedi rollers would make 1000 beedis in one day and he recived Rs 190 per day.
At the same time, the VAT plus 16 per cent of Central Government taxes came to Rs 117  for 1000 beedis which was unreasonable.  Due to the anti tobacco campaign and health awareness of Kerala people, this sector had experienced fall in smoking habit and yearly, there was reduction of 20 per cent in beedi consumption.
Mr Rajan also said the rate of Kerala beedis is 12 Rs per bundle and it would increase to Rs 15.   At the same time, other state beedis can be purchased at Rs 5 per bundle in Kerala.    As most of the beedi smokers are from migrant labourer group and they also prefer to smoke other state beedis.
He said about three loads of other State Beedis are imported at Kannur market alone illegally.   He said the government will not get the additional VAT because of crisis in this sector.
At the same time, the employees would be affected due to charging VAT on beedis.   Mr Rajan said the KDCB and other Beedi companies like Sadhoo, Surya, Apple, Royal and others functioning in the state are even ready to wind up the companies.
KDBC, once regarded the world’s largest cooperative of beedi workers, at present remitted Rs one lakh to Central Government as Central Excise per day.    However, the revenue has declined year by year despite diversification implemented in KDBC.