STATE FOOD
PROCESSING MINISTERS MEET SOON TO DISCUSS SALES TAX ISSUE
Representatives
of Food Processing Industries and various Industries Associations
today demanded exemption/withdrawal of several taxes applicable
to processed food, not to apply land ceiling laws for contract
farm to enable the Food Processing Industries to achieve quality
and economy of scale besides putting emphasis on quality of processed
food in country. In an interactive session with the Minister of
State for Food Processing Industries, Shri N.T. Shanmugam and
senior officials of his Ministry here today, the representatives
of the Industry, suggested that Food Processing Industry can achieve
its full potential if government brought down tax on processed
food substantially besides creating awareness about the processed
food among consumers. They were of the opinion that the targeted
8% growth during the 10th plan can only be achieved
if agriculture and food processing sector grew by 4.5 to 5%. They
also suggested that apart from emphasis on domestic consumption,
focus should also be on the export potential of this sunrise sector.
The representatives
pointed out that poor infrastructure, storage facility, movement
and transport bottlenecks, antiquated Food Laws, high taxes (25
to 27%) on processed foods, excise and sales tax levy etc. were
inhibiting the growth of this industry in the country. They suggested
that in order to accelerate the growth of food processing industry
there should be single tax on food with full VATability, extension
of excise exemption on innovative food and pasteurizing material,
single-rate of custom duties, elimination of central sales tax,
convergence of all State levies, IT exemption, besides creation
of a common Indian market through removal of restrictions on Inter-State
movement of processed food and establishment of food exchanges
in the line of IT parks.
While trying to find
out from the representatives the reasons for slow growth in this
sector, Shri N.T. Shanmugam said that on its part the Government
has enhanced the 10th Plan allocation three-fold to
Rs. 650 crore from the 9th Plan allocation of Rs. 235
crore. He said that the Plan schemes would address key areas such
as technology upgradation, infrastructure development, R&D
and quality assurance.
Outlining the process
of tax rationalization, Shri Shanmugam said that it began with
the withdrawal of excise on processed food and vegetables in the
budget of 2001-02. In the budget for the current year, a similar
effort was made by his Ministry to extend exemption to other sectors
of perishable food. He said that his Ministry also argued for
the higher exemption for packaging and cold chain equipment, besides
exemption on low priced biscuits.
The Minister told
the Industry representatives that his Ministry will soon call
a conference of Ministers handling Food Processing from States
and Union Territories, where the concerns of the Industry will
be addressed, including exempting the food processing sector from
sales tax. He said that a draft National Food Processing Bill
and a draft Processed Food Development Bill have been formulated,
which will also take into account problems faced by the industry
on account of multiplicity of taxes, regulation and standards.
Those who participated
in this interactive session were from Nestle Food, Tetrapak, Buiscuits
Manufacturers Association, Poultry Industries Association, All
India Food Processors Association, Dehydrated Food and Vegetable
Industries, Alcoholic Beverages Industries, Parle Group, Modi
Vanaspati, Meat Industries Association, Soft Drink Manufacturers
Association, Ice-Cream Manufacturers Association and Vegetable
Industry.
