Sahai favours zero sales tax on perishables Urges 4 pc levy on other food items; issue raised with Finance Ministry

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ALL EARS TO SUGGESTIONS?: Mr Y.C. Deveshwar, President, CII, with Mr Subodh Kant Sahai, Union Minister of State for Food Processing Industries, at the Foodpro 2005 Bijoy Ghosh
ALL EARS TO SUGGESTIONS?: Mr Y.C. Deveshwar, President, CII, with Mr Subodh Kant Sahai, Union Minister of State for Food Processing Industries, at the Foodpro 2005 Bijoy Ghosh

Our Bureau

Chennai, Nov. 14

THE Ministry of Food Processing Industry favours rationalisation of tax on processed food.

The Union Minister of State for Food Processing Industry, Mr Subodh Kant Sahai, said the issue has been raised with the Finance Ministry and the State Governments. "There should be zero sales tax on perishables and 4 per cent on other food items," he said. The Minister was inaugurating a two-day conference on "From the Farm Gate to the Dinner plate - the way forward for Indian Food Business" organised as part of Foodpro 2005, the sixth edition of CII's biennial conference on food processing.

Stating that his Ministry has prepared a vision document for guiding food processing policy, he said the Indian food processing industry was set for a major thrust. The stimulant for the processed foods was the rapid economic growth, which translated into increased disposable income of the huge urban and rural middle class population. The average Indian spent 52 per cent of his income on food, which meant a larger proportion of the increased income would be set aside for processed foods.

Pre- and post-harvest management was another crucial issue, he said. It was important to increase productivity by creating suitable infrastructure to avoid wastage and inefficiencies in the process.

Mr Sahai said food safety was another aspect.

Technical barriers such as difference in health and sanitary regulations could complicate or restrict bilateral trade in agricultural product, food and beverages.He said the multiplicity of food laws and agencies was a major impediment for growth of processed food in the country. The Government had introduced in Parliament, the Food Safety and Standards Bill 2005, which was now before the Parliamentary Standing Committee.

He said the Government would offer a subsidy of Rs 100 crore for investors in mega food parks. He urged the State Governments to amend the Agricultural Produce Market Committee (APMC) Act and introduce contract farming to ensure that the farmers and consumers got the benefit.

He also asked the Confederation of Indian Industry (CII) to come up with a blueprint for the food processing industry to compete in the domestic and international markets.

Mr Y.C. Deveshwar, President, CII, in his keynote address, said a viable strategy for this sector was to expand the processed food market, to reduce waste and extend the shelf life of agricultural products as well as ensuring food safety.

The sector should attract investment of about Rs 1,50,000 crore over the next 10 years. He said the Panning Commission has estimated that 10 million jobs need to be created annually over the next decade.

Quoting estimates of Rabobank, he said the food-processing sector could contribute towards generating at least 9 million jobs during this period.

At the consumer end, the acceptance of processed food represented the biggest challenge. There was a need to systematically build awareness of the advantage of processed food. Affordability was, of course, a key factor in the acceptance of processed foods, Mr Deveshwar said.

At a recent meeting chaired by the Prime Minister, CII had made some recommendations. Mr Deveshwar said CII had pointed out that there should be reform in the States' APMC Acts. This was critical in ensuring closer market linkages. The other points included the need to enact an integrated food law aligned with Codex Alimentarius (the FAO and WHO food standards) and establish an independent regulator to ensure food safety. The Government should also introduce certification-zoning systems such as pesticide free zones, organic production zones and disease free zone for higher export yields.

(This article was published in the Business Line print edition dated November 15, 2005)
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