Simplify tax on processed food: PM

Major investments needed in industry, infrastructure inadequate for growth

He also said the Centre and the states should work together for the growth of the sector.  The admission by the prime minister came in the backdrop of the announcement that the sector will see an investment of Rs 1 lakh crore by 2015. Addressing the first conference of state food processing ministers here, Singh said this sunrise industry had the potential to improve rural livelihood and create employment opportunities.

India ranks first in the world in the production of milk, pulses and tea and second in the production of fruits and vegetables.  Despite being a major food producer, India’s share in world food trade was less than 2 per cent. “The level of processing in India is extremely low at around 6 per cent compared to 60-80 per cent in developed countries and over 30 per cent even in most other Asian and Latin American developing countries.

There is clearly very high wastage and very low value addition in our country, with corresponding loss of business opportunities as well as losses in farm income,” he said.
His government is working to realise India’s potential in the sector. The country’s “Vision 2015 – Strategy and Action Plan” is  aimed at enhancing the level of processing of perishable goods from 6 to 20 per cent, increasing value addition from 20 to 35 per cent and the country’s share in global food trade from 2 to 3 per cent.

Addressing the conference, Food Processing Industries Minister Subodh Kant Sahay said out of the Rs 1 lakh crore investment in the sector, Rs 45,000 crore is expected to come from the private sector. As the deadline of April 1, 2010, for the introduction of proposed Goods and Services Tax (GST) draws closer, Prime Minister Manmohan Singh, on Tuesday, asked the states to work towards expeditious implementation of the new indirect tax system.

“The states should work towards early implementation of the GST,” he said at the conference of state food processing ministers here. He also asked the states to remove subjectivity in treatment and classification of food products.

The Centre and the states are yet to reach at an agreement for goods and services to be included in the GST regime. The decision on a lower levy on food products and exemption to some of them is also yet to be taken.

States have also decided to have two main rates for GST, besides a special rate for precious metals, while the Centre is yet to take a call on it. However, many states are not willing to subsume the local levy and also have a fear of losing financial autonomy.

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