Due to unprecedented increase in the costs of Major Raw materials during the last two years, manufacturers of Biscuits across the country especially those in the Small & Medium Sector, are experiencing acute hardships and resultant losses.The hike in Major Raw Materials/Inputs witnessed by Biscuit Manufacturers during the last two years
New Delhi Friday, 4″1 May f)QT,fye Indian BiscuitManufacturers Association (IBMA) has wholeheartedly welcomed the announcement by Shri P Chidambaram. Finance Minister yesterday, extending exemption limit from Central Excise Duty on biscuits with MRP upto Rs. 100/kg, from Rs.50/kg, a^-per the Budget for 2007-08, presented before Parliament on 28 February 2007.
While briefing media today, Shri B P Agarwal, President of Indian Biscuit Manufacturers’ Association (IBMA) stated today that the present announcement is in recognition of the Post Budget memorandum submitted by IBMA inter alia pointing out the anomaly in the original budget proposal limiting excise exemption to only biscuits with MRP upto Rs.50/kg will benefit only very few large biscuit manufacturers as almost ninety percent of the biscuits with MRP upto Rs 50 is manufactured by such few large biscuit manufacturers.
Shri B P Agarwal, President, IBMA was confident that with the increase in exemption limit for biscuits with MRP upto Rs. 100/kg, more than 150 SMEs in the biscuit industry will now he able to have a level playing field.
The IBMA President thanked the Finance Minister for acceding to the Association’s plea that since the revenue outgo is very little as compared to the employment opportunities that are being created in the industry on an yearly basis, there is an economic rationale for extending the C’envat exemption to the biscuits exceeding Rs 50 per kg
Since most of the 150 SMEs are producing mixed varieties of biscuits, the increase in excise exemption for biscuits with MRP upto Rs. 100/kg would also remove their hardships for maintaining excise duty related documents, including differentiation in stock of raw materials/packing materials / transportation cost etc. separately for Excisable and non-excisable biscuits ultimately resulting in higher cost burden , as almost all categories of Biscuits would be covered under the newly announced excise exemption. For more information, please contact Mr K P Mohandas. Secretary General, IBM A(Mobile:9818857709)
New Delhi, Wednesday 9 May 2007 Imposition of Value Added Tax (VAT) at the highest rate of 12.5% on biscuit has hardly hit the sector especially the small and medium segment. Higher VAT is resulting in low demand pick-up and subsequent losses to the biscuit industry.
While addressing a Press Meet today in New Delhi. B P Agarwai. President. Indian Biscuits Manufacturers’ Association (IBMA) said that the Association has submitted representations to the Chief Ministers/Finance Ministers of all State Governments, as also to Mr Asim Dasgupta, Chairman, Empowered Committee on VAT, with the plea to reduce the rate of VAT on biscuits to 4%.
“Biscuit is a merit good and is a nutritious snack food hygienically processed & packaged. It is available at very reasonable prices and consumed predominantly by children as almost a staple food/breakfast. Economically weaker sections of the society consume biscuits The recent findings of National Sample Survey Organization (NSSO) lend credence to the fact the low income group’s demand for goods like milk, fruits and the food items of similar ilk are incree.°;ng more than the demand for cereals and grains.” says Mr Agarwai Fiscal policies should be accordingly tailored to ensure greater consumption of these goods among the low-income group, he added.
IBMA Chief added that, biscuit is a part of the food processing industry. recognized as a thrust area by the Government of India. Higher consumption of processed food including biscuits will lead to greater demand for agro products, !ihc v/hoat, vegetable oil, sugar rnilk etc. Thus, growth in production and consumption of biscuits would benefit the farmers of these agro products. However, sharp increase in the prices of wheat / Maida, vegetable oil sugar etc has already hiked up the cost of production. Biscuit is also subjected to various other local levies, such as Purchase Tax, Entry Tax / Octroi etc. There are taxes/duties / cess etc on ingredients of biscuit, packaging material, equipment etc.
While appreciating the-increase in the threshold limit for Excise Duty exemption for biscuit from MRP upto Rs.50/- to Rs.100/ kg, announced by the Finance Minister on 3 May 2007, Mr Agarwal said that IBMA has strongly pitched for reviewing the Budget proposal since the earlier proposal was to restrict excise exemption for biscuit upto MRP of Rs.50/- per kg. This would have benefited only one or two large industrial houses, to the detriment of more than 140 Small & Medium enterprises in the biscuit industry.
