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GST implementation will be a boon for crippled food processing units in Sonipat
November, 01st 2012

Tipped as the business of future, the food processing units in Sonipat have started to make their presence felt. But power shortage, poor transport service and faulty taxation are crippling the growth of the 150 units operating in the in the region.

With an annual turnover of around Rs 250 crore, the industry creates around 3,750 to 4,000 direct and indirect job opportunities.

Rahul Gupta, co-owner of SPR Foods said, "One unit in the region is creating around 10 to 15 direct jobs and equal number of indirect job opportunities."

A buoyant in-charge of the Rai Industrial Estate further talked about the progress, the industry has been making. "The food processing industry in Sonipat consists of readymade food products and beverages such as, milk, juice, bakery items, ice cream etc.

Rai Industrial Area is a hub for this industry, because almost all units dealing in this segment are based here." However, positive he sounded the industry still lags behind due to certain impediments.

Skewed taxation

Rahul Gupta, co-owner of SPR Foods said, "Majority of our market is in Delhi and we are competing against the industries based in Narela, Delhi. Since, being based out in Delhi, Narela has an advantage over us.

Food processing units in Delhi do not have to pay a 5 percent tax on the flour-made items, while the units in Haryana have to shell out the money. Thus we find it difficult to compete against our rivals based in Delhi." For Gupta, implementation of Goods Service Tax (GST) seems the only plausible solution.

"We have tried our level best to bridge this gap by meeting the related officials but in vain. Hence, we have now pinned our hopes on GST because it will provide a level playing field for us against all our rivals in the country," said Gupta. "The implementation of GST would be a boon for us. It has the capacity to help us triple our business within two to three years of its implementation."

Madanlal Gandhi, president of the Rai Industries Association agreed with the GST solution. "Out of the 150 units operating here, around 125 are micro units, which have an average turnover of around Rs 1 crore.

But there are some big players who have an average turnover of around Rs 5 crore. Hence, in the current scenario, the food processing units in Rai clock a net turnover of around Rs 250 crore annually. With GST, this amount can go up to Rs 750 crore to Rs 800 crore per annum."

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