|
|
|
D&B Budget Impact Analysis: Food processing sector
Overall impact: Positive
Excise Duty Changes
- The Special Excise Duty (SED) on aerated soft
drinks & soft drink concentrates have been brought down from 24% to 16%.
This is in tune with rationalisation of SED.
- Food preparations based on fruits & vegetables
have been completely exempted excise duty. This move relieves products of
common use like pickles, sauces, ketchup, juices, jams, jellies, vegetable
juices etc. from the burden of excise duty.
- Fruit pulps, fruit based drinks & ice creams
and non-alcoholic beverages dispensed through vending machines have been exempted
from CENVAT.
- Rate of abatement on MRP of aerated water has
been reduced from 55% to 50%.
- Concessional rate of duty of 8% on biscuits
in retail pack of 100 gms with price below Rs 5 has been withdrawn & will
be chargeable at the rate of 16% CENVAT
Custom Duty Changes
Custom duties have been amended
upwards in order to safeguard Indian industry after the removal of Quantity
Restrictions as per WTO regimes.
- Duty on tea, coffee, coconut & desiccated
coconut has been raised from 35% to 70%.
- Presently edible oil attracts custom duty ranging
from 35% to 55% & refined oil attracts duty of 45-65%. The Finance Minister
has fixed a uniform rate of 75% on edible oil & 85% on refined oil. Soyabean
oil will be charged at a lower rate of 45% as per the WTO agreement.
- Duty on crude palm oil has been increased from
25% to 75%. But sick vanaspati units have been given the benefit of
concessional rate of 55%.
Other Changes
- CII had demanded a special focus to encourage
the growth of the industry. In consideration to this demand, FM has announced
tax holidays under section 80-IB of the Income Tax Act to those assesses who
are engaged in the integrated business of handling, transportation and storage
of food-grains on or after 01/04/2001. These tax holidays are offered in the
form of:
- 100 % exemption from tax for the first 5
years and
- Deduction of 30% of profits for corporate
assesses & 25% for other assesses for next 5 years.
- Deduction of development allowance available
for tea industry under section 33AB of the Income Tax Act has been increased
from 20% to 40%. The additional allowance is intended to be used for re-plantation,
rejuvenation, and modernization of tea plantations and processing facilities.
Some of the budgetary reforms undertaken
to boost the agriculture sector, are likely to have a favorable impact on the
food processing industry. These are
- Extension of Credit Linked Subsidy scheme for
construction of cold storage for perishable commodities rural godowns.
- Proposed reduction in rate of interest by NABARD
for funding the storage of crops, from 10 % to 8.5 %.
- Proposed review of the operations of the Essential
Commodities Act, 1955. This is mainly intended to remove many of the restrictions
that have been imposed on the free inter-State movement of foodgrains and
agricultural produce and also on the storage and stocking of such commodities.
This will give a helping hand to the development of this sector
Rediff-Dun & Bradstreet Budget Impact Analysis
Budget 2001
Tell us what you think of this analysis
|
