The Hindu Business Line : Pepsi's Nooyi makes a pitch for scrapping SED

WITH just a fortnight to go for the Budget, President, Chief Financial Officer and member of the Board of Directors of PepsiCo Inc, Ms Indra Nooyi, was in the Capital paying a `courtesy call' on the Finance Minister, Mr Yashwant Sinha.

In an obvious attempt to gain more reliefs for the soft drinks sector in terms of taxes - a sector in which the cola major is a substantial stakeholder - she has urged the Government to abolish the 16 per cent Special Excise Duty (SED) levied on aerated soft drinks, in its forthcoming budget.

In a representation to the Government recently, Pepsico had sought the abolition of SED on aerated soft drinks and wanted the item to be subjected to Cenvat on par with other processed foods and beverages. Ms Nooyi's visit is expected to reinforce the demand.

Last year's Budget had bought some reprieve to the segment when the Government reduced the overall excise duty to 32 per cent comprising 16 per cent Cenvat and 16 per cent SED. Prior to 2001-02, soft drinks attracted a 40 per cent excise duty levy, comprising a 16 per cent Cenvat and a 24 per cent SED.

The company believes that high domestic taxation is one of the main reasons for the slow growth of the soft drinks market in the country. In fact, Ms Nooyi felt that it ( meaning the company and the sector) was being singled out for discrimination in the form of extraordinarily high tariffs in comparison to other mass consumption segments such as tea and biscuits. In some of the States such as Karnataka, the company has to contend with an additional multi-point 4 per cent sales tax. "And this is despite PepsiCo employing 60,000 people, exporting over Rs 300 crore worth products and being good citizen," she said.

Pepsico also seems upset with the postponement of the State VAT reform process which was to have been set in motion this April. "It would have simplified things," says the company.

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