The food processing sector suggested the government the need to extend capital allocation in the forthcoming budget and it will be tabled on Tuesday.
India’s food processing sector is likely to be one of the largest sectors in the world, and by 2025-26 its output is evaluated to be US$ 535 bn. It contributes 12.8% to Indian GDP.
As per the reports provided, by 2023, Indian annual household consumption is anticipated to increase, which makes India be the fifth-largest consumer in the world.
Based on this to get more market opportunities, it is essential to increase the processing price by modernization and technological advancement.
Mayank Jalan, CMD of Keventer Agro stated that investments are crucial for the growth of the food processing industry and would appeal to the government for sufficient capital available for the sector.
He also mentioned that to boost the modernization in existing food processing projects, capital investment should be increased to 50% of accelerated depreciation.
This will help in bringing up the food processing sector to pace up with the other sectors like textile, environment, energy, etc. that have accelerated depreciation op to 150%.
At the same time, re-introducing investment development allowance would be encouraging.
The different steps could be increasing the present underused Rs.2000 crore fund generated by NABARD to all food processing components that will assist running the units to maximum potential for modernization of processing components in designated food parks.
Jalan mentioned that increasing the advantages of the SAMPADA scheme to the outside of Mega Food Parks will assist in more move of cash and a level playing field.
For current food processing projects, under section 80IB (11A), new investment is an additional capital investment of more than 50% of current book value of plant and machinery and is entitled to a 5-year tax holiday.
Currently, the following are allowed under income tax deduction: Processing, Preservation, and Packaging of fruits and vegetables, meat and meat products, poultry, marine, dairy products but preparation and value additions are not enclosed.
The Keventer Agro CMD stated that they would suggest the government revise this to include preparation and value additions of the processed food products to be entitled to an income tax deduction.
Jalan mentioned that promoting Indian branded food items is one of the main pillars of the government’s vision of promoting Brand India. Based on this, a 200% deduction on expenditure aroused on promoting Indian brand food items would be inspiring.
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