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BAKERY

Biscuit makers demand GST rate reduction from 18% to either 5% or 12%
Thursday, 18 January, 2018, 08 : 00 AM [IST]
Ashwani Maindola, New Delhi
Biscuit manufacturers demanded that the Goods and Services Tax Council lower the tax rates to either of the two lowest slabs (i e either five per cent or 12 per cent) under the Goods and Service Tax (GST) regime. Currently, biscuits attract 18 per cent GST.
 
Claiming that the higher tax rate of 18 per cent had pushed the industry to the brink of negative growth, wherein the industry was not able to attract fresh investment, B P Agarwal, president, Indian Biscuit Manufacturers’ Association (IBMA), said that the industry was fighting a battle for survival.

He added that it had incurred a loss amounting to approximately Rs 2,000 crore in the past six months due to GST rates. “We have seen a fall of 10-15 per cent in production in the past six months following the GST rollout,” Agarwal stated.

“This has put great pressure on the Indian biscuit industry, which is estimated to be worth approximately Rs 30,000 crore. And if the GST rates remain unchanged, we will be forced to do a price hike,” he adding, stating that there would not be any alternate way to survive.
 
Agarwal added that the viability of the industry was with the five and 12 per cent rates, and the IBMA urged the GST Council to reconsider the rates for the biscuit manufacturers.
 
The association, at a press meet here, stated that biscuit manufacturers, especially in the small- and medium enterprise (SME) sector, have been hit the hardest because of the unjustified imposition of 18 per cent GST.

The growth in the industry has started to stagnate since the imposition of 18 per cent GST, and there is an urgent need to bring down the GST rate to 12 per cent.

Biscuits are a mass-consumption food product which are hygienically processed. Although the consumers of biscuit belong predominantly to the poorer segments, biscuits have been mistakenly understood to be a premium product, preferred for consumption by the affluent society. Hence, biscuits has been placed in the higher tax slab, denying them a level playing field vis-à-vis similar products.
 
“Biscuits are a common product of consumption, eaten by everyone, be it a rickshaw puller or a low-wage labourer in search of hygiene, energy and nutrition at a low cost,” said Agarwal.

“Similar food products, such as sweets, processed dry fruits and tea (all of which are in the five per cent slab) and juice, namkeen, jam, jelly, noodles, pasta and tomato ketchup (all of which are in the 12 per cent slab) are subject to lower GST rates, while GST at 18 per cent is imposed on biscuits,” he added.

“We urge the government to review their decision of imposing 18 per cent GST on the biscuit industry. There is an urgent need to bring down the GST rate to 12 per cent to avoid stagnation in the growth of the industry,” Agarwal added.   
 
Anoop Bector, managing director, Cremica Biscuits, added, “Biscuits are made of agricultural products like wheat, vegetable oil, sugar and milk and a higher production of biscuits would benefit a larger number of farmers.”
“Biscuits are highly labour-intensive, and stagnation in growth in production would adversely affect the industry, which is estimated to provide employment to a workforce of about 7.5 lakh directly and over 30 lakh persons indirectly in marketing, retail network, transport, etc.,” he added.
 
“The biscuit industry is subject to escalations in the cost of inputs or ingredients due to the higher cost of transportation, fuel, packaging, wages, etc.,” said Pankaj Agarwal, chief executive officer, Bonn Biscuits.
 
IBMA said that the association has already submitted a detailed representation to prime minister Narendra Modi, finance minister Arun Jaitley, minister for food processing industries Harsimrat Kaur Badal and the state finance ministers, who are members of the GST Council.
 
The association has also sought intervention and support from Members of Parliament from various political parties for favourable consideration of the levy of GST at lower slab of 12 per cent.

“Lowering the rate of GST on biscuits would result in higher production and would not affect revenue to the Central and state governments,” said Deepak Bherwani, director, Krown Biscuits.
 
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