Don't ignore food processing industry: Khambatta

Ahmedabad, Feb 28 (UNI) With the Union Budget for 2007-08 not offering much to the food processing industry, Piruz Khambatta, Chairman, CII Food Processing Committee, Gujarat-Council, said ''the industry needs a boost.'' While massive allocation to agriculture is welcome the ''multiplier effect'' of ''processing'' has not been recognized. Food processing can provide huge benefit to rural India and make India shining. The real critical factor and its uniqueness need further push, Mr Khambatta said in a release today.

The rate of investment in the food processing sector has been relatively weak as the viability of the sector challenged by both, supply side and demand side constraints, Mr Khambatta said.

This is a hyper segmented industry with an extreme need to localised tastes implying high investment requirements in market research, technology and R&D for taste innovations and volume creation.

Additionally, shelf life extension is a core consumer value and packaging is an integral part of the product, the cost incidence of which at this point is quite high. Thirdly, industry suffers from acute supply chain problems related to availability of the right quality and quantity of raw materials.

In this context, the industry was looking forward to several critical fiscal interventions in terms of introduction of a low uniform excise Duty on all sub-segments of the industry, Significant neutralization of the high incidence of packaging costs, While incentivisation in the form of reduction on custom duty for food processing machinery from 7.5 percent to five percent has been given, similar measures on R&D and innovation are needed.

Appropriate Financial Interventions like subvention of three percent of the bank interest on all loans availed by the food Processing industry, removal of Rs five crore cap on investment for classification under priority sector by RBI etc would have stimulated investment.

Support in supply chain, transportation and warehousing like 10 year Income tax holiday for investment in cold chain infrastructure is essential.

UNI