Kerala government fails to get private units functional

Kollam: The LDF government has failed to intervene in the crisis in the cashew sector caused by the closure of the private cashew factories for a year. It is alleged that the government has viewed the small cashew processing establishments as “capitalists.”

The small-scale factories cite huge operational costs for the closure. As the business has turned non-profitable, they have demanded a comprehensive package, including formation of a federation to support the industry.

The units are at the receiving end with the additional burden of nearly 10 percent tax levied on foreign invoice. The large players are refunded  the money with their exports while the small units purchasing from these large companies have to pay the tax. The small-scale factories want the formation of clusters by incorporating single factory owners to form a federation.

“The formation of such clusters alone can save the sinking industry. The cashew corporation can supply the federation with raw materials and buy finished products which could subsequently be exported by the corporation. There are only some 12 major players in the private sector to be counted,” Mr Gobind Prasad, a private cashew factory owner, told DC. The large players who import raw cashew from foreign countries  sqeeze  the small players with high rates for raw cashew acting as “traders” instead of “processors”.

The big players also get cash incentives per container while exporting. The interest rate  for exporters is also as low as six percent while small units are charged a high 14 percent.

The processing charges incurred in the state are Rs 2,300 for a bag of raw cashew weighing 80 kg, whereas in Andhra Pradesh and other neighbouring states, it is just Rs 1,200. Any delay in the payment of sales tax also causes these factories to pay an additional 25 percent  of the amount as fine. Surviving in such an economy is difficult  for the small players who form the  majority among some 875 private cashew units in the state  which has a Rs 11,000-crore cashew sector.