cii technopak mfpi 12june 2009 [read-only] · •assistance from ministry in schemes like...

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Company Name CONFIDENTIAL

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Presentation to

Sri Subodh Kant SahaiHon’ble Minister for Food Processing Industries

© Confederation of Indian Industry© Confederation of Indian Industry

Hon’ble Minister for Food Processing Industries

12th June 2009

New Delhi

Inclusive Growth

The Need of the Hour


Food Processing is the Answer

Indian Food Processing Industry – The Fact File

•Food & Grocery retailing accounts for 62% ofthe total retail market and will be worth US$150billion by 2025

• India remains one of the fastest growingeconomies in the world, with a projectedaverage GDP growth of 7.1% in 2009-10 fiscalyear

•Foreign Direct Investment (FDI) increased by6

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11

Fruits & Vegetables

Marine & Fish Foods

Packaged Foods

Poultry

% Growth Rate


•Foreign Direct Investment (FDI) increased by137% March - November last year, to US$17.21billion

•Food consumption has an annual growth rate of4.1%, expected to reach US$344 billion by 2025

•New sectors which are showing a potentialgrowth rate in the coming years are –

- Breakfast cereals- Bakery- Baby Foods

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Beer

Wine

Buffalo Meat

Dairy

Benefits of Food Processing

•Agricultural Developments

•Price of Agriculture

•Employment generation

•Higher standards of rural life style

•Prevents migration away from rural areas


IndustryGovernment Bodies

Academia Consumer

Partnership

Exponential - From the Grassroots

Exponential

Exponential Growth


Exponential Employment Generation

Exponential Income

Integrated Infrastructure Blueprint

• Assistance from Ministry in schemes like Integrated ColdChain, Modernisation of Abattoir, Mega Food Parks, StrategicDistribution centers

• Attempts to provide cold chain facilities at the point of harvest havenot been successful

• Even though the new APMC act has been implemented in 18states, some states like Punjab & Haryana have done so halfheartedly as they have adopted Contract Framing but notWholesale Market Development

• Assistance from Ministry in schemes like Integrated ColdChain, Modernisation of Abattoir, Mega Food Parks, StrategicDistribution centers

• Attempts to provide cold chain facilities at the point of harvest havenot been successful

• Even though the new APMC act has been implemented in 18states, some states like Punjab & Haryana have done so halfheartedly as they have adopted Contract Framing but notWholesale Market Development

Food Infrastructure


• Free Trade Zones (FTZ) and Export Processing Zones (EPZ) havebeen proposed followed by the setting up of 100% Export OrientedUnits (EOU). This will facilitate in importing all goods free of duty

• Free Trade Zones (FTZ) and Export Processing Zones (EPZ) havebeen proposed followed by the setting up of 100% Export OrientedUnits (EOU). This will facilitate in importing all goods free of duty

Export and Import

• Mega Food Park schemes needs to be more entrepreneurialfriendly• Mega Food Park schemes needs to be more entrepreneurialfriendly

Manufacturing Impetus

•Accelerated depreciation to have new technologies and machines

– To help the industry to be more competitive and upgraded technology like in many other

sectors depreciation should be increased from 15 to 25% on plant and machinery

employed in the food processing industry.

•Rationalization of Import Duties

– How feasible is it to have 0% duties on edible oil, and 125% on wine.


– How feasible is it to have 0% duties on edible oil, and 125% on wine.

•Rationalization of excise duties

– Is 12% VAT justified when the Excise duty is nil

– Is Early GST justified at nil when the Excise is nil

Star Performer Modules

Module - Concept

• Ministry should initiate a module to recognise and to reward those companies who are maintaining the role models through out the supply chain


Module – Results

• This will set the benchmarks for the industry

• It will encourage farmers, traders and distributors to gain a competitive edge

• This will also facilitate consumer awareness

MFPI to Consider Initiating a Module on the Same

Lines of APEDA

Steps in the line of APEDA

• Ministry should initiate a module to do work on the lines of APEDA

• The module will cover the same things as APEDA performs for exports from India


Module - Practice

• The Program will cover -

• Seminars

• Brand Building

• Awareness Program

• Extensive Media coverage

• Road Shows

Promotion of Venture Capital Funds

Module - Concept

• Ministry should promote investments in food processing sector based on a venture capital model, on a PPP framework

• The module could be on PAN India distribution basis


Module – Result

• The Module will facilitate more entrepreneurs in food processing and agri- business sector

• The sector will be given a boost with more companies/players/firms participating in it’s activities

Cold Storage: Capacity

• Total installed capacity of 22 million MT and additional capacity of 114 million MT is required by 2015

• Two states - Uttar Pradesh & West Bengal have 65% of total installed Capacity • Larger capacity per installed units are required (at production as well as consumption centers)

• Investment required of $ 5 billion over the next 5 years


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2007-08 2010-11 2014-15

Capacity & Requirement

No. of units Capacity in Million MT

Development of Cold Chain

Cold chain should be given an impetus –

• Current scheme for Integrated Cold Chain Development should be continued during the11th five year plan period without any limits on number of units

• New schemes may be introduced by MFPI for assistance to food processing units on aneed-based, open-ended viability gap funding mechanism.

