India produces large amounts of fruits, which is much more than what we consume.
India is largely dependent on its agrarian economy and a significant number of the people in rural economy depend on the agriculture sector for their livelihood. By investing in food processing, the industry can play a crucial role in providing better market access and stability for our farmers, who are subjected to the vulnerability posed by nature.
The food processing industry, therefore, creates a virtuous cycle, as first (value chain), it provides the farmers an additional channel to the market beyond the mandi where he can expect better prices for his commodities and an assured off-take while ensuring lower wastage; second (job creation), it warrants local on-farm jobs and near-farm work as local youth are trained for sorting, grading and separating commodities needed for food processing factories; and third (exports), India produces large amounts of fruits, which is much more than what we consume. We could turn this to our advantage if we process the excess produce and tap export markets thus earning foreign exchange. These benefits finally ensure a trickle down affect on farmers’ income.
While we work towards the rationalisation of corporate tax rate, in the interim, with a view to provide a growth fillip to the food processing industry, CII suggests few fiscal incentives in the Union Budget to push investments in this sector. The incentives could include a five-year tax holiday for new plants; the same give-year tax holiday can also be extended for existing plants if they invest more than 50 per cent in plant and machinery; accelerated depreciation of 50 per cent for all existing projects (which invest in upgradation and modernisation below 50 per cent) and an increase in income tax exemptions for new employment generation.
Also to sustain the growth trajectory, it is expected that there would be further significant enhancements in the budgetary allocations to facilitate the growth and development of the food processing industry, since the last budget.
The writer is a member of CII Committee on Food Processing Industries and CMD of Rasna Ltd