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Food and dairy players seek Govt investment

Low investments in infrastructure emerge as key concerns with big players entering Indian market, reports Saurabh Turakhia.

india Updated: Feb 07, 2007 21:40 IST

With big players like Walmart and Carrefour all waiting to enter the Indian retail market, the low investments in infrastructure and cold storage emerge as key concerns. While India may be gung-ho about its homegrown Big Bazaar and Subhiksha chains, the infrastructure necessary for proper development is hardly in place. "At present, there is a 30-40 per cent loss in transit of fruits and vegetables," laments Soumendu Ghosh, Business Head, Fruit and Vegetables, Subhiksha.

With heavy investments required for setting up such chains, Ghosh and his colleagues want the Government to invest. RS Sodhi, Chief General Manager, GCMMF Ltd echoed the thought, "The import duty and excise duty on equipment for cold storage is restrictive." Sources say the duty is close to around 25 per cent. Since the cold storage operations in India are at a nascent stage, such duties may come in the way of further development.

Piruz Khambatta, Chairman and Managing Director, Rasna Pvt Ltd is also in agreement with such a view and added that such development should be carried out in the farmlands to help farmers and not just in the metros.

There should be no VAT, which for some products is 12.5 per cent, on products of basic necessity like, milk, curd or buttermilk, insists Sodhi. "Octroi in Maharashtra and Gujarat should be abolished as it comes in the way of growth of distribution network", he adds.

The octroi is around 2-7 per cent.

The FMCG sector seems to have few other concerns, which it would like to get addressed through the forthcoming budget. HK Press, Executive Director and President, GCPL (Godrej Consumer Products Limited) says import duties on industrial oil remains one such concern. "At present the duties stand at 12.5 per cent and 15 per cent for different kinds of palm oil. It this can come down it will help the industry. We want the MAT, which went up last year to be reversed."

Sources in the industry are sore over historic excise duty benefits extended to certain product categories. "They can be raised for certain products and exemptions done away with given the economy is booming," says a reliable source. Khambatta also said that multiple taxes should be done away with. He also pushed the case for incentives for research and development and lesser levels of taxation for food products

Ghosh of Subhiksha clarified that the inflation has not had an adverse effect on the prices of the fruits and vegetables. It is the seasonal nature of their availability that is affecting the prices - for instance cauliflower quoting at Rs 15 a kilo now can go up to Rs 40 in another month or the cabbage at Rs 10 per kg now can shoot upto Rs 20 - 30 a kg by May, says Ghosh.     
 

Email Saurabh Turakhia: saurabh.turakhia@hindustantimes.com