Biscuit industry urges for excise exemption
New Delhi, Mar 15: Biscuit manufactures have urged the Finance Minister to extend across the board excise duty exemption to all categories of biscuits to save the industry from maintaining separate accounts for excisable and non-excisable products rolled out in the same plant.
Finance Minister P Chidambaram has exempted the biscuits priced upto Rs 50 per kg from excise duty in the Budget 2007-08, leaving higher priced product unchanged.
Speaking to mediapersons at a press conference here today, Ms Maria Iyer, President of Biscuit Manufacturers Welfare Association (BMA), said the exemption is expected to benefit over 130 biscuit manufacturers.
Ms Iyer proposed that the whole concession amounting to over Rs 180 crore will be passed on to the consumers in the form of additional biscuits for the same price.
Addressing the reporters, Mr Ranjit Sawhney, President of the Federation of Biscuits Manufacturers of India (FBMI), said many of the factories make both low price and premium biscuits. To maintain separate accounts for inputs is going to be a challenge.
''I have urged the Finance Ministry to issue fresh guidelines as to how to account for inputs used for excisable and non-excisable category products manufactured in the same plant,'' Mr Sawhney added.
Ms Iyer said packs with up to six per cent additional biscuits are expected to hit the market from next month.
Biscuits have for long being acknowledged as the most competitively priced nutritious snack having a high level of acceptance amongst all age groups across socio-economic sections of the country.
Indian biscuits under the United Nations' World Food Programme (WFP) are being supplied to Afghanistan, Iraq and Indonesia.
In the organised sector, branded, packaged biscuits are the largest food segment in the country with volume of about 1.3 million tonnes and valued at Rs 6,000 crore.
The biscuit industry has high agriculture input spanning up to 50 per cent of the MRP. Wheat four, sugar and vegetable oil valued at about Rs 3,800 crore is used by the biscuit manufacturers.
Due to a weighted average increase in input costs of raw materials of 75 per cent, the margins on low priced biscuits had gone down to 0.33 per cent. While the industry value addition is just 8.75 per cent, the net excise and VAT burden was 16.5 per cent of MRP.
The Indian biscuit industry's total market size is two million tonnes in volume and Rs 9,500 crore in value terms and provides direct and indirect employment to over 35 lakh people.
The organised sector is 1.2 million tonnes in volume and Rs 6,000 crore in value terms while unorganised sector comprises eight lakh tonnes in volume and Rs 3,500 crore in value terms.