Biscuit industry seeks tax relief

Ahmedabad, Sept 7 (UNI) Biscuit manufacturers today said that they would be forced to go in for price hike if the Gujarat and the Central government continues to ignore their representation.

Addressing mediapersons here the Director of Parle Products, Mr Amol Chauhan said that the Rs 8,500 crore Indian biscuit industry is reeling under the adverse impact of a hike in the prices of wheat, sugar and vanaspati. The new VAT regime has burdened the industry further which today has a higher contribution to tax than the value addition that it does, he said.

The excise duty, which at present is 8 per cent must be brought to zero, and VAT which is at 12.5 per cent should be reduced to 4 per cent, Mr Chauhan said.

It is surprising that foods like ketchup, cheese, butter, potato chips, pasta, namkeens, ice cream and bread&jam, among others, are excise free while biscuits attract excise levy of 8 per cent.

Biscuits provide cheap nutrition to those living below the poverty level as one packet of 100 grams of biscuit gives 450 calories in terms of energy equivalent to that of one meal, he noted.

Higher taxation on biscuits mainly affects the poor people who number over 300 million in this country. For a poor man, sometimes, the only nourishment that he can afford is a packet of glucose biscuits, Mr Chauhan pointed out.

In a representation to the Gujarat Minister of State for Finance, Saurabh Patel and Gujarat Minister for Excise, Amit Shah, the Biscuit Manufacturers Association (BMA) has sought the support of the Gujarat Government in getting a complete waiver for themselves from excise, and revision of VAT to 4 per cent, he revealed.

With the migration to the VAT regime, the industry has been crippled with profit margins sinking to as low as 0.33 per cent, Mr Chauhan said. In other words, a manufacturer gains just 1.3 paise on a 100 grams pack which is priced at Rs 4 . Interestingly when the industry's value addition is only 35 paise per pack the Central and State governments are collecting over 66 paise in taxes, Mr Chauhan rued.

Even the Union Budget of 2006-07 allows 8 per cent excise on all biscuits, while various other segments of the food processing industry deploying lower percentage of agricultural and dairy input have been granted relief in excise, he lamented.

UNI VNB WD NV1537