Financial Daily from THE HINDU group of publications
Tuesday, May 13, 2003

News
Features
Stocks
Port Info
Archives

Group Sites

Industry & Economy - Dairy & Dairy Products


`Biscuits will cost more post-VAT'

Our Bureau

NEW DELHI, May 12

BISCUITS are a poor man's bread, but though the proposed VAT on bread is 4 per cent, biscuits are faced with a VAT imposition of 12.5 percent, lament biscuit manufacturers.

Not only will the proposed move eat into the revenues of the estimated Rs 5,000 crore biscuit industry, it will also push up the retail price of biscuits by about 3 per cent, according to Mr S.S. Shivrain, President, Federation of Biscuit Manufacturers of India (FBMI).

The industry forum has urged the Centre to bring down the proposed VAT rate to 4 per cent, on the same level as bread.

Biscuits are currently burdened with a sales tax of 8 per cent, as opposed to other processed food items that have zero tax, points out Mr Naveen Khanna, a representative of FBMI.

The industry forum comprises regional and national players, including the biscuit big-daddies such as Britannia, Parle and Priya.

With a respectable growth of 9 per cent, the industry forum contends that it could touch a growth rate of 15 per cent, if the VAT rate was brought down. But a 12.5 per cent VAT would bring down the industry's growth rate to about 5 per cent and this would make it unviable for manufacturers in the segment, they opine.

According to Mr B.P. Agarwala, Vice-President of the Federation, biscuits are clubbed in the category of products such as jams, jellies and ketchup. But biscuits are a mass-consumption item, with biscuits priced from Re1 upwards.

Besides the increase in the price of biscuits, if a VAT-rate of 12.5 per cent was imposed, would also impact small-scale manufacturers operating in the segment, who would be hit, he said. About 60 per cent of the estimated Rs 5,000-crore biscuit industry is organised. The imposition of high VAT could force manufacturers to cut corners and compromise on quality, they added.

Article E-Mail :: Comment :: Syndication

Stories in this Section
`Women must be consulted on Budget'


Manufacturing pushes up industrial growth to 5.8 pc
`NDA managed economy well during Iraq war'
Kerala's annual Plan fixed at Rs 4,430 cr
Mozambique invites Indian industry
Simhadri Plant: Technical snag likely to persist
Evacuation system causing outages near Simhadri: NTPC
UPASI workshop on VAT today
Powerloom weavers court arrest
Tyre makers to urge Govt to rescind ban — Following SC ruling on rubber import under advance licence
Multi-system operators give thumbs-up for CAS
Govt open to airing news on FM
One Alliance bouquet goes off the air in Kerala
Jewellery complex ready for inauguration
`Dairy sector shifting focus on ethnic products'
`Biscuits will cost more post-VAT'
SARS strengthens case for drugs at affordable cost — Singapore, others may join India's stand at WTO
ILO unveils report on unfairness at work
`Cost data can resolve tariff tangle'
Rigid product norms stem herbal exports
New FCI chief


The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | Home |

Copyright 2003, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line