The Union Budget 2017 is almost upon us. Even as the food industry grapples with the effects of demonetization, they hope for sops and incentives that will make up for the losses they incurred post the note ban. Here is a wish list of industry biggies…
Sanjana Desai, Head – Business Development, Mother’s Recipe: The FMCG sector, which saw marginal improvement in the beginning of the year 2016, is again reeling under pressure – marked by low volume growth due to demonetisation impact, especially in the rural area.
With the upcoming union budget, the industry expects government to provide necessary thrust to the agri-based Industry by introducing reforms promoting growth to lift the overall consumer sentiment and drive demand. Apart from this we expect support from the government in providing export benefits on food processing along with revisiting the service- tax structure for marketing and advertising done for international markets (outside India).
Also with GST scheduled to be rolled out from July 1st along with sufficient remonetisation we anticipate revival in demand providing necessary boost to the overall FMCG sector & especially to the organised food-processing national brands like Mother’s Recipe and others.
“A great move by our Prime Minister for initiating and taking the bold step of demonetization to eradicate black money in the economy. It is still too early to predict how successful it has been but it would be safe to say that the move took every by a storm. Talking about this year’s budget, we will expect a lot of opportunities from our Finance Minister to settle the economy and help everyone. I feel the motive behind demonetization was to get everybody into the tax bracket and subsequently bringing the tax down so that the people are encouraged to go through the process of taking the route of eradicating black money. Each and every transaction should be monitored and taxed. Having said that the government will also have to give a relaxation in the slab of taxes, the percentage has to come down so that people are encouraged to pay taxes.”
“The Government’s focus is on implementation of cashless economy which supports long-term economic growth. All eyes are now on the Union Budget for clarity on taxation policy and regulatory issues, and norms for support of cashless economy. We hope to see supportive policies for the Dairy Sector.
1. Boost Investment in Dairy Sector – Dairying in India, is not just an economic activity. It is an integral part of our society, our culture. No other industry can claim to touch lives of millions of farmers; more than half of them landless. Given market access, remunerative prices to farmers, dairy can become a potent tool for equitable growth and income distribution. Genuine impetus to the dairy sector leading to its growth will lead to that elusive balanced and inclusive growth where our villages progress alongside urban India. Given, over 40 per cent of population of India is vegetarian, milk is now the largest crop of India and milk products are the primary source of protein for nutritional development of population. It is reasonable to assign a status of agriculture products should be assigned to milk products. Therefore bringing milk and milk products to NIL under GST is warranted.
2. Create Alternate Livelihood for Farmers – There have been some external reports stating farmers difficulty to see Rabi crops due to the unavailability of new currency notes in sufficient numbers. If the reports that large areas of agricultural land have remained unsown are true, food inflation can become a challenge. With unpredictable monsoon season, we shall look for alternate source of earnings for farmers. Keeping this in mind, private dairy sector should be provided with additional incentives for ease of farmers.
3. Boost Dairy Growth Through Private Sector – India is the largest producer of milk. The Indian dairy industry presently contributes about 15 per cent to the total milk production of the world. Dairy Industry in India presents a plethora of opportunities. Earlier, dairy industry was dominated by co-operatives but since last 20 years with the entry of private players, we have seen a sharp rise in demand for milk and milk products. The private sector having overtaken the cooperatives today. The overall industry is underdeveloped and extremely fragmented. Private sector is now willing to further speed-up its investment in Indian dairy industry but an extremely poor state of farmers and no incentive for private dairy to develop farmers is becoming a real hurdle. A subsidy on purchase of milk from farmers under cashless conditions shall be initiated to bring double advantage in terms of supporting farmers from vagaries of monsoon and also bringing economy to cashless.
4. Develop Infrastructure – To maintain quality, longer shelf life and to keep it fit for human consumption, proper packaging of milk products is essential. It is therefore be promoted to investment in cold chain infrastructure and support in terms of subsidy and tax relief be granted. Packing of milk products should also be construed as processing for preservation and the packaging industry should be exempted from all duties like excise, GST, Octroi etc. and should be considered under the food processing industry. If a meaningful impetus were to be given to the dairy industry, all machinery and equipment used by the industry should be exempt from import duty.
5. Avoid Loss of Nation’s Crop – Also, when there is a thrust on increasing the milk production, then there should be ample amount of facilities to handle it. There is a dearth of required infrastructure of chilling plants and bulk coolers due to which so much of milk goes waste due to spoilage. There are long distances to be covered to reach bulk milk coolers from the collection centre. There is a shortage of refrigerated vans and insulated tankers for ferrying the chilled milk to the processing plants. Government should create a fund to support these activities by subsidising these investment to a large extent for economic growth of the country.”
Beer drinking habits are changing in the country on a very fast pace. People are looking for good quality beers with varied taste. Imported beers offer solution to this new need. This segment has great potential to grow. Since domestic beers do not offer similar quality and taste, government should look into slashing custom duty on beer. Once imported beer brands see bigger market in India their next step will be to brew domestically, thus creating huge employment opportunity. However liquor is kept out of the GST and it is a big hurdle in smooth distribution. Therefore, the beer industry can look forward to ‘Budget 2017’ for two main elements: reducing custom duty on imported liquor in India and including alcohol beverage in proposed GST. This will give a shot in arm to the overall business as well as create more avenues for consumers to enjoy their favorite drink.