The Hindu Business Line : Biscuit makers seek uniform exemption

MR B. P. AGARWALA (right), President, Indian Biscuits Manufacturers' Association, and Mr P. Mohan Das, Secretary General, addressing a press conference in the Capital on Wednesday. — Ramesh Sharma

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New Delhi March 7 Biscuit makers on Wednesday asked for a blanket relief from excise duty for the entire sector, similar to the one granted to other food mixes in the Union Budget. It felt that "the Budget proposal (of differential exemption) will help only a few large biscuit manufacturers in the country".

The differential exemption would "negate the avowed objective of the Government to create an enabling environment" for the small-scale biscuit manufacturers to grow, Indian Biscuit Manufacturers' Association (IBMA) President Mr B.P. Agarwala said.

The Finance Minister, Mr P. Chidambaram, had in the Budget proposed full exemption from excise duty for biscuits selling at Rs 50 per kg or less while retaining the 8 per cent excise on the remaining categories of the Rs 4,000-crore industry.

The proposal, according to the biscuit makers, is likely to create administrative problems for small and medium enterprises (SMEs) in the sector. "We have been asked by the authorities to keep different sets of accounts for excisable and non-excisable biscuits which will ultimately result in higher cost burden on us," said Mr Agarwala, who is also the Chairman and Managing Director of Priyagold.

The excise proposal would benefit only glucose biscuits manufactured by the three major players in the sector as only they can afford to sell their products below Rs 50 per kg, he added.

In the Rs 4,000-crore biscuit market, glucose biscuits account for Rs 2,500 crore and 95 per cent of these are manufactured by Britannia, Parley and ITC, he said

According to Mr Agarwala, there are around 125 SMEs spread across the country that pay excise duty. The SMEs have only single manufacturing units and produce mixed varieties of biscuits, which have MRP above Rs 50 per kg. Though they constitute only 10 per cent of the country's biscuit production, they provide direct and indirect employment to over 1.2 lakh people. The annual production turnover of the 125 SME units is around Rs 1,200 crore and the central excise collection from these units is only Rs 50 crore as against the total collection of Rs 200 crore from the industry.

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