Agribusiness

Simpler Tax Regime for Processed Food Sector: PM

Prime Minister Manmohan Singh today regretted that the food processing sector was subject to “multiple levies” and said there is an urgent need to rationalise tax structure to replicate the success of the IT industry globally.

“Though primary agricultural commodities are mostly exempted from taxes, processed foods are subjected to multiple levies. There is an urgent need to rationalise and simplify tax structure,” he said here while pointing out that despite being a major food producer, India’s share in the global processed food trade is less than two per cent.

At present, many states are levying additional cess even when the empowered panel of Finance Ministers of states on Value-Added Tax has suggested a four per cent VAT on processed fruits and vegetables, hampering the flow of investment into the sector.

Addressing a conference of food processing ministers of different states, the Prime Minister announced that the government would formulate a National Food Processing Policy to spell out the vision for rapid growth in food processing.

He noted that “despite economic slowdown, the sector grew at an impressive rate of 14.7 per cent in 2008-09” from seven per cent in 2005-06.

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