Indian F&B industry poised for exponential growth

By IANS

New Delhi : India’s food and beverages (F&B) industry is likely to touch Rs.4,660 billion (about $110 billion) with a growth rate of nine percent by March 2008, according to a survey by the Federation of Indian Chambers of Commerce and Industry (FICCI).


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The segments that have indicated high growth potential of 10-20 percent in the survey are branded flour, bakery items, biscuits, fruit juices, sauces, chocolates, beer, butter, country liquor, branded milk products and malted food among others.

According to FICCI, the main reasons for the exponential growth are positive developments based on the government’s liberal policy measures and other such initiatives that have contributed to a major extent for the development of the industry.

Moreover, socio-economic factors such as the increasing purchasing power of the middle class coupled with a changing lifestyle pattern have played a major role in altering the consumers’ mindset and preferences.

FICCI also said recent government initiatives aimed at raising farmers’ income are also expected to act as a catalyst for a high growth of the industry.

However, the survey has also highlighted certain problem areas and the industry’s pending demand before the government to solve them.

The chamber has sought income tax exemption on the grading of agriculture and farm produce, cold storage, processing of fruit and vegetables from April 2007 till March 2012.

It has recommended setting up of cold chain infrastructure and other modernised technology for upgradation of storage handling and transportation that should be granted infrastructure status.

Besides, the F&B industry has also urged a 10-year tax holiday for food parks and integrated food zones.

It has also asked for a uniform tax structure that is imperative for sustained growth of the industry. However, it has lauded the introduction of the value added tax (VAT), which in this sector ranges between 4 and 12.5 percent.

The F&B industry leaders have also insisted on doing away with the customs duty and countervailing duty on import of food processing machinery by mega food processing plants besides lowering the excise on all machinery used for the processed food industry to a maximum of eight percent.

The industry has also requested that export oriented units (EOUs) should be permitted to sell products in the domestic tariff area free of excise duty.

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