Agro firms find budget proposals sweet 'n' sour

The Rs 4,500 crore food processing industry, despite the finance minister's proposed incentives for farmers and agro-processing industry, feels that there will be no major gains in the short term.

"We will have to take a hit in the form of the 2 per cent education cess and the increase in excise duty. The decision to exempt dairy machinery from excise duty is not likely to result in any significant benefits for us," said Nikhil Sen, chief operating officer, Britannia Industries Ltd.

"We expected the Budget to come out with a lot of pro-farmer policies. The cost of dairy equipment will immediately come down by 5 per cent. Increased farm credit and tax sops for the agro-processing industry will lead to higher availability of working capital," said B M Vyas, managing director, Gujarat Co-operative Milk Marketing Federation.

A senior official from Dynamix Dairy Industries said the company will not benefit from the move as it imports machinery paying a customs duty of close to 50 per cent.

Besides waiving the excise duty on dairy machinery from the existing 16 per cent, the excise duty on processed meat, poultry and fish has been reduced from 16 per cent to 8 per cent.

"The cost of packaged poultry and meat products for the end consumers will go down by nearly 6 to 8 per cent," said Anuradha Desai, MD, Venkateshwara Hatcheries.

She added that the decision will reduce the entry barriers for new players.

"Allowing a deduction of 100 per cent of profits for five years is a big incentive for new investments in food processing," said Amit Burman, CEO Dabur Foods.

"The farmer can get a better deal for his produce and with food processing becoming incentivised, ultimately it is the end consumer who will have a wider choice at cheaper cost," said Vikram Bakshi, managing director, McDonalds India (North).