The coconut oil industry is likely to bounce back after years of subdued existence with the help of tax concessions given by the government, traders said. The new concessions on a truckload of copra or coconut oil work out to Rs 20,000 and traders are finding the new margin attractive.
Selling outside the state has become more attractive with the central sales tax likely to become nil because of zero taxation on copra and oil in Kerala. Traders are optimistic that the Kochi market will regain its position as the main market for coconut oil in the nation with trade picking up in the days to come.
The state government has reduced the purchase tax on copra and the value added tax on coconut oil to help the ailing industry. With zero tax, the product has regained its competitiveness compared to the substitute palm oil.Traders are also pointing that the central sales tax may also become nil as it is calculated on the tax paid in the state of origin.
?If the central sales tax is reduced the total savings from a truckload (approximately 10 tonne) of copra or oil will be around Rs 35,000. Coconut oil from the state will be competitive and given the better quality of the product the market will move back to Kochi,? Talat Mehmod, a leading trader told FE. Almost 75% of the consumption of coconut oil takes place in Kerala whereas most other states depend on the cheaper palm oil and other oils for cooking. With the price of the substitute palm oil ruling higher than coconut oil, the demand is likely to take the price to higher levels, traders said. The state?s coconut cultivation covers 9,00,000 hectares and the average annual fall in the coconut price has been 9% in the last decade.
Industrial use of coconut oil includes manufacture of toilet soaps, laundry soaps, surface-active agents and detergents, hair tonics and other cosmetics.