A delegation from the Central Arecanut and Cocoa Marketing and Processing Cooperative (Campco) Ltd has petitioned the Uttar Pradesh government to remove the 'mandi' tax on arecanut sold by cooperatives, citing the double incidence of market fees that has hurt legitimate trade and forced the closure of its Kanpur depot. The request, made during a meeting with Uttar Pradesh Chief Minister Yogi Adityanath in Lucknow, underscores the difficulties faced by farmer-owned cooperatives under the current tax regime.
Background on Campco
Campco is a farmer-owned multi-state cooperative with a membership of over 1.50 lakh arecanut growers. It operates across multiple states, procuring arecanut primarily from Karnataka and marketing it nationwide. The cooperative plays a key role in providing a transparent, organised channel for arecanut trade, competing with unorganised market operators.
The Double Taxation Issue
According to Campco, arecanut procured from Karnataka is already subjected to APMC cess at the place of origin. Upon entering Uttar Pradesh, the same produce is again levied with a 'mandi' tax, resulting in a double incidence of market fee on the same commodity. The delegation explained that this additional tax burden increases the cost of legitimate trade and reduces Campco's competitiveness against unorganised operators who may evade such taxes.
| Tax Type | Levied By | Stage |
|---|---|---|
| APMC Cess | Karnataka | At procurement (origin) |
| Mandi Tax | Uttar Pradesh | At sale (destination) |
Impact on Campco
The double taxation has adversely affected Campco's business operations in Uttar Pradesh. The cooperative reported a substantial decline in turnover and was compelled to close its Kanpur sales depot as a direct consequence of the additional tax burden. This has not only reduced Campco's market presence in one of India's largest arecanut-consuming states but also harmed the interests of its farmer members who rely on the cooperative for fair pricing.
Government Response
The Campco delegation—comprising President SR Sathishchandra and Managing Director BV Sathyanarayana—requested the Uttar Pradesh government to either remove the mandi tax on arecanut or grant an exemption to cooperative institutions. They also sought relief from the double incidence of market fee. The delegation was assured that the Uttar Pradesh government would extend all possible support to cooperative institutions and sympathetically examine the concerns presented.
Implications for Arecanut Trade
If the UP government accedes to Campco's request, it would strengthen organised trade channels by reducing the cost burden on cooperatives. This could encourage more farmers to sell through formal channels, potentially increasing revenue for the state through legitimate business activities while protecting the interests of lakhs of growers. The final decision awaits further examination by the Uttar Pradesh government.
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