Fearing loss, pickle industry seeks cut in GST

Fearing loss of revenue and collapse of business, pickle manufacturers from different states came together in the city recently to form an All India Pickle Manufacturers' Association with an objective to pressure the Central government to bring Goods and Services Tax (GST) on pickles to 5%.

At present, pickles are in the 12% GST slab.

Manufacturers from Goa, Maharashtra, Andhra Pradesh, Telangana, Tamil Nadu, Kerala and Karnataka attended the inaugural meeting of the association. In Karnataka, a campaign by the state pickle association had resulted in VAT exemption for pickles in 2006.

Founder-president of the Association Ramachandra Setty said, the tax rate was unfair as the industry supports farmers and women, and the sector is labour-intensive, thus providing more jobs.

They contended that when the machine-made papads are exempted from GST, pickles should not be charged the high rate. Sathish M R, a manufacturer from Karnataka, said a high GST slab has cascading effects on the industry.

Since, it depends on seasonal fruits and vegetables, production is restricted to a few months while the sales take place rest of the year.

With fruits, vegetables and salt being exempted from GST, pickle manufacturers can claim input tax credit of 3% for spices, masalas and the container. They have to pay GST of 9% to the government, by recovering it from consumers. "After GST was introduced, manufacturers had to increase price because of which sales have gone down. To empty stocks, they will be forced to sell at lower prices, bringing down revenue. Because of this, and fear of poor sales, manufacturers will reduce production," Sathish said. The end result will be layoffs and possibly, a collapse of the industry, he added.

G Kandaswamy of the Tamil Nadu Pickle Manufacturers Association said about 60% of pickle consumption in the state is of packets weighing less than 50 grams.

"Pickles in small packets are very popular there, consumed mainly by middle and lower income groups. Before GST, small pickle packets were exempted from VAT and other pickles were charged at 5%. Now, it is a uniform 12% for all pickles," he said.

The association will be approaching bureaucrats in the GST council and the union finance minister soon to press for their demands.