The commerce ministry and the United Planters Association of South India (Upasi) are in talks with the Karnataka government to exempt value-added tax (VAT) levied on chemicals, fertiliser and nutrients used in plantations.

The ministry, along with various plantation bodies will persuade Karnataka to exempt VAT on chemicals, fertiliser and other nutrients used by planters as has been done by Tamil Nadu and Kerala, Jyotiraditya Scindia, minister of state for commerce, said.

Addressing the 119th annual conference of Upasi here on Friday, he said the exemption of VAT would help the plantation sector reduce its burden to some extent.

The Karnataka government has levied 5.5 per cent VAT on agriculture inputs like chemicals and fertilisers and 14.5 per cent for agriculture nutrients that are also used in the plantation sector. The cost of fertiliser and agricultural inputs have shot up more than 100 per cent over the last few years.

However, the Karnataka government has exempted individuals and partnership firms from the payment of agriculture income tax. The Karnataka Planters Association (KPA) has requested the state government to also exempt companies from agriculture income tax as has been done in Tamil Nadu. This will enable them to reinvest whatever surplus is available back into their plantations that have remained neglected for the last several years, Marvin Rodrigues, Chairman, KPA said.

On shortage of workers in the plantation sector highlighted by Upasi, Scindia said, mechanisation was the only solution to address the issue. The Coffee Board had proposed a subsidy scheme for mechanisation during the 11th Five Year Plan and considering the success of the scheme, it has been decided to continue the scheme into the 12th Five Year Plan as well and it will be extended to other plantation commodities, he said.

In traditional areas, the key to improve productivity is to go for replanting. The government is examining the proposal of fixing the new unit costs in the 12th Plan in order to improve the replantation scheme. Comprehensive mechanisation scheme is being worked out in association with various commodity boards, he said.