GST, infra, higher spending top food-processing industry’s wish-list for govt
Rationalisation of GST, creation of infrastructure at the farm gate and higher budgetary allocation for the food ministry — these are among the food-processing industry’s top expectations from the government. Processing of food, primarily fruits and vegetables, is crucial for doubling farmers’ income, as the government has promised, say industry executives.
The 2018 budget had proposed the launch of a scheme, Operation Greens, to boost production and processing of tomato, onion and potato, and establishment of a financial institution to help farmers double their income. The budgetary allocation for the Ministry of Food Processing Industries was also nearly doubled to Rs 1,400 crore. These, say industry insiders, had bolstered the expectations of the sector.
“The current government has set the tone for the food-processing sector through various measures. The roadmap for the next term or the next government will be to rationalise tax rate that is as high as 28% on some of the food products. If cinema ticket can be made cheaper, tax slabs can also be brought down for food products, making them more affordable,” said Piruz Khambatta, chairman of soft drinks company Rasna International.
The government realises that growth of the food-processing sector and job creation in allied sectors is an answer to the rural distress and ensure that farmers don’t have to seek for loan wavers, Khambatta said, even as he stressed on the need for better alignment between the Centre’s vision and execution by states.
The food-processing sector is gaining strong ground but the pace of this can be more, according to the Confederation of Indian Industry.
All India Food Processors’ Association president Subodh Jindal wants the next government to abolish GST on the sector. “It is extremely unfortunate that while farmers are compelled to discard fruits and vegetables in the glut season, if someone converts those produces into pulp, it attracts 12% GST. The world has found a solution to save wastage of natural produce by strengthening primary processing to catch the glut produce and convert it into a stable form,” said Jindal.
Food processors said for the next five years, the government must encourage indigenous development of low-cost food-processing equipment, particularly for the micro, small & medium scale enterprises that comprise 90% of the food processing application in the country. Their association feels that India should harness the potential of its coastline of more than 7,500 km by modernising the marine-food catching and processing value chain.
Government subsidy has encouraged the setting up of large cold storages with capacity of 5,000-20,000 tonnes, Jindal said. “The scheme should now be for investment in small cold storage at farm gate which will be of 10-20 tonnes to give farmers some holding time for his crop in the glut season. Such facilities can be powered by solar panel,” he said.
Further, Jindal said, financial support should be provided to existing and new processing units instead of allocating resources only to food parks.
Mayank Shah, category head at foods company Parle Products, said the next government should ensure stability of commodity prices to curb uncertainty of input costs for the industry. “Besides reforming the farm sector, the government should allocate more funds for the rural sector to build a better road network. Also, higher job creation in rural India will foster demand for food products,” said Shah.
Bureaucrat-turned-entrepreneur and food-processing consultant Gokul Patnaik said port infrastructure should be developed for the effective implementation of the recently announced export policy. “Cluster development should be the focus for the government instead of only focusing on large-scale food parks. As we have adequate capacity in cold chain, our focus should shift to the development of pack houses, point of sale and logistics infrastructure,” he said.
The CII recommends accelerated depreciation to equipment and machinery used in all segments of the food-processing industry, tax deduction at 200% under Section 35 for promoting the ‘Made in India’ brand abroad, benefits under section 35 AD for cold-chain projects that commenced operation prior to April 2012, and extension of benefits given to infrastructure projects to food parks as well.
Source- Economic Times.
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