The Indian coffee industry, which faced a crisis two years ago, was not yet out of the woods and needs help in the coming budget to stimulate growth. | |
| Last year's recovery in international prices was not enough to wipe out the damage done by several years of low prices. |
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| Top most among the reliefs the industry was seeking was reduction in cess on exports. Currently there was a cess of Rs 500 on every ton of coffee exported. |
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| "It's time for the government to look at bringing this down to Rs 200 per ton. This will help ease margin pressures the exporter faces today," says Harish Bijoor, a consultant. |
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| Export finance was available on rupee terms at 8 per cent interest rates. On dollar terms it was LIBOR plus 2-3 percentage points (3.5-4.5 per cent for three moth funds) and far from satisfactory. |
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| D M Purnesh, Secretary, Speciality Coffee Association of India and MD, Classic Coffee & Spices, said foreign exchange earned was hardly ploughed back for infrastructure development. |
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| The industry would like waiver of interest, reduction of interest for the future loans and a minimum support price, particularly for small growers. Quality had to be encouraged with incentives. |
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| Bijoor said coffee bars proved the coffee retail segment was at the take-off stage. India could accommodate 1,20,000 coffee vending machines in the next few years but rationalisation of duties on imported coffee making machines was needed. |
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| Naresh Malhotra, director, Cafe Coffee Day, sought lower taxes on imported capital goods and machinery. |
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| Excise duty on instant coffee and liquid coffee concentrates for vending machines had to be reduced from 16 per cent at present. |
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| Bijoor warned that years of low prices had kept coffee area limited and led to decline in productivity owing to lack of funds for crop maintenance and management. |
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| A tax holiday under a special coffee processing zone plan for key areas like Coorg, Chikmagalur, Hassan and Wayanad, or a special economic zone at Hassan, could be considered for long-term revival. |
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