Dairy Sector Seeks Duty Cuts to Spur Growth

INDIA - In a bid to promote the processing and packaging of milk in the country, the dairy sector has sought exemption of excise duty and value added tax (VAT) on equipment and machinery in the upcoming Union Budget. Besides, the industry has also sought a uniform VAT rate on all milk products at four per cent, which could help drive consumption of such products.
calendar icon 7 February 2012
clock icon 2 minute read

TheHinduBusinessLine reports that the Indian Dairy Association believes that duty exemption on equipment and machinery would encourage more investments in processing and packaging of milk and milk products. Only 15 per cent of the milk produced in India is processed and packed, thereby leaving scope for adulteration, unhygienic handling and distribution. About 46 per cent of the milk produced in India is in liquid form.

The IDA also suggested income tax exemption for co-operative unions at the district and State level to promote dairying in rural areas. Besides, it has also said that the all new dairies and cold chain that qualify for income tax exemption could be further exempted from the minimum alternate tax (MAT), which is about 20 per cent of the book profits.

Further, the dairy sector has also sought the status of agriculture sector, as it has large potential to generate rural employment. Such a move would also help the dairy sector avail term loans from banks and financial institutions at a concessional rate of four per cent, which is currently available for the agriculture sector alone.

The IDA has also demanded that fiscal incentives available for the food processing sector such as reduced excise and customs duties and income tax relief should be extended to the dairy sector. As cattle feed prices have shot up by over 40 per cent in the past one year due to hike in prices of oilmeals, de-oiled cake and molasses, the IDA has suggested that VAT and other duties on molasses used in cattle feed could be abolished. Such a move would provide relief to the farmers.

The IDA has also recommended that the Government fix a special quota for supply of molasses from sugar mills to the co-operative cattle feed plants. It has also suggested that export of all oilmeals should be discouraged by imposing an additional export duty of 20 per cent ad valorem.

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