IBSA urges for tax exemption to SMEs

New Delhi, Mar 7 (UNI) The Indian Biscuit Manufacturers Association (IBMA) has urged the government to extend exemption from Cenvat to all the biscuit manufacturers, since the proposal in this year's Budget will help only a ''few large'' players.

Budget 2007-08 has proposed to exempt biscuits with MRP upto Rs 50 per kg. Ninety per cent of the biscuits with MRP upto Rs 50 are manufactured by a handful biscuit manufacturers.

Briefing mediapersons here today, Mr B P Agarwala, President, IBMA said the Small and Medium Enterprises (SMEs) in the biscuit industry would face a situation where the market advantages would be tilted in favour of the large players in light of the Cenvat (Central Value Added Tax) exemption.

''This totally negates the avowed objective of the Government to create an enabling environment for the SMEs. The uneven competition can lead to extinction of the SMEs in the biscuit industry and also most of the SMEs become ineligible for claiming surcharge exemption since their income is over Rupees one crore,'' Mr Agarwala said.

There are around 125 SMEs across India, who pay excise duty, have a single manufacturing unit and produce mixed varieties of biscuits, which have MRP above Rs 50 per kg.

Though their production constitutes only 10 per cent of the total production of biscuits in the country, they provide direct and indirect employment to over 1.20 lakh people, the IBMA President pointed out.

The annual production turnover of the 125 SME units is around Rs 1,200 crore and the Central Excise collection from these is only Rs 50 crore as against the total collection of Rs 200 crore from the industry.

''Since the revenue outgo is very little as compared to the employment opportunities that are being created in the industry on an yearly basis, there is an economic rationale for extending the Cenvat exemption to the biscuits exceeding Rs 50 per kg,'' he suggested.

He said the Budget 2007-08 has provided blanket relief from excise cut to all food mixes irrespective of the price band.

UNI