The Food Processing Ministry has requested Finance Minister Pranab Mukherjee to withdraw the Budget proposal to impose 1% central excise duty on food commodities, saying it will lead to food inflation.
In the 2011-12 Budget, Finance Minister Pranab Mukherjee announced the imposition of an extra 1% central excise duty on 130 items, including some food and agricultural commodities.
"The entire food processing industry is feeling the pinch of this announcement (excise duty). We have written a letter to the Finance Minister. I hope he will look into it," Minister of State for Food Processing Harish Rawat told reporters here.
He said that industry bodies have complained that the 130 items on which 1% excise duty has been increased include food items as well and this will lead to an increase in prices.
Food inflation came down to 9.52% for the week ended February 26 from 10.39% in the previous week.
Rawat, while inaugurating the National Seminar on food ingredients and additives on the sidelines of the Aahar 2011 international food and hospitality fair, said, "The ministry has requested the Finance Minister to keep GST and other taxes at a minimum level."
The All-India Food Processors Association (AIFPA), which organised the seminar, has sought the removal of 1% excise duty on food and agricultural commodities, besides the waiver of Goods and Services Tax (GST) on food items.
"With GST also, there should be no tax on food. When you tax food, you are taxing the value addition in the sector and this will lead to price rise as cost of inputs will go up and my worry is this will further increase the inflation," AIFPA President Piruz Khambatta told PTI.
"The recent imposition of excise duty and tax on Special Economic Zones (SEZ) is very counter-productive," he added.
On Mega Food Parks, Rawat said, "We have sought a report on Food Parks currently in progress in Andhra Pradesh and Uttarakhand to know problems these parks have been facing. This will help us to rectify problems in new food parks."
The government has given the nod to set up 15 more Mega Food Parks in this year's Budget. Earlier, it had given permission to set up 15 food parks.
Rawat said the country processes only 3-4% of its fruits and vegetables, compared to 70% by Thailand and 80% in Malaysia and this is an area of concern.
"We contribute only about 1.6% of the global food processing industry," he added.
The minister said that the problem areas in the food processing industry are limited availability of technology, storage capacity, refrigerated transport, modern food chains and a dearth of qualified manpower, among others.
