Biscuit Industry Demands GST Exemption

The Dollar Business Bureau

The Rs.36,000 crore Indian Biscuit Industry has demanded a complete waiver on Good &  Services Tax  on  ‘Low Price High Nutrition’ (LPHN) biscuits priced under MRP Rs.100 per kilo.

“LPHN biscuits are the only hygienically produced affordable snack sold in small packs retailing at Rs.2 to Rs.5.  Consumed mainly by  low  income group, any increase in price of  LPHN  biscuits causes  a direct reduction in demand. While there is a 62% weighted average hike in input costs (Maida,  Sugar and Vegetable Oil)  over the last decade the Biscuit Manufacturers have been unable to increase their realization pro-rata” alleged Mayank Shah - Vice  President and Spokesperson of the ‘Biscuit Manufacturers Welfare Association’.

Glucose biscuits offer consumers 72 kilo calories per rupee compared to 55 by bread, 18 by potato chips and 29 by namkeens (savouries). All three enjoy concessional rate of taxes. A 70 gram pack of Glucose biscuits which retails at Rs.5 offers 315 kilo calories which is about 16% of  the daily dietary recommended allowances by the government.

Last year the biscuit industry  procured agriculture produce of  over Rs.13,300 crore. Sugar prices have more than doubled in the last decade and current wheat flour and vegetable oil prices make net margins on LPHN biscuits reduced to just 3%. Fear of an advent of negative margins phase forces manufacturers to curtail production leaving the demand un-satiated.  Glucose biscuits retailed at Rs.70 per kilo today attract net taxes of  Rs.7.21 which is higher than the value addition earned by the industry (Rs.7.01 only).

“The Government may tax all  Premium Biscuits as they deem fit and we are a highly compliant  industry with last annual contribution to the exchequer at Rs.3075 crore. However, on behalf of over 600 manufacturers of Low Price High Nutrition Biscuits retailed at up to MRP of Rs.100 per kilo, I urge the GST Council to completely exempt LPHN  Biscuits” concluded Mayank Shah.