Helping hand

  • 30/03/2007

The food processing industry is growing faster than it and pharmaceuticals.One of the implications of this growth is that industry is buying raw materials on a large scale affecting both supply of food, which is contracting, and prices, which are rising. Both these developments affect the poor the most, especially with industry lobbying government aggressively to establish favourable procurement, pricing and fiscal regimes.

Industry is not happy with current growth rates. While competition does not allow them to increase prices, they also end up having to buy raw material at high prices because of pricing policies. They want agricultural produce and marketing regulations reviewed so farmers can sell their produce at market-driven prices to buyers of choice rather than through committees or authorised agents. Force majeure in such transactions is a legitimate apprehension. Industry also says the Essential Commodities Act, 1955, hinders interstate movement of food grains and essential food items. They want these restrictions to go to ensure free flow of raw materials.

While this might not have happened yet, the government is helping industry increase the proportion of raw food that is processed from the present 2 per cent to 10 per cent by 2010 and 25 per cent by 2025. It has delicensed the sector, giving automatic approvals for foreign investment up to 100 per cent, exempted export earnings from corporate tax and all processed fruits and vegetables products from central excise duty. Most recently, the 2007 budget has proposed exempting all food mixes, including instant food, from central excise levies. The Union ministry of food processing industries's

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