20/03/2018 – News / Business News / TAX / India / Biscuits

India’s biscuit-makers call for GST rate reduction

Indian’s biscuit manufacturers have demanded that the country’s Goods and Services Tax Council lower the tax rates to either of the two lowest slabs (i.e., either five per cent or 12 per cent). Under India’s current tax regime, biscuits attract 18 per cent GST (Goods and Service Tax).

 

Claiming that the higher tax rate –imposed on 1st July 2017 – had pushed the industry to the brink of negative growth, B.P. Agarwal, President of the Indian Biscuit Manufacturers’ Association (IBMA), said that the industry was now fighting a battle for survival. He added that the industry had incurred losses amounting to approximately Rs.2,000 crore (US$315m) and a 10-15 per cent fall in production over the past six months following the GST rollout.

 

“This has put great pressure on the Indian biscuit industry, which is estimated to be worth approximately Rs 30,000 crore,” noted IBMA’s President, adding theat “if the GST rates remain unchanged, we will be forced to do a price hike” in order to survive. 

 

Biscuits are a mass-consumption food product, the IBMA asserts, yet have been mistakenly catergorised as premium goods. As a result, biscuits are positioned in the higher tax slab, denying them a level playing field with similar products. “Biscuits are a common product of consumption, eaten by everyone – be it a rickshaw puller or a low-wage labourer in search of hygiene, energy and nutrition at a low cost,” stressed Mr Agarwal. “Similar food products, such as sweets, processed dry fruits and tea (all of which are in the five per cent slab) and juice, namkeen, jam, jelly, noodles, pasta and tomato ketchup (all in the 12 per cent slab) are subject to lower GST rates,” he added.

 

“We urge the government to review their decision of imposing 18 per cent GST on the biscuit industry. There is an urgent need to bring down the GST rate to 12 per cent to avoid stagnation in the growth of the industry,” Mr Agarwal opined.    

  

IBMA said that the association has already submitted a detailed representation to Prime Minister Narendra Modi, Finance Minister Arun Jaitley, Minister for Food Processing Industries Harsimrat Kaur Badal and the state finance ministers, who are members of the GST Council. 

 

The association has also sought intervention and support from Members of Parliament from various political parties for favourable consideration of the levy of GST at lower slab of 12 per cent.

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