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  3. Food processors ask for tax holiday for food processing units

Food processors ask for tax holiday for food processing units

26 Apr 2012 Evaluate

Several food processing and FMCG firms’ CEOs have requested for a 100 percent tax exemption for food processing units as the sector is poised to be the growth driver of the country’s economy. Further, the industry legislature asked the Union Government to consider the long pending demands such as uniform implementation of Agricultural Produce Marketing Committee Act, promotion of cold chain industry on private public partnership (PPP) basis, fast implementation of GST for a harmonized tax structure, exemption of import duties on machinery and raw materials, and establishment of quality food laboratories.

During 2006 and 2010, the sector grew by an average of 8 percent, which is higher than the growth of the manufacturing sector. However, the government is trying hard to get to the bottom of certain problematic areas of the sector such as land. Lack of proper infrastructure in the sector is resulting in wastage of Rs 30,000-crore food every year.

Rakesh Kacker, Secretary, Ministry of Food Processing Industries, said that ‘cold chains have been doing quite well with eight already being set up. Another 10-15 will come up by the end of this fiscal and the government had approved another 30 new projects last month.’

The food processing sector is highly fragmented industry, it widely comprises sub-segments like, fruits and vegetables, milk and milk products, beer and alcoholic beverages, meat and poultry, marine products, grain processing, packaged or convenience food and packaged drinks.

A huge number of entrepreneurs in this industry are small in terms of their production and operations, and are largely concentrated in the unorganized segment. This segment accounts for more than 70% of the output in terms of volume and 50% in terms of value. Though the organized sector seems comparatively small, it is growing at a much faster pace.

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