The ₹36,000-crore Indian biscuit industry, on Tuesday, demanded complete waiver of Good and Services Tax (GST) on Low Price-High Nutrition (LPHN) biscuits priced under a maximum retail price of ₹100 a kg.
“LPHN biscuits are the only hygienically produced and affordable snack sold in small packs retailing at ₹2-5. Consumed mainly by the low-income group, any increase in price of LPHN biscuits causes a direct reduction in demand,” said Mayank Shah, Vice-President and spokesperson of the Biscuit Manufacturers’ Welfare Association.
He said while there is a 62 per cent weighted average hike in input costs (maida, sugar and vegetable oil) over the last decade, the biscuit manufacturers have been unable to increase their realisation pro-rata.
Glucose biscuits offer consumers 72 kilo calories/ per rupee (Kcal/re) compared to 55 by bread, 18 by potato chips and 29 by namkeens.
All three enjoy concessional rate of taxes. A 70 gram pack of glucose biscuits which retails at ₹5 offers 315 Kcal, which is about 16 per cent of the daily dietary recommendation of the government.
Last year, the biscuit industry procured agriculture produce of over ₹13,300 crore. Sugar prices have more than doubled in the last decade and the current wheat flour and vegetable oil prices make net margins on LPHN biscuits reduced to just 3 per cent.
Fear of the advent of negative margins phase forces manufacturers to curtail production leaving demand unsatiated. Glucose biscuits retailing at ₹70 a kg today attract net taxes of ₹7.21 which is higher than the value addition earned by the industry (₹7.01).
“The government may tax premium biscuits as they deem fit. We are a highly compliant industry with last annual contribution to the exchequer at ₹3,075 crore. However, on behalf of over 600 manufacturers of LPHN biscuits retailed at up to MRP of ₹100 a kg, I urge the GST Council to completely exempt the LPHN biscuits,” Shah added.
The Hindu Business Line, 25 january 2017