Saturday, March 20, 2010


Every year business sector submits a "wish list" containing suggestions for the Finance Ministry to consider for improving the business potential further through financial policies which need to be included in the annual budget presented to the Parliament. Though food processing industry associations of various hues also go through this motion, nothing worth while happens because of the short sighted vision of successive governments. This year, a new body representing a strong segment of food processors, had raised a fundamental issue regarding what constitutes food processing before deciding about any supportive policies. Here is a take on that.

"AFTPAI had suggested in its memorandum that the government should define food processing industry with a broader perspective and all allied players like food processing and packaging machinery and packaging materials, and raw materials for food processing, and other service providers should also be included in it. There should be exemption in import duties of machinery and raw materials for a certain period and 100 per cent tax holiday from state and central governments till the units get sustained development".

The fundamental principle that higher taxes by the governments would make processed products costlier which in turn might exclude more and more people from the clientele of the industry, never seems to be bothering the policy makers. By agreeing for a tax holiday, the loss from taxes may be very negligible and the argument that such forgone revenue would be less than the cost involved in collecting them does not seem to receive the attention it deserves! If collecting taxes at "any cost" from the hard pressed citizens of this country, for subsidizing many unproductive and ill conceived programs, is the motto of the governments, there is no salvation for Indian Food Industry in the foreseeable future!

No comments: