Lower GST Rate to Spur Food Processing Growth

ASSOCHAM expects relaxing norms for FDI in food retail and infrastructure development will boost food processing sector in India. Dr. Ombeer Singh Tyagi, Director, ASSOCHAM talks to SMART AGRIPOST. Excerpts;

Q. How was the year 2016 for agriculture and food processing sector?

Ans: The year 2016 was excellent for the food processing sector. You can look at it from the two perspectives; one is that the agriculture production was high for both food grains as well as for the fruits and vegetables. Secondly, the growth of the sector remained around 8-9 %, which was excellent and thirdly there was progress in the regulatory fame work specially the Food Safety and Standards Authority of India (FSSAI) worked excellently to create environment for the production. So if you look at all these together, 2016 has been excellent for the food processing sector.

Q. What are your expectations from the government in 2017?

Ans:  There are two major things which have to happen in the food processing sector. One is the unorganized retail sector has to convert gradually to the organized retail. Unless you have the organized retail, you won’t be able to enforce the quality food stuff. Unless you offer the consumer the quality food, the products will not grow. So if you keep that in mind, the government is expected to relax the conditions for FDI in the food retail. Though they have approved 100% FDI in the food products but alone food products will not serve purpose. Secondly, we also hope that government will bring out more schemes for the infrastructure development. If infrastructure development comes, then the farmers’ linkages with industry will be better. The companies which are importing the material from abroad will have better linkage with the farmers to grow the crops of required variety.

Q. What has been the effect of demonetization on your industry?

Ans: Demonetization, of course I can say, is a temporary effect. The people have the money in their hand.  If you need food, you may restrict yourself for one or two days, but you cannot wait endlessly. Now money circulation is growing, impact of demonetization will slowly go away. It’s a temporary phenomenon, may be for a month a two. There should not be much impact in the longer period.

Q.How will GST impact industry?

Ans: Definitely positive, the GST will have positive impact. We are requesting the government to keep the food and vegetable products in the lower category of the GST. So that the sector gets a boost, farmers get more income. This is what we are expecting from GST. After ease of doing business, the GST definitely will change the scene.