Food processing industry seeks govt help to grow abroad

The food processing industry in India is looking at government support, as tax incentives and other measures, to strengthen brand India abroad. The $14 billion food processing industry, growing at 12-13 per cent at present, could grow at higher rates if effective meaures are taken, said the industry body.

Speaking to reporters on the sidelines of inauguration of Foodpro 2011, the ninth Indian Food Processing and Food Technology Fair organised by Confederation of Indian Industry (CII) in Chennai, Piruz Khambatta, chairman, CII National Committee on Food Processing and chairman and managing director, Rasna (P) Ltd, said: “The government should come out with tax incentives for R&D, value-added products, quality control and education to support the industry. We are also recommending a corporate farming structure in which the industry can lease farmland from farmers where the owners could produce agri products as per the requirements of the company.”

At present, on the one hand the government talks of the need for value addition in food processing while on the other end it imposes tax on value added products. “It is an irony,” he said. Food processing segment should be included in zero GT and zero excise duty regime along with lower value added tax (VAT) regime. It should also consider tax incentives for R&D and education programmes in the industry.

The industry has also demanded setting up of a venture fund for the industry. The CII is in discussions with the National Institute of Food Technology Entrepreneurship and Management (NIFTEM) on the possibilities of setting up a venture fund for the food processing industry acros the country, he added.

Khambatta also demanded support from the government to help the industry to promote the Indian brand in foreign markets. “There is big opportunity in vegetable and organic foods market abroad and India is in the right position to leverage that if the government helps to create brands abroad. You can see examples of other countries promoting their brands across the world,” he said. The government could do generic advertisements on tea, organic and vegetable foods in the overseas markets or provide tax breaks for companies which come up with such advertisements.

A major issue faced by the food processing industry in India is that the agricultrue segment is fragmented as small peices of lands owned by separate individuals could not meet the massive requirements of the industry. Instead of the government setting up its own R&D centres for the food industry, a model which has not helped the industry, according to Khambatta, it should look at public-private partnership model in which companies should be encouraged to set up research centres and be extended tax incentives by the government.

Earlier, inaugurating the conference, Tamil Nadu Governor K Rosaiah, said the country needs a novel food technology. “It is important to examine, identify and segregate industries that could absorb R&D inputs to bring about a 10-15 per cent increae in value addition in agri-produce,” he said.

The country has achieved a record foodgrain production of 241 million tonnes in 2010-11 crop year and has reached an estimated growth rate of 5.4 per cent for this year.