Biscuit makers seek tax holiday

In an unprecedented move, members from the Biscuit Manufacturers' Association, including Parle Biscuits, Britannia and ITC, have submitted a proposal to the state government, saying they would not hike the price of any variety of biscuit for the next five years provided the excise on them is abolished and VAT reduced to 4 per cent from the current 12.5 per cent.

The biscuit market in Gujarat for both organisd and unorganisd brands has been estimated to be around Rs 470 crore and d the current 8 per cent excise duty clubbed with the 12.5 per cent VAT is pushing down profitability as low as 0.33 per cent even in case of glucose biscuits which occupy 80 per cent of the revenue share.

Biscuit manufacturers are angry that while other segments of the food processing industry, including Pasta, ice-cream, condensed milk, ready-to-eat, dosa mixes and processed meat and fish have been granted relief from the excise duty.

Biscuits, which are reportedly consumed by more than 73 per cent of the population, have to go through excise and VAT.

"The excise and VAT imposed on us is completely detrimental to our operations and may eventually force majority of the consumers to shift to the unorganised sector and duplicate brands, which will ultimately be a compromise both in quality and nutrition to the consumer, said Maria Iyer, president of the Biscuit Manufacturers' Association.

The Indian Biscuit industry is estimated to be of around Rs 8,500 crore of which Rs 4,500 crore forms the organised segment and the rest Rs 4,000 crore form the unorganised market.

Since unorganised players do not comply with taxes, it is bigger names like Parle Biscuits, makers of Parle G, the world's largest selling biscuit brand, who are feeling the pinch of the taxes.

"In spite of spiralling rise in costs of input such as wheat, sugar and vanaspati, the biscuit industry has maintained a steady price. Raw material alone accounts for nearly 49 per cent of the MRP, " said Amol Chouhan, director, Parle products.

Biscuit manufacturers have also submitted the proposal to the Union finance minister.