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LATEST NEWS UPDATES | GST effect: Fate of Ludhiana plywood industry hangs in balance -Sumeer Singh

GST effect: Fate of Ludhiana plywood industry hangs in balance -Sumeer Singh

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published Published on Jul 21, 2017   modified Modified on Jul 21, 2017
-Hindustan Times

Ever since the goods and services tax (GST) was brought to force, there has been a 60% fall in the demand for plywood, owing to the tax rate of 28% on furniture goods.

Situated on the outskirts of Ludhiana city in Hambran, is a small plywood manufacturing unit. Until last month, the manufacturing unit had a 110-strong workforce. But now the owner, Wazir Sood, has temporarily laid off 70 workers. And the ones that he has retained don’t have much work either.

Wazir says it’s the fallout of the new tax regime. Ever since the goods and services tax (GST) was brought to force, there has been a 60% fall in the demand for plywood, owing to the tax rate of 28% on furniture goods.

Punjab has more than 125 plywood manufacturing units where around 25,000 workers are employed. The story is the same in all these units. Workers are either being laid off or have no work at all.

Threat to ecological balance

Until 1990s, forest wood was the prime source of raw material for plywood manufacturing units but the forest cover in the region was exhausted to its threshold.

In the early nineties, the cultivation of poplar and eucalyptus trees provided a perfect alternative to forest wood and later, the state government owing to its agro wood properties, introduced a slew of fiscal incentives for farmers growing these trees.

Farmers in the state then began cultivating poplar and eucalyptus trees (replacing paddy and wheat crops) in vast swathes of agricultural land. This proved to be a blessing in disguise as in 1996, the Supreme Court imposed a ban on cutting of forest wood.

Khaira Bet, a village in Ludhiana district, has more than one crore poplar trees while Hoshiarpur, Abohar, Moga, Fazilka, Amritsar and Kotakpura are richly cultivated (crores in numbers) with poplar and eucalyptus trees. Around 90% of wood for plywood manufacturing comes from poplar and eucalyptus trees.

Jolt to farming community

Around 30% of the total farming community in the state is completely dependent upon cultivation of agro wood (poplar and eucalyptus). With shortfall in demand of plywood items, the cultivation of agro wood is likely to fall and thereby taking toll on the livelihood of thousands of farmers in the state.

Parminder Singh, 33, a farmer in Walipur Kalan village who has been growing poplar in five acres of his land for the last 20 years, says, “Now, nobody is ready to pay a single penny beyond Rs 5.5 lakh for poplar trees that were grown at a cost of Rs 8 lakh. Now I am in a fix whether I should cut the trees this year or not.” It takes around four to five years for one crop to ripen.

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Hindustan Times, 20 July, 2017, http://www.hindustantimes.com/punjab/gst-effect-fate-of-ludhiana-plywood-industry-hangs-in-balance/story-BbsJMXEtfygEVvhk4OWOWK.html


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