Over 100 small and medium bakery manufacturers of Kanpur are facing a tough time owing to the recent spike in raw material prices coupled with cut throat competition from their multinational counterparts.
The aggressive marketing policies of these multinationals have squeezed the wafer-thin profit margins of the local bakery manufacturers.
According to Uttar Pradesh Biscuit Manufacturers Association (UPBMA) President Jaswant Singh, around 44 small and medium units have closed down in past four years in the city itself.
“The bigger companies have decided not to raise their prices despite immense rise in production costs which is pushing the local bakers out of market competition,” he said.
These companies are also offering extra rebate offers and attractive gifts along with the base products while these small-time bakers find even paying taxes levied by the state government a Herculean task.
The once celebrated biscuit and bakery industry is now struggling for its identity.
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“Even people from rural areas now prefer packaged multinational bakery products over the local ones. The oppressive taxes levied by the state government have also contributed significantly to our decline,” said UPBMA Secretary Suresh Gurnani.
According to him, around 80 units have closed down in the state out of which 44 are from Kanpur.
The state government has also discontinued the ‘compounding’ facility provided to the small bakers with more than four burners.
There was provision of mere 3-4 per cent trade tax under the compounding system while now it has risen to 12.5 per cent under value-added tax (VAT) system.
“All these factors have contributed to the decline of the small biscuit industry. A number of bakers have started taking franchisee from these big companies foreseeing their demise and finding it the only way to survive,” said Gurnani.
Even these bakers are not happy as they say that this may have helped them survive but it has led to extinction of their own identity.
Singh said the prices of sugar have risen from Rs 16 per kg to 34 per kg during the last one year.
“The investment is increasing as is the pressure for not raising prices. Whichever baker has tried to raise the price, he has to pay the price by losing the market existence in face of stiff competition from the multinational counterparts. Earlier the government used to give a quota of flour and sugar which has also been discontinued now,” he added.
The association demands that the compounding facility be reinitiated and the taxes be reduced if the small bakeries are to survive.