With packaging playing an important role in the country’s food processing sector including retail, Federation of Indian Chambers of Commerce and Industry (FICCI) has suggested a nine-point incentive package to boost competitiveness, including zero import duty on packaging machinery.
In its suggestions to the government – based on views elicited from a cross-section of the industry – the trade body sought abolition of excise duty on the packaging materials meant for packing fresh fruits and vegetables as also grains, as this would enable more items to be packed in modern packaging mediums.
It wanted reduction of import duty on finished packaging material as this will help in developing newer and innovative packaging material for end users, and also help in developing an initial market for new technologies and concepts.
The trade body also sought reduction in central excise tax on packaging equipment and food processing equipment, from 16 per cent to 8 per cent, to promote innovation in food processing and packaging equipments, thus increasing processing efficiency while cutting costs of food products.
It said the present excise and customs duty of 16 per cent and 10 per cent, respectively, on corrugated boxes is hampering the growth of packaging industry. Thus, the longstanding issue of excise and import duty reductions to 8 per cent and 5 per cent, respectively, should be considered.
FICCI wanted exemption of excise duty on packaging machines used for food packaging so as to allow the food processors to offset this cost. Further, there is need for a tax holiday for the packaging industry to boost research and development activities in this sector.
It stressed the need for making India a focal point for contemporary developments for technology and engineering in the field of packaging, by promoting investments and simplifying of procedures.
The Indian packaging industry is worth $18.8 billion, with an average growth rate of more than 15 per cent. Its linkages are extensive and with immense scope for generating employment.
Packaging being among the high-growth industries in the country, there is tremendous potential for almost all user segments, which are expanding appreciably: processed foods, hard and soft drinks, fruit and marine products, drugs and pharmaceuticals, soaps and toiletries, cosmetics, and personal care.
A few large manufacturers characterise the Indian market for packaging equipment with a nationwide presence, along with a large number of small players in the unorganised sector with regional presence. There are about 700 packaging machinery manufacturers in India, the majority of which are in the small and medium sectors.
– Sri Krishna