MoFPI Wants Removal of 1% Excise on Food.

The food processing ministry has requested finance minister Pranab Mukherjee to withdraw the Budget proposal to impose 1% central excise duty on food commodities, saying it would lead to food inflation.

In the 2011-12 Budget, Mukherjee had announced the imposition of an extra 1% central excise duty on 130 items, including some food and agricultural commodities.

"The entire food processing industry is feeling the pinch of this announcement (excise duty). We have written to the finance minister. I hope he will look into it," the minister of state for food processing industry Harish Rawat said.

He said that the industry bodies had complained that the 130 items on which 1% excise duty had been increased included food items as well and this would lead to an increase in prices.

Rawat, while inaugurating the national seminar on food ingredients and additives on the sidelines of Aahar 2011 International Food and Hospitality Fair, said, "The ministry has requested the finance minister to keep the GST and other taxes at a minimum level."

The All-India Food Processors Association (AIFPA), which organised the seminar, had sought the removal of 1% excise duty on food and agricultural commodities, besides the waiver of Goods and Services Tax (GST) on food items.

"With the GST also, there should be no tax on food. When you tax food, you are taxing the value addition in the sector and this will lead to price rise as cost of inputs will go up and my worry is this will further increase inflation," Piruz Khambatta, president, AIFPA, said.

"The recent imposition of excise duty and tax on Special Economic Zones (SEZ) was very counter-productive," he added.

On the mega food parks, Rawat said, "We have sought a report on food parks currently in progress in Andhra Pradesh and Uttarakhand to know the problems these parks have been facing. This will help us rectify problems in new food parks."

The government has given a nod to set up 15 more mega food parks in this year's Budget. Earlier, it had given permission to set up 15 food parks.

Rawat said the country processes only 3-4% of its fruits and vegetables, compared to 70% by Thailand and 80% in Malaysia and this was an area of concern.

"We contribute only about 1.6% of the global food processing industry," he added.

The minister said that the problem areas in the food processing industry were limited availability of technology, storage capacity, refrigerated transport, modern food chains and dearth of qualified manpower among others.

Source : fnbnews.com