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Union Budget: Food processing industry for status at par with agriculture
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Wednesday, 26 June, 2019, 08 : 00 AM [IST]
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Ashwani Maindola, New Delhi
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The full Budget for fiscal 2019-20 shall be tabled in the Lok Sabha on July 5, 2019, and it is expected that in line with the recent address by Prime Minister Narendra Modi at Niti Ayog’s Council Meet, where he spoke of value addition and enhancement in food processing capabilities to add up to farmers’ income, the Union Budget shall make food processors smile.
Earlier, the interim Budget before the General Elections 2019 had put food processing industry as one of the 10 focus points for the government in the next 10 years for ensuring growth of Indian economy. The expectations from the food processing industries have risen since then.
There are many expectations that need to be addressed by Finance Minister Nirmala Sitharaman. These include the contentious issue of rates of GST on food processing products, and particularly, primary processing. However, a direct mention of this is unlikely in the Budget speech and a mention can lead to GST Council review into the rates.
Converting fruit into pulp still attracts 12% GST. The demand for putting pulps, purees, pastes of fruits & vegetables at 0% GST is still pending with the finance ministry along with 0% tax for dried/dehydrated/frozen fruits, vegetables, herbs, spices.
Industry experts say that all preparations of fruits, vegetables, herbs, spices, milk, cereals, honey or their combination including, pickles, murabbas, sauces, chutneys, fruit & vegetable juices/squashes/sharbats, traditional foods, cooking oils, instant food mixes, ready-to-serve/-eat foods, snack foods, namkeens, mishthan, biscuits should be placed at not more than 5% GST. The industry expects the Finance Minister to look upon this issue and address it.
Meanwhile, CII (Confederation of Indian Industries), in its budgetary memorandum has sought for allowing accelerated depreciation to equipment and machinery used in all segments of the food processing industry and not only the flour mill rollers.
It suggested that accelerated depreciation i.e., 60% on computers should be restored given the pace at which technology is becoming obsolete. And the reduction made in depreciation rates should be reviewed in the light of global trend in tax reforms where investment in new assets is encouraged through higher deductions.
CII’s memorandum
It is suggested to extend the infrastructure projects benefit to food parks including Mega Food Parks.
It is suggested to include all prepared and value addition of fruits and vegetables under Section 80IB (11A) to avoid unnecessary litigations.
It is suggested to make available this benefit of Section 80IB (11A) to existing units as well, which are going in for substantial expansion (over 50%) of the capacity.
Implementation of the withdrawal of the deduction under Sections 80IA/ 80IB/ 80IAB as announced in the Union Budget 2016-17 should be reviewed.
And the food processing industry expects that food processing should be given a status at par with agriculture.
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