| Cashew processing plants based out of Palasa in Andhra Pradesh are increasingly looking at Orissa as a safe haven to avoid high taxation and increased processing costs.
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| A few Palasa-based cashew processing operators have already opted to open their plants in Orissa and several other cashew manufacturers are contemplating the same to improve their margins.
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| “A few cashew manufacturers in Palasa have set up around 30 cashew processing units in the Ganjam district of Orissa during the last two years,” S Murali Krishna, secretary, Palasa Cashew Manufacturers Association, told Business Standard. Krishna pointed out that with some processing units shifting base to Orissa, the number of processing plants in Palasa had come down to 160.
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| “If the Andhra Pradesh government does not take necessary steps immediately, several other operators are also likely to relocate their operations from Palasa to Ganjam in Orissa,” Krishna said. Each of these plants has a cashew roasting capacity of 10 to15 bags (each bag consists of 80 kg cashew nuts) per day.
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| At present, the Andhra Pradesh government imposes an eight per cent tax on the purchase of raw nuts, whereas the Orissa government does not impose any tax on the purchase of raw nuts. This apart, the Andhra Pradesh government collects another two per cent tax on the cashew kernels, he said.
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| “Altogether we pay 10 per cent in taxes whereas the operators in Orissa pay only between four and five per cent tax. Additionally, labour charges are higher in Andhra Pradesh as compared to Orissa,” he added.
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| Palasa traders pay close to Rs 350 as labour charges for the roasting and processing of one bag of cashew nuts, whereas in Ganjam the operators pay only around Rs 150 and Rs 200, Krishna pointed out.
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| “The Orissa border is just about 10 km from Palasa and most of the cashew nut production from Orissa comes to the Palasa market. If we can set up a plant in Orissa, we can continue to operate from Palasa itself with the additional benefits of lower taxes and cheaper labour,” he said.
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| Palasa cashew manufacturers, for the last several years, have been asking the state government for a reduction in purchase tax and had recently submitted a memorandum to the new Congress government on the same issue. |
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