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Food processing industry still divided on allowing FDI in retail sector

Our Bureau

New Delhi , Sept. 27

EVEN as there is consensus within the food processing industry on the need for large-scale organised food retailing, the house is divided on the issue of foreign direct investment (FDI) in the retail sector.

At a meeting between the top honchos of food companies and the Prime Minister, Dr Manmohan Singh, a section of the industry felt that large domestic companies should first be encouraged to enter food retailing in a big way, after which foreign investment must be allowed. Another group was of the view that both domestic and foreign investment must be permitted in this sector at the same time. Briefing newspersons, officials at the Prime Minister's office said, "The Prime Minister has told industry representatives that the Government is in the process of building a consensus on FDI. Also, the fiscal issues raised by the industry would be taken up with the Finance Minister."

The Minister of State for Food Processing, Mr Subodh Kant Sahai, said, "We have to look into how the market can be widened so that not only the supply of raw materials is ensured, but also price stability is maintained. FDI in retailing would also be a welcome intervention."

Mr Y. C. Deveshwar, Chairman, ITC Ltd and President of the Confederation of Indian Industry, said, "We have sought moderation in the tax structure for the food processing industry." The taxes, as a percentage of the sale price in India, could be as much as 25 per cent, while in other countries they are less than half. The industry has sought the abolishment of all Central excise taxes and sales tax besides levying a moderate value added tax.

It has said that investments of Rs 1,50,000 crore would have to be made in the next 10 years to expand the sector.

"There is need to invest in branding of Indian processed food and creation of a dedicated India brand fund," he added. Also, globally benchmarked infrastructure should be in place along with establishing 20 strategic hubs for export competitiveness.

There is a need to amend the Agricultural Produce Marketing Committee (APMC) Act at the State level, which is critical for strengthening the engagement of the organised private sector in food processing business, said Mr Rajeev Bakshi, Chairman, PepsiCo India. Besides, research and development (R&D) must be strengthened to improve the quality of fruits and vegetables.

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