Biscuit manufacturers seek exemption under GST

The Rs 36,000 crore Indian biscuit industry has urged the government to waive low price high nutrition (LPHN) biscuits priced under maximum retail price Rs 100 per kg from Good & Services Tax (GST).

"LPHN biscuits are the only hygienically produced affordable snack sold in small packs retailing at Rs 2 - 5. Consumed mainly by low income group, any increase in price of LPHN biscuits causes a direct reduction in demand. While there is a 62 per cent weighted average hike in input costs (maida, sugar and vegetable oil) over the last decade the biscuit manufacturers have been unable to increase their realisation pro-rata," said Mayank Shah, Vice President & Spokesperson of the 'Biscuit Manufacturers Welfare Association'.

Glucose biscuits offer consumers 72 kilo calories/ per rupee compared to 55 by bread, 18 by potato chips and 29 by namkeens. All three enjoy concessional rate of taxes. A 70 gram pack of glucose biscuits which retails at Rs 5, offers 315 kilo calories, about 16 per cent of the daily dietary recommend allowances by the government.

Last year, the biscuit industry procured agriculture produce worth over Rs 13,300 crore. Sugar prices have more than doubled in the last decade and current wheat flour and vegetable oil prices make net margins on LPHN biscuits reduced to just 3 per cent. Fear of an advent of negative margins phase forces manufacturers to curtail production leaving demand un-satiated. Glucose biscuits retailed at Rs 70 per kg today attract net taxes of Rs 7.21 which is higher than the value addition earned by the industry (Rs 7.01 only).

"The government may tax all premium biscuits as they deem fit and we are a highly compliant industry with last annual contribution to the exchequer at Rs 3,075 crore. However, on behalf of over 600 manufacturers of LPHN biscuits retailed at up to MRP of Rs 100/- per Kg, we urge the GST Council to completely exempt LPHN biscuits from taxes," added Shah.