The Centre would need to usher in strong measures to provide the much-needed impetus to the growth of the food processing sector by effecting an uniformity in the tax structure and bring down the prevailing high levies.
This was stated by Arabind Das, chief operating officer, Godrej Tyson Foods, who added that the government would also need to push up investments into technology in the farm sector, food processing and the modernisation of its cold chain logistics infrastructure.
He stated that the food sector, which is marred by spiralling inflation and fuel prices, is also facing the paucity of state-of-the-art technology, which could create efficiency in farming operations, sustain the product shelf-life and increase production volumes.
“The Indian agriculture and food processing industries have been putting up with daunting challenges. Now the government would need to take tough decisions to come out with a policy not just to rationalise and review the value-added tax (VAT) structure, which is grossly inconsistent in many states, but also abolish the hygiene tax for frozen foods,” Das added.
“The VAT for frozen foods, which are expensive to transport, is levied at 10-15 per cent in some states. Five per cent hygiene tax is levied on packaged food products, including poultry products, was deterring the growth prospects of the food processing industry,” he said.
Access to safe and quality packaged foods could be inaccessible, as the hygiene tax dissuaded investments.
Godrej Tyson, one of the largest players in the packaged poultry meat sector (with its Real Good chicken brand), has been campaigning that the only way to correct protein imbalances was to include chicken in the diet of non-vegetarian palates in a phase of persistent food inflation.
Although the company is engaged in the highest quality standards of product development, it sees the need to abolish this hygiene tax and make food safety mandatory.
“The Food Safety and Standards Authority of India (FSSAI) needs to embark on safe food practices training for both the processing industry including poultry and consumers. This is because of the 1.2-billion Indian population, about 67 per cent are non-vegetarian. A diet-wise study on 20 meals revealed that of this, about 25 per cent (or seven meals) were non-vegetarian,” said Sushil Sawant, associate vice-president, India operations, Godrej Tyson Foods.
“As a premium brand in the poultry space, Godrej Tyson has only increased its prices by six percent as against the 61 per cent rise in vegetable prices in November 2013. We have been using vegetables as an analogy to compare the cost of chicken. The government needs to have a two-pronged strategy to address tax issues and boost investment into technology for farm, food processing and cold chain infrastructure,” said Das.