The cashew crisis in India is getting worse, even as government-level talks are being carried out to re-open the private sector cashew factories that have been lying closed following the last minimum wage revision. And now banks are declaring at least 60 cashew factories lying closed as non-performing assets and issuing notices to take possession of these properties.
Sources in the sector said that private processors who received notices owed amounts ranging from Rs.5 crore to Rs.50 crore each to various banks. The owners of these factories had availed themselves of working capital loans from the banks to operate the factories. But following the wage hike, they had kept the factories closed on the grounds that the operation could result in huge losses.
The private sector was willing to agree for a 25 per cent hike in minimum wages. But the Industrial Relations Committee unilaterally declared and notified a 35 per cent hike. Subsequently, a 10 per duty on imports of raw cashew nuts was imposed by the Central government and it made things all the worse for the cashew sector.
Cashew factory owners in the State said that the import duty and wage hike will make their product highly uncompetitive in the international and domestic markets. That is because cashew is now processed in at least six States where the cost of production is very low compared to Kerala, vis-a-vis the last wage hike.