The Hindu Business Line : Lack of common VAT rates hits food processing industry

Mr Subodh Kant Sahai, Union Minister for Food Processing Industries, and Mr Ness Wadia, Chairman, FICCI Maharashtra State Council, at a ‘Foodworld India 2008’ seminar in Mumbai on Thursday. —

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Mumbai, Nov. 13 An investment of Rs 1 lakh core was required in the food processing sector if the government has to achieve the growth target of Rs 4.40 lakh crore by 2015.

Speaking at ‘Foodworld India 2008’ – a global convention on food business and industry organised by Federation of Indian Chambers of Commerce and Industries, Mr Subodh Kant Sahai, Minister of State for Food Processing Industries, said despite restriction on foreign investments, the industry has registered a growth rate of over 15 per cent last fiscal.

“The government measures to attract foreign investment have yielded positive results and we have set a growth target of Rs 4.40 lakh crore by 2015,” he added.

The different rates of value added tax (VAT) imposed by State governments are hampering the growth of the industry. For instance, the Kerala Government charges 20 per cent VAT on processed juice, he said and added that the Central Government was pursuing the State governments to impose lowest possible VAT on processed foods.

The Government is ready to offer a grant of Rs 10 crore for projects providing backward integration for food processing units and Rs 50 crore to modernise meat processing units.

The installed capacity of fruits and vegetable processing industries has increased from 11 lakh tonnes in 1993 to Rs 26 lakh tonnes in the beginning of 2008. Production of fruits and vegetable in 2004-05 was 492.94 lakh tonnes which has increased to 1,014 lakh tonnes in 2008. The utilisation of fruits and vegetable processing was estimated to be about 2.20 per cent of the total production, he said.

Mr Ashok Sinha, Secretary, Ministry of Food Processing Industries, said the government vision was to grow food processing industry from 7 per cent to 20 per cent and achieve a domestic market share of 35 per cent from present 20 per cent and double the international markets share to 3 per cent.

“The remaining half of the current Five-Year Plan will show tremendous improvements as the government corrects its past mistake,” he said.

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