CII seeks zero GST for processed fruit and vegetable industry

Industry body, the Confederation of Indian Industry (CII) has demanded that fruit and vegetable processing industry be exempted from the goods and services tax, proposed to be introduced from April 2010, as the sector is still at a "nascent stage" and needs support.

"We have requested the government to keep fruit and vegetable processing industry under a special GST rate of zero per cent," CII National Council for Agriculture Chairman Rakesh Bharti Mittal said.     

An empowered panel of finance ministers of different states yesterday resolved to meet the deadline of rolling out the GST regime in April next year and has reached a consensus to have two basic tax rates in the new system, and a special one for precious metals. But the rates are yet to be decided.     

Though India produces about 50 million tonnes of fruits and 90 million tonnes of vegetables, the level of processing is lagging pathetically at just about 2 per cent, compared with that of 65 per cent in the US and 23 per cent in China.     

Low processing results in huge wastages of fruits and vegetables, estimated at Rs 33,000 crore a year mainly because of lack of infrastructure and adequate support, he said.    

Mittal, who is also the vice-chairman and Managing Director of Bharti Enterprises that export fruits and vegetables under the brand name 'Fieldfresh', observed many states are levying additional cess even when the empowered panel of Finance Ministers of states on Vat has suggested a 4 per cent VAT on processed fruits and vegetables.     

Moreover, some states are charging more by restricting the description of the processed fruit and vegetable category even when the VAT panel recommended a uniform tax rate structure and classification of products, Mittal pointed out.     

"Uniform classification of all processed fruits and vegetables across Centre and states on lines of the Cenvat structure is needed," he said.