In view of the consistent performance of the food processing industry in recent times, the Ministry of Food Processing Industries (MoFPI) is mulling extending fiscal benefits to provide a further boost to the sector. The food processing units in India are thus enthused at the prospect of getting tax holidays or tax breaks in the near term.
Bucking the trend
Notably, even at a time when most sectors are bleeding due to the onslaught of global recessionary winds, the food processing sector has been growing at a steady pace. The sector has registered a 15% growth while the FMCG segment has expanded at the rate of 20% in 2008-09.
Dharmesh Kodnani, Director, RK Food Products, a pickle manufacturing company in Surat, says, “The food processing sector has recorded double digit growth even at a difficult time like this. It is perhaps the only sector that has not resorted to mass lay offs and aggressive cost cutting in the wake of the economic downturn. The government should therefore provide some form of tax exemption for food and beverage (F&B) players.”
The food processing sector also plays an important role in supporting the agriculture sector. According to industry experts, the food processing industry gives farmers the opportunity to undertake demand driven farming. This, in turn, enables them to mitigate losses and sustain profitability.
Tax breaks on R&D investments
“Considering the crucial role that the food processing industry plays in supporting allied sectors such as dairy and agriculture, MoFPI is already contemplating providing tax holidays to the sector. The government should provide 100% tax breaks for R&D investments in the sector,” says Syed Tanzil, proprietor of a Bengaluru-based food manufacturing company, Sairy Food Products Pvt Ltd.
Motivated by the steady growth rate clocked by the industry in the past few months, MoFPI is optimistic of achieving the Rs 1 lakh crore mark for investment in the food processing sector within the next 5 years.
Industry players opine that although the food processing segment has notched up impressive growth in 2008-09, poor infrastructure and a complex tax structure are some key issues that need to be addressed to maintain this momentum.
Shubhomita Bose |
