All india Food Processors’ Association (AIFPA) that stands as a regulatory and representative body for plethora of large, small and regional packaged food companies, has written the MoFPI as well as the finance ministry,GOI urging a rebate in GST of 7% dropping from 12% to 5% on series of instant meals, pickles, ready to eat foods, snacks etc.

AIFPA represents a series of country’s packaged food stallwarts including Haldiram’s, Prataap Snacks, ITC, Mondelez India, Britannia Industries, PepsiCo, Bikanerwala and MTR is seeking a similar GST rate for the listed firms as it is 5% in case of unbranded food items.

All these demands are made before the meeting of Finance ministry’s GST council meeting scheduled to be held on 27 August.

Argue behind the demand is that similar GST rates will help to break the bars and proper growth initiatives could be taken to strengthen the branded sector too. This will also help the branded sector to survive the increasing blow of competition in the sector.

“Non-branded namkeens, bhujias, fruit & vegetable chips, snack foods etc. are charged only 5% GST, while in the packaged form these items are charged 12% GST. This anomaly has been increasing complexities for the industry and encouraging production of unsafe & unhealthy products.” The Letter reads.

“It is further realised that a shift of consumption from branded to non-branded foods reduces revenue to the Government and proves to be counterproductive,” All India Food Processors’ Association’s, president, Subodh Jindal, said in the letter to finance ministry.

Currently packaged food comprises 57% in sales share of fast leaping FMCG. AIFPA further stated expenditure on the food by households is about 35-40% and this will be seeking a good incentive for our sector.
Also COVID-19 has imposed an effect among the households to be at ease inside homes and enjoy the staple, snacks and what not.They’re relying mostly on packaged food which has served a chunk of benefit to the companies like Parle, Britannia,ITC etc.

“An important step for increasing farmer’s income is to increase the consumption of agri-produce by promoting the use of consumer food products,” the letter futher reads.
In a separate streak Indian beverage association has also urged for the lower tax on carbonated beverages which represents companies such as PepsiCo, Coca-Cola,Dabur etc., A report from Hindu Business line suggests.

AIFPA’s letter further requests ministry to not include these packaged food as a ‘product of luxury’ and levy taxes.“Food processing is not an option but an essential step in making natural agri-produce ready for human consumption. Even wheat, rice, corn, milk, potato, tomato, onion, sugar, salt, fruits, vegetables, tea, coffee, pulses, spices, meat, fish etc. have to be processed to make them usable,” the letter read.

In a data from the global taxation scheme, AIFPA’s letter further marked that food products are either relieved or charged minimally. 74% nations are exempting the food processing sectors from taxes and levying only 0% to 10% taxes, which marks the maximum.

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