The High Taxes on Branded Food Products

The food processing industry has asked the government to give an export incentive of 20% under the Remission of Duties or Taxes on Export Product (RoDTEP) scheme. It has also asked for the rationalisation of the Goods and Services Tax (GST) on processed fruits, vegetables and essential daily-need food products to save wastage of agri-produce.

“The food industry is under severe economic pressure owing to uncertainties, perishability of food products and sudden price spikes in agri commodities. To increase the processing level of fruits and vegetables from the current 10% to 80% as in many developed countries and boost export, the news scheme – RoDTEP – should be introduced urgently as exports are losing viability,” said All India Food Processors’ Association president Subodh Jindal.He said that they have also requested the government that the new scheme should provide benefits similar to the Merchandise Exports from India Scheme (MEIS) scheme at 20% and not reduce the incentive on exports.

Jindal said that this will strengthen the farm economy and realise the objectives of doubling farmers’ income and the Make in India policy.

With rising food prices causing substantial negative socioeconomic effect and political unrest, Jindal said that there was a need to lower the GST. “It is an accepted global practice that food products are either exempt from tax or chargeable at a minimal rate. We have asked the government to keep pulps of fruits, vegetables and preserved fruits in salt at 0% GST. Similarly, duties of dailyneed food products from pickles, juices, butter, biscuits should be placed at 5% GST from the current 12-18%,” he said adding that consumption in the country has to be increased to benefit farmers.

The high taxes on branded food products has led to an increase sale of food in loose form which is unsafe and unhealthy. This has also reduced consumption of packaged food, said Jindal.

The association has also recommended that new units be provided with a five-year tax holiday irrespective of the location of the unit.

“The industry plays an important role in saving perishable agri produce and provides value addition. A tax holiday will ensure that entrepreneurs can set up units at their locations and do not have to trans-locate themselves to distant places which incurs high overheads and logistics expenses,” said Jindal.

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