Registration with central authority mooted; consultations needed on details.
The Union agriculture ministry is working on a law to enable traders in farm produce to bypass multiple inter-state taxes such as octroi and toll tax by registering in a centralised system. They’d also be able to trade at more than one Agriculture Produce Marketing Committee centre.
The registration would be valid across the country for a stipulated fee, for a minimum of five years. Officials said the law would enable any trader, industry or organisation purchasing and selling farm produce to avoid the layers of inter-state taxes and levies by just registering with the central authority.
At present, these taxes account for 15 per cent of the farm product price. “The idea is to break state barriers in farm produce movement and smoothen inter-state price distortions,” an official said. The enactment, Inter-state Agriculture Produce Trade and Commerce (Development and Regulation) Bill, has been okayed by the law ministry, following which the agriculture ministry is preparing a Cabinet note. The latter ministry has planned consultations with states, which’d lose a big chunk of revenue if such a system was implemented. “We are looking at a revenue sharing arrangement with states from the licence fees, as bulk of such taxes are levied and collected by state governments,” he said.
A law is in the works to enable smooth inter-state movement of farm goods and services
* A trader or dealer in farm goods can register with a central authority for a licence fee
* Registered people can transport goods from one state to another without paying octroi, toll tax or entry fee
* Law ministry has cleared the initial draft
* Local taxes account for average 15 per cent of price of a farm produce
* Revenue sharing arrangement with states to be worked out after consultation, as their revenues could drop
The registration and subsequent licence would be for both perishable farm produce like fruit and vegetables and non-perishables like grains and cereals.
“The system will be optional for traders and anyone who does inter-state trade in agricultural produce can avail of the system,” the official said.
“This is a welcome move and will help smoothen the market distortions in farm produce prices and reduce the wide disparity that currently exists,” said Gokul Patnaik, chairman of Global Agri-systems Ltd and a former head of the Agricultural and Processed Food Products Export Development Authority.
He said the proposal would help get farmers a better price, while also aiding consumers in getting food articles at a lower rate.
Ramesh Chand, director of the National Centre for Agricultural Economics and Policy Research said in a stable currency environment, the cost of transporting grain from northern India to the southern parts was higher than importing these from countries like Australia and the US, as domestic taxes distorted the price.
Studies show the cost of transporting grain from Punjab to Mumbai is almost 40 per cent more than importing it from the European Union, while the cost is 260 per cent more than importing it from Thailand. “Within states, too, there are a lot of local taxes which distort the market price of agricultural produce,” the official said.