Anytime snack khakhra stays unaffected by new tax regime

Manufacturers say the 5% GST on it had no major impact on business of the wheat flour snack but complicated paperwork left a sour taste

SURAT: In the summer of 2013, then Gujarat chief minister Narendra Modi was in Delhi to address an event organised by the Ficci Ladies organisation.

As part of his broad strategy to revive the economy and generate jobs, Modi spoke about the entrepreneurial skills of Indian women, citing in particular ‘Induben’s Khakhra’ in Ahmedabad, amid ringing applause from the audience.

Four years later as his Bharatiya Janata Party (BJP) fights to win a sixth term in Gujarat, the state’s popular wheat flour snack is back in focus, especially after the government slashed tax rate on the cracker in the run up to the December polls.

Across Gujarat, the anytime snack is largely made either by household units — often run by women — or small-scale manufacturers who employ women workers to pack handmade khakhras.

They say the new Goods and Services Tax (GST) — which was originally levied at 12% but cut to 5% in October — pinched them but not as much as the complex filing process.

But beyond economic considerations, the political fight for khakhra is rooted in its symbolism as state pride, and an important icon of Gujarat’s famed entrepreneurial ability — helmed by ordinary women.

Take, for example, 65-year-old Rekhaben Shah.

Standing in ‘Rekhaben’s Namkin’, she recalls how she began selling khakhra to neighbours to support her family 25 years ago.

“I used to make it at home myself and then deliver it to the people in the neighbourhood. Thanks to the word of mouth publicity, I got more customers.”

Two decades later, she bought a shop in Surat’s upmarket Athwa area. Now, her husband and son work with her.

Did GST affect her business? “There was a small dip in the sale for some time but this is something people have to eat so there was no major impact,” she says.

But her son Virag, who looks after the finances, said the new tax system had complicated things.

“Earlier, snacks like khakhra did not attract any tax in Gujarat. Then suddenly, there was 12% GST. Last month, it was brought down to 5%. There is not much impact on sales but the problem is complicated paperwork because of filing returns,” he says.

“Most people in this business run household units. Many of them are women. They don’t know much about taxation. Most of them have not operated computers. They are wary of the entire exercise of filing online returns every month.”

Another manufacturer in Surat who did not want to be named said small units would find the entire exercise difficult.

“Small scale units employ 5-10 women to pack handmade khakhras and sell locally to retailers. Their turnover is limited and they sell

unbranded khakhra. Now imagine, with a profit of a few lakhs a year, they are made to pay 5% GST on every pack sold and also file returns every month,” he said.

The khakhra industry is unorganised — save for a few manufacturers who sell the snack through supermarkets — and estimates say about 300 small-scale units are operational across Gujarat.

When the government slashed the GST rate in October, it was seen as an overture to the party’s trusted vote bank, the business community that the opposition Congress has been wooing.

“When they imposed 12% tax on khakhra, we were surprised. We got together and met different authorities with a request to drop us from the list. It is now reduced to 5%,” said Kishor Cholera of Rajkot-based Mini Griha Udoyg that manufacturers Shreeji Khakhra.

“The tedious work of filing returns is unwanted. We hope the authorities will accept our request to let us file the returns quarterly instead of monthly,” he said.

What about the customers? Did they complain when the prices was increased?

“There was minor variation for about couple of months. However, the tax wasn’t much at the retail level due to which customers did not complain much,” he said.

“It is something you prefer with your morning chai or as a light evening snack. Almost every family wants it. When I came to know there was GST on khakhra, I grumbled but bought it,” said Medha Mehta, a middle-aged housewife in Surat.

So is paying a little more for khakhra reason enough not to vote for the BJP?

“Nah, nah. It’s not a big thing for us.” She smiled.

THE KHAKHRA INDUSTRY IS LARGELY UNORGANISED AND ESTIMATES SAY ABOUT 300 SMALLSCALE UNITS ARE OPERATIONAL ACROSS GUJARAT