The Goods and Services Tax (GST) will prove to be death knell for small players in the food processing sector. This was stated by Subodh Jindal, president, All India Food Processors’ Association (AIFPA) on the sidelines of the Associated Chambers of Commerce and Industry of India’s (ASSOCHAM) 12th Global FAD, which took place in Ahmedabad recently and focussed on food processing, agribusiness and dairy.
While the players said that the rules of the game had now tilted completely in favour of large multinational corporations (MNCs), Jindal said that the new tax regime had improved the liquidity situation for large companies, but worsened the situation for the smaller ones.
“There was no tax refund on service tax on consultancy services during the previous regime. The large companies take such services on a routine basis. Now, clubbing all the taxes under one roof has enabled them to get a refund of GST paid on such services. We have difficulties in getting GST refund on exports,” the AIFPA chief added.
Under GST, all players with an annual turnover of Rs 1.5 crore need to get themselves registered with the tax authorities. While earlier they were filing quarterly returns, now they have to file monthly returns, making compliance costlier and complex.
Jindal alleged that the new regime had been borrowed blindly from western countries, where large corporations are the norm, while in India, small industries are a norm. There are lakhs of small and medium enterprises (SMEs) in the sector providing jobs to locals in remote places.
“If these are wiped out, there will be huge amount of job losses,” he warned, adding, “Small players cannot compete with large MNCs in the production of grain flours because of economies of scale. Large players can procure raw materials at a lower cost. They have better systems for quality control.”
Suraj Savalia, chairman and managing director, Patson Group of Companies, which manufacture and export processed food items said that large MNCs have experts for all segments associated with business, while in small companies, the owner looks after all the managerial functions.
“The new regime has tilted the balance in favour of large MNCs. If proper safeguards are not given to local SMEs, they will be wiped out,” he added.
Mega food park in Surat to become operational by November
The mega food park in Mangrol, Surat will become operational by November. This was stated by Ashish Doshi, director, Gujarat Agro Infrastructure Mega Food Park Private Ltd, recently.
“The park will enable processing of horticultural crops. South Gujarat is known for its fruits. Moreover, it will provide rail, road and port connectivity to transport finished products within the country and for exports. The facility will play a major role in increasing the incomes of farmers in the neighbouring tribal areas,” he added.