Need to simplify tax structure on processed food, says PM

"I recognise that we need to look at taxation structure in the industry. 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 the tax structure," he said.

Singh,  while addressing a conference of state food processing ministers here, noted that "despite the economic slowdown, the food processing industry in India grew at an impressive rate of 14.7 per cent in 2008-09".

Pointing out that the level of processing is very low in the country, the Prime Minister said: "India's share in world food trade is less than two per cent. The level of processing in India is abysmally low at around 6 per cent compared to 60-80 per cent in developed countries".

"There is clearly very high wastage and very low value addition in our country, with corresponding loss of business opportunity and farm income," he added.

Singh said the food processing sector has the potential to be an industry driver that can transform the rural economy.

"I recognise that there are a number of constraints both in forward and backward linkages in the sector. But, if we can get out act together India can emerge as a leader in the global food processing industry," he said.