Ahmedabad: The halt on isabgol trading at Unjha APMC, Asia’s biggest market for the crop, has entered its second month. Over 20 processing units have shut down, raising concerns that farmers could turn away from the crop.Trading has remained suspended since July 26 over the unresolved GST dispute between Gujarat and Rajasthan. The deadlock has moved beyond a tax dispute and now threatens the supply chain of an export-oriented industry. Isabgol Processors Association (IPA) said 80-90 processing units operate in Unjha. Processors that remain operational are also running down their existing stocks.“If the situation continues for another fortnight, a majority of the units may not have stock left to process. The impact is particularly severe because India supplies about 90% of its Isabgol output to US and Europe,” said IPA president Ashwin Nayak.IPA estimates the current season’s demand at around 32 lakh bags against the production of about 25 lakh bags. Of this production, processors have procured only about 70%, according to IPA officials. That supply gap is now widening as the Unjha market remains shut.Processors say the shortage of fresh seed is putting export commitments under pressure. India’s isabgol industry caters to food, pharmaceutical and health-product markets across the world. Major international buyers include companies such as P&G, Kellogg’s, Guardian Drugs and Dr Schär, according to IPA.With raw material drying up, processors face a difficult choice: run down existing inventories to meet export commitments or conserve stocks as the market remains closed. IPA estimates that around Rs 250 crore of working capital is currently blocked because of the disruption.Box: Big blow to farmersWith trading suspended, farmers cannot sell their remaining produce through the mandi and are being forced to retain the crop in warehouses, incurring additional storage costs.The industry fears the bigger impact could come in the next sowing season. “If farmers cannot sell their produce through the mandi, they will naturally reconsider whether to sow isabgol,” said Rakesh Patel, secretary, IPA.An estimated 60,000-70,000 farmers in Gujarat and Rajasthan depend on the crop.Box: Industry seeks tax uniformityThe immediate demand remains a uniform GST position for isabgol seed across Gujarat and Rajasthan. Following the Gujarat Authority for Advance Ruling (GAAR) ruling, trading of psyllium seed continued at 0% GST from June 1. A subsequent ruling in Rajasthan took a contrary position, leaving traders concerned about the possibility of future tax liabilities on transactions involving Rajasthan-origin seed.The conflicting positions have effectively paralysed trading at Unjha, which handles isabgol arriving from both states. Other reports have also highlighted the concern over retrospective tax demands and the need for a common position before trading can resume.“Govt needs to resolve the issue immediately. Every additional day of closure is hurting processors, traders and farmers. For an industry where demand is estimated to grow by about 7% annually, we now fear that the prolonged disruption could create a shortage of raw material well beyond the current trading season,” said Amit Patel, treasurer, IPA.
