The tax regulations for Guar splits and powder is being reassessed by the Rajasthan government. In order to increase the state revenue, the tax charged on splits and powder could increase from 3.3% to almost 5-7%.
The new Guar Seeds and splits have predominantly been purchased by stockists and speculators. Farmers are looking for alternatives to Guar, due to the low prices no longer making the crop viable. The repercussions of these decisions will only come to light once the next crops are harvested.
Demand is still low from the oil and gas industry, however, demand from the technical and food industry has been increasing steadily.
The prices for Guar Gum have remained range bound and no adverse fluctuations are expected to the price in the near future. The only concern is the potential change in the Rajasthan government’s tax regulation.
If the tax is increased to 5% – 7%, this increased cost will be passed on to the customers, which will result in the average price for Guar Gum increasing in line with the new tax rise.