Budget 2019

A fresh boost for food processing sector

Our Bureaus New Delhi/Mumbai | Updated on January 20, 2018 Published on February 29, 2016

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Move seen as encouraging entry of foreign players, bring in more investments and better price for farmers

In a bid to bring in more efficiency in the farm sector, it has been proposed to allow 100 per cent foreign direct investment (FDI) through the Foreign Investment Promotion Board route in marketing of food products produced and manufactured in India. The government claims this move will ensure that the FDI policy also addresses the requirements of farmers as well as the food processing industry, citing that a lot of fruits and vegetables grown by farmers do not fetch the right price or fail to reach the market in time.

To promote use of refrigerated containers, the government has also reduced basic customs duty on such containers to 5 per cent from the existing 10 per cent, and excise duty to 6 per cent from the current 12.5 per cent. This will help boost setting up cold chains needed for efficient supply chains in the country, said the Finance Minister.

Piruz Khambatta, Chairman and Managing Director, Rasna, and Chairman, CII-National Committee on Food Processing, said, “While FDI in food manufacturing has always been there, FDI in marketing will be a boost for retail companies like us and even international majors like Walmart. It is going to be an indirect entry of FDI for food retail companies which had been opposed by the BJP in the past. It will boost agriculture and supply chain efficiencies of food retail companies.”

The move to allow FDI in marketing of fruits and vegetables will also help companies realise their true value.

Sumit Saran, Head of International Foods, Future Consumer Enterprise, said, “The Centre is finally applying the Make in India policy on food and there will now be more sourcing from the country.’’

Yogesh Bellani, CEO, FieldFresh Foods, said, “I believe this will help farmers get the right kind of remuneration, reduce wastage of produce and help consumers get good quality products. This will help to bring in new techniques that will lead to efficiencies in the supply chains.”

Industry estimates say only about 10-11 per cent of fruits and vegetables grown in the country actually get used by the food processing industry.

However, Dhanraj Bhagat, Partner at Grant Thornton India LLP, said more clarity was needed on whether this would be permitted for retail or only wholesale marketing. “In the event that this applies to retail marketing, it could be a prelude to opening up of multi-brand retail, beginning with the food sector. The opening up of this sector for food would be beneficial to the farmer, which is one of the key directions in this Budget,” he added.

Published on February 29, 2016
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