Mr B P Agarwal mentioned that, recognizing the need to encourage biscuit manufacturing, the State of Tamil Nadu, which has recently introduced VAT, has fixed rate of 4% on biscuits. Similarly Assam is also levying VAT @ 4% on Biscuits. Other State Governments should also favorably consider IBMA’s representation for fixing 4% VAT on biscuit
According to the IBMA President, similar food products like Wafers, Bhujia, Namkeen, Bread, Fruit Juice, Jam, Jelly, Potato chips, Ice Cream etc are either exempt/or levied VAT at 4%. Even a luxury item like dry fruits is exempt/or at 4%, from VAT. However, biscuit – common man’s snack food, hygienically made & packaged available reasonable prices- is subjected to VAT at 12.5%
Mr Agarwal informed media that biscuit manufacturing is highly employment oriented and mainly consist of SMEs. Biscuit industry in the country, directly and indirectly employs more than 25 lakhs workers, and therefore, deserves sympathetic consideration by the State Governments, especially with regard to levy of Value Added Tax at the minimum rate of 4%.
Biscuit, which is high volume agri-based product, operating under highly competitive environment with the characteristic very thin margin of profit, predominantly in the SME sector is subject to highest level of taxation, making the survival of the firms highly difficult.
“In our communications and oral submissions before Chairman and Member Secretary of the Empowered Committee and also to the State Finance Ministers, we have apprised them about the pernicious effect of the higher VAT on biscuits. Some of the State Governments have already acted on it. We hope that the Empowered Committee on VAT will favorably decide our case salvaging the labor intensive biscuit industry.” says Mr Agarwal.
For further information, please contact Mr.K.P.Mohandas, Secretary General, IBMA (Mobile No. 9818857709) or Mr.Joseph Thachil, Media Advisor (Mobile No. 9810516770).
Inaugurating a Seminar on Food laws – Problems and Prospects, organized by Indian Biscuits Manufacturers’ Association (IBMA) today, Shri Subodh Kant Sahay, Minister of State for Food Processing Industries, Govt of India, stated that his Ministry will provide adequate financial assistance to food processing industry for achieving higher quality of food products like biscuits and also for building a network of 100 Quality Testing Lab rotaries throughout the country.
Lauding the role of food industries who provides food for the economically weaker segments of the society at comparatively cheaper prices, Shn Sahay said that it has been the endeavour oft he Food Processing Ministry to encourage growth of food industries, especially in the Small & Medium Sector.
Earlier, welcoming the Minister, Shn B P Agarwal, President of the Indian Biscuits Manufacturers’ Association (IBMA) that the main objective of the Seminar is to afford an opportunity to various segments of food processing industries, including biscuits manufacturers, especially in the small & medium Sector, to deliberate on various issues affecting food industry, arising out of the recent amendments in
PFA Rules, Packaged Commodities Rules ets, as also die newly x.
enacted integrated Food Safety & Standard Act, 200? and find
solutions to the grey areas in the Food Laws.
The Seminar also aims to create a unique platform for decision- maker in the government and all stakeholders in Ihe food processing industry as also consumers.
hn Agarawal said ihat Government and more particularly the Ministry of food processing Industries under the dynamic leadership of Shri Suboth. Kant Sahay has to be credited for the creation, of the integrated Food Safety and Standards Act 2006. This has taken care of everybody’s long standing demand for consolidating the multiple legislations enforced on the Food Industry, leading to hardships bolh to tiie industry and the enforcing Departments due to overlapping of various regulations.
For favour of publication/ coverage please
BMA has been on the forefront in vigorously pursuing Biscuit Industry’s request for reducing VAT from 12.5% to 4%. To further highlight acute hardships and heavy losses being suffered by biscuit manufacturers especially those in the SME sector, our Association has again taken initiative and submitted detailed representations to Shri Asim Dasgupta, Chairman and Satish Chandra, Member Secretary, Empowered Committee on VAT and similar representations have also been submitted to the Chief Ministers and Finance/ Excise and Taxes Ministers and to the concerned officials of all State Governments. The adverse impact of high rate of VAT along with rising cost of production/ prices of major raw material/ inputs etc have been highlighted.
To follow up and voice Biscuit Industry’s view points on VAT, IBMA Delegations propose to meet the Ministers, officials in various States.
Members in different States are once again requested to assist us in obtaining such follow up meetings, so as to seek VAT @ 4% on Biscuits, especially in the context of the proposed introduction of Goods & Services Tax(GST) merging VAT and other local taxes, with effect from 1st April 2010, since reduction on VAT to 4% will result in lower rate of GST on Biscuits.