NEW DELHI: In its pre-budget recommendation to the government, the Trade Promotion Council of India (TPCI) has sought a flat five per cent Goods and Services Tax (GST) on all processed food items and a separate fund for R&D as well as testing labs for meeting global standards. According to TPCI founder-chairman Mohit Singla, non-tariff barriers in the food sector are impacting the industry and trade. “Therefore, Indian texting facilities should be made at par globally with safe standards, so that it is accepted worldwide.
Also, to meet the new standards such as Codex Alimentarius standard of the EU will require a lot of investment,” he added. For small and medium companies, the marketing of products in global shelves comes with a huge cost, largely still unaffordable. “One way could be to provide concessional credit to meet the high cost; or tax deduction on expenditure incurred on marketing of brands abroad, etc. is the need of time to scale Indian products to the global shelf,” the trade body said in its suggestion.
Other demands of the industry include tax holiday for five years for companies investing in infrastructure, including digital infrastructure; for existing projects, capital investment to be extended up to 50 per cent accelerated depreciation to encourage modernisation; competitive import tariffs over five years, with lowest or nil slab on inputs or raw materials; and input tax credit on food sales as an added incentive.
“Some of the items like - chewing gum and white chocolate, fat and oil, cocoa powder, waffles and wafers coated with or containing chocolate, attract 28 per cent GST. Similarly, products such as condensed milk, refined sugar, sugar cubes, all preparations of cereals, flour, starch or milk for infant use and sold retail, pasta, noodles, etc. attracts 18 per cent GST, which leads to the increasing the overall cost of the product,” noted Vivek Agarwal of Capital Ventures.
Major demands from the sector include:
- Tax holiday for five years for companies investing in infrastructure, including digital infrastructure
- For existing projects, capital investment to be extended up to 50 per cent accelerated depreciation to encourage modernisation
- Competitive import tariffs over five years, with lowest or nil slab on inputs or raw materials