The Cochin Oil Merchants’ Association (COMA), representing coconut oil millers, traders and allied industries in Kerala, has urged the State Government to introduce a regulatory framework for the trade and movement of coconuts, copra and coconut oil, according to a report by The Hindu Business Line on June 24, 2026.
The Association argues that the absence of a monitoring mechanism has led to large-scale unrecorded and clandestine transactions, causing significant losses to farmers, traders and the coconut oil industry. "Kerala is one of India’s largest producers and consumers of coconuts and coconut oil, with thousands of farmers, copra manufacturers, oil millers and workers depending on the sector for their livelihood," said Thalath Mahmood, president of COMA. However, unchecked inflow and outflow of coconuts and coconut products through informal channels are adversely affecting the industry.
Comparative Regulatory Framework
COMA pointed out that neighbouring states such as Tamil Nadu and Karnataka regulate coconut trade through Agricultural Produce Marketing Acts, which provide for trader registration, movement permits, market fees and transaction monitoring. Kerala currently lacks a comparable system. The following table summarises the differing approaches:
| State | Regulation | Key Features |
|---|---|---|
| Tamil Nadu | Agricultural Produce Marketing Act | Trader registration, movement permits, market fees, transaction monitoring |
| Karnataka | Agricultural Produce Marketing Act | Trader registration, movement permits, market fees, transaction monitoring |
| Kerala | None | No specific regulatory framework for coconut trade |
Allegations of Tax Evasion
COMA has alleged that dry coconuts (Undakkopra), which are primarily used for copra and coconut oil production, are often transported and invoiced as ordinary coconuts to avail GST exemptions. This, it claims, facilitates tax evasion, suppression of taxable turnover and unfair competition for compliant businesses.
Proposed Regulatory Measures
To address these issues, the Association has proposed a set of corrective measures:
- Nominal market cess on the first purchase of coconuts.
- Mandatory registration of all traders.
- Electronic documentation for bulk transport.
- Digital tracking of inter-state movement.
- Stronger border inspections.
- If a cess is not feasible, exploring a revenue-neutral mechanism through the GST Council that would create an audit trail without burdening farmers.
The memorandum also seeks the formation of a committee comprising representatives from the Agriculture, Industries and GST Departments, the Coconut Development Board and industry stakeholders to recommend corrective measures.
Implications for Trade and Compliance
For importers, exporters, and trade policy analysts, the lack of regulation in Kerala creates an uneven playing field, with compliant businesses losing out to those exploiting the informal channel. The proposed reforms, if implemented, would introduce transparency and traceability in the supply chain, potentially reducing tax losses and improving market data for the coconut sector. The involvement of the GST Council indicates a possible shift towards inter-state harmonisation of trade rules for agricultural commodities.
COMA has called for immediate action to safeguard Kerala’s coconut economy and ensure transparency in trade.
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