• Provide 100 % depreciation for Cold chain equipments


• All government subsidies should be given only to units complying with minimumprescribed technical standards (CII has worked out a set of technical standards)

To Make India “Food Factory of the World”

• Need of needs to make substantial investment in brand building

• Need of needs to make substantial investment in brand building

• Need of advertisements and promotions (national and international)

• Need of advertisements and promotions (national and international)

Advertising Phase

• The industry will be capable and equipped to compete with companies from South East Asian

• The industry will be capable and equipped to compete with companies from South East Asian


Investment phase

and international) and international) South East Asian Countries South East Asian Countries

Results

…IBEF Could be A Partner

Steps to Catalyse Growth

Rationalising the Tax Structure

• Introducing a “broad- banded” definition for the sector for both taxation and licensing purposes

• Imposing a “low” and “uniform/ flat” rate of Excise as per a broad- banded definition


• Existing exemptions should continue• Excise duty on all similar food products should be brought at par to take care ofanomalies

Excise Duty and Service Tax of Companies Engaged in Outsourcing

• Amendments should be made in the Service Tax Credit Rules to provide for Service Tax Credit forLead Businesses who get their goods manufactured through dedicated outsourced small andmedium scale enterprises.

• Present Service Tax Credit Rules may be suitably modified to provide for Inter Division transfer ofCredit and its subsequent utilization towards payment of Excise Duty / Service Tax within the sameCompany.

Research and Development



Research and Development

• Under clause (1) of sub-section (2AB) of Section 35, 150% weighted deduction in respect of in-house R&D expenditure is available, R&D expenditure on food processing needs to be covered

Fringe Benefit Tax (FBT)

• Provision of FBT should be abolished

80 - IA Income Tax

• Deduction on the profit deriving from the business of processing, preservation and packaging offruits and vegetables is only available to new units and not to existing unit. It is suggested to makeit same for the existing units also and definition of food processing needs to be defined for inclusiveto cover preparation of tomato ketchup, squash, sauce, jam, fruit juices, etc.

Incentive for Employment Generation

• As Food processing industry can generate more employment suitable income tax exemption should be given



should be given

Government-Funded Food Research Centers

• Establish More Government-funded Food Research Centers – Direct Government funding of basic research in food technology will lead to new opportunities and applications

Improve Education in Food Processing

• Improve education in food processing – Sustaining a growing and prosperous food processing industry will require a steady supply of talent. To ensure that supply, the Government should take several actions to develop a highly skilled workforce

Key Challenges


Meeting Global

Standards of Quality

Inadequate Infrastructure

and Supply Chain

Technological Knowhow

and Support

Food Regulations Lack of Processable Produce &

Irregular Supply

Training Infrastructure

• Provide Annual Grants for 10 years to Training Institutions covering the following areas:

– Building Awareness on Food Safety across the food Chain, regulatory authorities andconsumers

– Providing training on new technologies and best practices in food processing, food safetyand quality

• Facilitate up-gradation of food factories in Cluster or individually through GHP,GMP,HACCP,ISO 22000, Manufacturing Excellence, TQM, TPM, ISO 14000 through


GMP,HACCP,ISO 22000, Manufacturing Excellence, TQM, TPM, ISO 14000 throughfunding assistance to experienced Consultancy bodies

• Create a National FSQ Fund for facilitating the above

• Enabling skill development infrastructure

Laboratory Infrastructure

• Provide funding assistance for developing a network of at least 250 standards andcertification laboratories to support the new law, at various levels i.e. Central, Regional,District, States and local through PPPs

• Upgrading the present laboratories through GLP compliance and Accreditation ,recommendlaboratories required at various levels (Central, Regional District, States and local) andfacilitate up-gradation through GLP compliance and accreditation. Recommend setting up ofhigh-tech lab facilities for testing of pesticide residues, genetically modified food andchemical and microbiological contaminants and toxins


chemical and microbiological contaminants and toxins

• Setting up a National Referral laboratory to be responsible for training of testing personnel,making available /validating test methods, making available proficiency testing programs/making available Certified Reference Material and Samples

• Research and development activities although undertaken in the laboratories, have notbeen extended in the field level or adopted extensively.

Food Safety

• FSSA has been widely appreciated and accepted, thanks to Ministry of food ProcessingIndustries

• However, there are yet a number of acts which are required to be repealed and enforced(The Prevention of Food Adulteration Act, 1954, The Fruit Products Order, 1955, The Meat

Food Products Order, 1973, The Vegetable Oil Products (Control) order, 1947, The Edible

Oil Packaging (Regulation) Order, 1998, The Solvent Extracted Oil. De oiled Meal, and

Edible Flour (Control) Order, 1967, The Milk and Milk Products Order, 1992, etc)


• It is desirable that there is a CODEX Cell within MFPI (Ministry of Food Processing).

• Ministry of Food Processing Industries (MFPI) continues to play a pioneering role inaliening India food standards with the world

“CII would like to work very closely under the

leadership of Shri Subodh Kant Sahay, to make

his dreams for the sector a reality”


Thank you

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