Hoping to cash in on the pro-agriculture mood in the UPA government, the food processing industry has sought tax breaks for setting up cold chains.
Though India is one of the largest producers of vegetables and fruit, they have argued that a large quantum is wasted due to lack of storage and processing facilities.
Therefore, a tax holiday under Section 10 A of the Income Tax Act has been sought for cold chains along with excise and customs sops for procurement of capital goods, including refrigerated vans. This could also boost the countrys farm exports and provide better returns for farmers, they said.
According to representations submitted to the government by apex chambers, tax concessions should cover the entire supply chain for the food processing industry. The sector needs a boost in view of the growing demand for processed foods and evolving food patters.
Proposals from all industry representatives are expected to reach the finance ministry by October 15, the early deadline set to examine proposals in detail. The domestic industry is also keen to obtain tax breaks for integrated projects which deal with the entire gamut of the sector starting from procurement and storage to processing and packing.
The tax sops provided to the industry in some sectors should be extended to cover all states so that the entire food processing chain benefits, they said. As of now, only some states in the north-east Sikkim, Himachal Pradesh and Uttaranchal enjoy this benefit.
Interestingly, the demands of the industry come at a time when the ministry of food processing is working with chambers to come out with a vision document for the development of the sector over a period of 10 years. The document would address the policy and procedural issues. It is expected that issues related to procurement, R&D and supply chain management would be given due focus in the document.
A strong push is being made by the chambers for this segment in view of the strong and dynamic food industry which is important for diversification and commercialisation of agriculture. This would, they hope, ensure value addition to agricultural products, generate employment, enhance income of farmers and create surplus for export of agro foods.
Therefore, all activities starting with the acquisition of seeds, plantation, various aspects of processing, preservation, including cold chains (especially controlled atmospheric storage system), handling storage, transportation, packaging and re-packaging, wholesaling and retailing have been short listed for concessions.
It is understood that the industry is also taking up state-level taxes, which increase input costs, separately with the empowered group of finance ministers on value added tax.