Five-year tax holiday to boost FPO incorporation

Vijay C Roy

Tribune News Service

Chandigarh, February 2

The five-year tax holiday proposed in the Union Budget for Farmer Producer Organisations (FPOs) with turnover up to Rs 100 crore is likely to boost incorporation of the FPOs in the region. As compared to southern region of the country, the FPOs are yet to catch fancy of the farmers in these two states.

The concept behind FPOs is farmers can form groups and register themselves under the Indian Companies Act. Since small farmers often find it difficult to access markets on their own, aggregating farmers into FPOs will help enable them improved market access and better bargaining capacity.

“The tax waiver is expected to give a fillip to the FPO movement in Punjab and Haryana. If it is implemented successfully, the announcement will help in realising the Centre’s goal of doubling the farmers’ income by 2022,” said a senior Nabard official.

Under the PRODUCE Fund (Producers Organization Development and Upliftment Corpus set up by Centre in Nabard), around 67 FPOs in Punjab have been promoted covering a gamut of activities such as agro processing, dairy, goatery, vegetable cultivation, etc. In Haryana, there are 50 registered FPOs.

Sumit Batra, an advocate, said these FPOs are a cross between cooperative societies and private limited companies and they not only enable the farmers to get price for their yield but provide an overall corporate sphere to the traditional agricultural sector in terms of modernisation, infrastructure and technology implementation.

The members of FPOs jointly procure seeds, fertilisers and machinery. It also jointly undertakes training, networking and impart financial and technical advice to members besides production, consolidation and aggregation of the produce.

Mohd Sharif, MD, Sangrur Vegetable Producer Company Ltd., said the announcement is a big positive for the FPOs in general. “This will bring more money into the hands of FPO members.” His FPO has 1,500 members and a majority of them are in vegetables cultivation.

Current scenario 

• As compared to southern region of the country, the FPOs are yet to catch fancy of the farmers in northern states
• There are around 67 FPOs in Punjab which are engaged in agro processing, dairy, vegetable cultivation etc
• In Haryana, there are 50 FPOs registered and engaged in similar kind of activities