Beedi-making jobs up in smoke after 28 per cent tax

Unable to withstand the 28 per cent tax, several factories have shut shops rendering thousands jobless. Stakeholders in Tirunelveli district, a beedi manufacturing hub in the state, say that there is a 60 per cent fall in business after GST. Initially, the traditional rural industry, which came into existence sixty-five years ago, was levied 2.021 per cent excise duty. 

During 2011 and subsequent years, the industry had to pay both 14.5 per cent of value added tax(VAT) imposed by the State government and also the central excise duty. While the industry was struggling because of the double taxation, the GST of 28 per cent came as a fatal blow, lamented stakeholders. While genuine taxpayers find it hard to run the business, tax evaders and illegal manufacturers exploit the situation. 

As a result, the illegal trade is thriving, causing huge loss to the exchequer. Despite the high tax rate, beedis won't vanish, but it would push original beedi makers out of the trade, say owners of some branded companies. Though it is a handmade sector, the highest rate of GST was levied on beedi manufacturing. Ironically, handmade safety match, another low value product, was spared from the GST, according to S Kasi Vishwanathan, Tirunelveli district secretary, CPI and general secretary, All India Beedi Cigar and Tobacco Federation, affiliated to the AITUC.   

Among the unorganised workers, the beedi rolling workers were granted most legal rights through the Beedi and Cigar Workers Act, 1966. However, it was not being implemented properly. About 90 pc of the workers were being hired only on a contractual basis. After the preliminary stage of beedi rolling in houses, packaging and labelling would be done in factories. 

The required raw material, including leaves, tobacco and scissors, would be given by employers. As beedi rolling was home based, women are also involved in this job in large numbers. Considering this, the act was diluted in 1974 allowing women to undertake beedi rolling in houses. 

Later in 1976, a healthcare scheme for rollers and their families were introduced after a long struggle, he recalled. To evade tax, unbranded beedis were manufactured and freighted to preferred trade destinations, mostly in north India and were marketed as branded items. Lakhs of workers, especially women, were part of the manufacturing process 10 years ago. 

Of late, its workforce had shrunk by half as the next generation is reluctant to take up beedi rolling. Around 30 popular beedi companies exist in Tirunelveli, Vishwanathan said. Gunasingh Chelladurai, president, Tirunelveli District Chamber of Commerce and Industry, said many small companies have wound up unable to bear the loss. However, the ‘Tirunelveli beedi’, which has got its fame, has managed to maintain its market in Kerala till date. 

Beedi was exported to Colombo, Burma and Maldives 10 years ago. The high GST was levied on beedi manufacturing, which comes under cottage industry, to discourage smoking. 

“But, livelihood of around 1.20 lakh workers relying on this industry directly and several others indirectly, is now under threat,” he felt. Thayammal, a beedi roller from Pettai, Tirunelveli, while sharing her 30-year experience, said that she earned Rs 210 after rolling thousand beedis, which require a minimum of eight hours. “But, now I am able to roll only 500 beedis a day,” she said. 

As for R Mohan, district secretary, CITU, the stoppage of annual educational scholarship amount of Rs 250 to Rs 8,000 under Beedi Workers Welfare Fund Act three years ago, would pave the way for child labour. Several economically poor beedi rollers could not pay even tuition fees of their children. 

M Krishnamurthy, district coordinator, Unorganised Workers Federation, said the beedi rollers should be brought under the unorganised workers welfare board to enjoy some privileges.