Dairy co-ops seek restriction on imports of skimmed milk powder, butter oil

In a meeting with Prime Minister Manmohan Singh on Wednesday, members of various dairy cooperatives from about seven states of India sought restriction on imports of skimmed milk powder and butter oil.

Recently, Director General of Foreign Trade (DGFT) had allowed duty-free imports of 30,000 metric tonnes (MT) of skimmed milk and whole milk powder, milk food for babies etc. and 15,000 MT of white butter and butter oil.

A delegation comprising the chairman of National Cooperative Dairy Federation of India and chairmen of state milk marketing federations and unions of Gujarat, Haryana, Punjab, Karnataka, Uttarakhand, Madhya Pradesh and Maharashtra today held meeting with Prime Minister Manmohan Singh and Agriculture Minister Sharad Pawar.

The representatives of the dairy sector also demanded reduction of income tax on cooperatives from 30 per cent to 15 per cent.  

The cooperatives also demanded levying of 25 per cent of excise duty on oil meals, de-oiled cake and cattle-feed, restriction on imports of skimmed milk powder and butter oil, and classification of advances to dairy cooperatives under priority sector lending, among other things.

"Since the existing system in place for milk production encourages income generation for millions of milk producers, it is important that the Government should have policies that facilitate dairy development and is consistent with this profile.  Equally important, our Government must take necessary measures to ensure that input cost in the milk production remains lowest and the milk farmer is not burdened with taxes," dairy cooperatives stated in a memorandum to the PM.

According to the memorandum, "The current excise duty on molasses is Rs 750 per MT + 3 per cent cess. This should be waived for usage in manufacturing of cattle-feed in view of the increasing cost pressure on producers. Government should also restore 15 per cent custom duty on milk powders and 40 per cent duty on butter oil with immediate effect in the interest of dairy farmers of country. Government should also impose Anti Dumping duty on import of butter oil from New Zealand."

Apart from a reduction in the existing income tax rate of 30 per cent to 15 per cent, the dairy cooperatives have also sought removal of education and higher education cess and weighted deduction of 125 per cent of expenses should be allowed u/s 35 CCA of the Income Tax Act.

"We are not advising ban but in order to discourage export of valuable oil-meals, we recommend Government to impose 25 per cent export duty on Oil meals, De-oiled cake and cattle feed which will help to reduce input cost to the milk farmer. VAT on all value added dairy products may be fixed at 4% across all the states," the memorandum to the PM further stated.