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INTERVIEW

“Govt can help direct salary transfer, GST rates should be slashed”
Monday, 27 July, 2020, 08 : 00 AM [IST]
With the economy going through a rough patch due to the Covid-19 pandemic, the industry is using virtual ways to mitigate the challenge. In tune with this, industry chamber CII (Confederation of Indian Industries) is organising a virtual expo, CII Food and Bev Tech Expo. In ths regard, Piruz Khambhatta, chairman and MD, Rasna Pvt. Ltd, and chairman, CII Food and Bev Tech Expo, in a telephonic conversation with Ashwani Maindola highlighted aspects of the virtual expo, subjects challenging the food industry and way forward. Excerpts:

How has the competitive landscape of the industry changed due to Covid-19?
For certain food categories, which are like staples, the impact is positive but with respect to the discretionary items, there is a challenge as consumers only purchased essentials in the backdrop of the pandemic. Secondly any products, which are even remotely talking of health, for example health drinks, and especially Ayurvedic foods like chyawanprash and honey, have seen a spike in sales of upto 80%.
However I think this is occasional as sometimes people overdo certain things. So they have to balance their food intake and preferences. Also now people have started realising that Covid is becoming a way of life and things will improve as we go forward.

How CII is incorporating new initiatives for the food sector and organising exhibitions?
CII Food and Bev Tech Expo is a completely new virtual avatar of FoodPro and Food & Bev Tech and will provide a platform for companies to market and promote their products and services in an increasingly competitive market to food and beverage industry professionals and related. The expo aims to reach out to international and domestic food and beverage industry professionals, CEOs & top executives from food sector, procurement heads, R&D professionals, processed food manufacturers, top officials from government and regulatory agencies, distributors and importers, supermarket chains, hotels, restaurants, airlines, railways, food service providers and also interact with buyers and delegates on beneficial innovations.

Virtual B2B Pavilion is a platform for buyers to have a virtual interaction exclusively with the exhibitors at iFPT 2020, virtual instant meetings over video call, multiple topic-based and industry-based conferences to be organised during three months of exhibition.

The major conference is scheduled on August 20, 2020, in collaboration with CII FACE and MoFPI. The conclave would be addressed by the captains of the food and beverage industry to discuss the issues and challenges faced by the sector. The interactive sessions would focus on changing the games - new strategy of marketing, food safety and regulations, India- the food factory of the world: Exploring new horizons, Farm to fork: the paradigm shift and building financial capacities in the food chain.

Who are the major exhibitors at the show?
Leading national and international companies participating include HRS Process, Frick India, Universal Robots, Tata Consumer Products, Forbes Marshall, Buchi India, KHS Machinery, Sealed Air, Nichrome, Fowler Westrup, MTR Foods, SSP Ltd, Standard Packaging Ltd, Rinac India, USP Packaging to name a few.

The consumers are now inclined towards healthier products, How does the food industry look at this - a challenge or opportunity? How such expos can help?
People want to check their calories, they are becoming more health-conscious. And because of the pandemic we will see a big push towards healthier products having less salt, sugar and fat. So I see better value-added, healthier food alternatives, becoming the norm and for that such exhibitions are very important as you need to meet the people who understand how we can do innovation and make changes without disturbing the texture and flavour of the products but yet are more value-added and healthier. Also industry on its own should start reducing salt, sugar and fats from products.


Certain sections of the industry are still sceptical about the future. Comment.
As per my understanding, we are back to around 80-90% of pre-Covid capacity. Further there are expectations of a vaccine coming by November, which is expected to improve the situation. However, worries are there with respect to consumption which is less. Secondly, there is a challenge to get people to work in factories. Supply chain and transportation are also major issues.

The governmemt has announced a fiscal stimulus package for the economy. How do you see its impact on the economy?
We have been studying the stimulus given in other countries. There the stimulus is directly given to companies, which can be passed down to employees. India has only given loan waivers to access the interest waivers. There is no direct benefit, no taxation benefit or paycheck protection given and in absence of all these, the industry is left on its own (for operations).

As regards to food processing there have been some announcements for example the cluster scheme was announced. The Essential Commodities Act won’t apply to processing industries. APMC Act is abolished, which means the industry can buy directly from farmers.

Also there was an announcement made for agri infrastructure on which you can get interest subvention also. These are good steps in the right direction and it appears the government was proactive in the last 3-4 months with respect to agriculture and food processing. I won’t relate it to Covid but definitely they have taken this opportunity to strengthen the sector.

The big thing is that more investment is flowing into agri and rural infrastructure space and most of the schemes are for inviting more investment.

The definition of MSMEs was also changed. Would it make any difference in development of the MSME sector?
Essentially what they have done is increase the turnover limit and with Rs 250 crore turnover, a unit can now be classified as an MSME. But that is not a special benefit. For example, if you go to apply for a loan for a MSME unit, the rate of interest is higher at around 9-10% whereas a big corporate can borrow at around 7-8% rate.

Secondly in terms of government procurement, MSMEs do not get much benefit.

Do you also see any impact of the call for ‘Atmanirbhar Bharat’ on the food sector?
There are people who now prefer to buy Indian products and support Indian industry. Certainly the Make in India, Made in India movement is gaining ground. The Atmanirbhar Bharat is also an indication from the government that we should reduce our imports. This will result in import substitution in a big way. This is very much required since we have a trade imbalance and our exports are very low compared to imports. So, more and more trade substitution will happen, as we grow our manufacturing capacities over a longer period of time. We should utilise this time to deep dive into what went wrong in our approach. This is quite an opportune time as foreign companies are also looking up to India for setting up plants for the world.

 
But do you think government has done enough to attract companies to make India a manufacturing hub?
The biggest announcement was made about the reduction in income tax (for corporates) now at 22%. Following this, a lot of foreign companies got attracted towards India. FDI has opened up in a lot of categories, which has also attracted a lot of investments. I also see a lot many steps coming post-announcement of the Atmanirbhar Bharat.

What more policy interventions are required from the government to mitigate the issues faced by the industry due to Covid-19?
Quite a few things the government can do. First, the government must come out with some relief in the form of paycheck protection. Certain fiscal measures are announced for the rural poor but nothing has been done for the urban poor.

The government can help in direct salary pay transfer or paycheck protection for the people who are not able to join their services because of the restrictions imposed due to pandemic, like the hospitality industry, retailers at shopping malls etc.

Secondly, GST rates should be slashed and industry must be allowed to use the input credit. Like for example many of the companies have input credits lined up but are unable to use it.  

Thirdly, for export in particular, the costs have gone up exponentially by more than 50%. So the MEIS scheme, which is about reimbursement of certain cost factors like infrastructure, has been reduced from 7 to 5%. Ideally it should be between 7 and 9%.
 
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