Trade with Commodities: Food ministry prepares a long list of refreshments

Monday, June 15, 2009

Food ministry prepares a long list of refreshments

SEZ Status, 10-Year Tax Holiday & Cheaper Credit Sought For Fledgling Sector

A10-YEAR tax holiday for food processing units, special economic zone (SEZ) status for food parks and infrastructure status for the industry are among the proposals the ministry of food processing industries has proposed for inclusion in the coming Union Budget, an official said.
    These measures will ensure more foreign direct investment (FDI) and availability of cheaper credit in the sector that urgently requires a huge capacity buildup, a government official said on condition of anonymity.
    India processes only 5% of its total agricultural produce compared to nearly 80% in the case of the US and Malaysia. "Our target is to process 20% of our agricultural produce by 2015. For this, we have planned to build massive capacity," the official said. About Rs 30,000 crore worth of the country's agricultural produce is wasted due to lack of cold chains and other infrastructure. The ministry is also pitching for SEZ status for the mega food parks coming up in different parts of the country to ensure these parks do not need to pay local taxes. As per current norms, the government gives a one-time capital grant of 50% of the project cost of mega food parks subject to a maximum of Rs 50 crore in general areas and 75% of the project cost with same cap in hilly areas. The food processing ministry has also sought a higher Budget allocation.
    The ministry has also proposed to set up a venture fund either solely funded by the government or on a private-public partnership (PPP) to meet the sector's funding needs. At present, the industry gets 15% of its investments through the FDI route. Union food processing minister Subodh Kant Sahay last week said he would seek the finance ministry's intervention for providing cheaper loans to the sector. "Banks have only two loan heads — agriculture and non-agriculture or industry. There should be a separate head of loan for the food-processing sector," he said.