The Federation of Biscuit Manufacturers of India (FBMI) has asked the Centre to exempt biscuits from central value added tax (cenvat) and excise duty and bring down the sales tax on the product to four per cent to give a boost to the industry.
"The biscuit industry has experienced a decline in production, coupled with demand recession, mainly due to the hike in excise duty to 16 per cent. Moreover, many states are levying sales tax ranging between 8 and 16 per cent, thus putting more pressure on the industry. The government should realise the industry's plight and accede to our plea for exemption from excise duty and reduction of sales tax to four per cent on biscuits," FBMI president Nikhil Sen said at the 51st annual general meeting of the federation.
Asking for cenvat exemption, FBMI, in its pre-Budget memorandum, said: "The industry has already faced a 10 per cent decline in growth in 2000-01 and is again projected to face a similar situation in 2001-02 mainly due to the impact of cenvat and other local taxes."
Biscuit production during 2000-01 stood at 45,00,00 tonne. Sen said while excise duty on food products like juices, jams, jellies, wafers and sauces were reduced to zero per cent in the 2001-02 Budget, the duty on biscuits was raised to 16 per cent from eight per cent.
"Biscuit manufacturing is a low margin industry and this has led to escalation in the cost of inputs and raw material," he said adding if the excise duty is abolished, the industry is confident of increasing demand by 20 per cent via a drop in consumer prices.
FBMI said although a minimum floor rate of eight per cent sales tax has been fixed, actual sales tax varies from 8-16 per cent in various states. "This should be brought down to four per cent," the federation added.
