NEW DELHI: In a move that could give a fillip to the fast-moving consumer goods industry, the finance ministry is considering reducing central excise on packaging material to 8% from the current 16%.

“In order to boost competitiveness of India’s food processing sector, we have recommended slashing of central excise duties on the packaging sector. This will promote innovation in food processing and packaging equipment and increase processing efficiency while cutting costs of food products,” said minister for food processing industries Subhodh Kant Sahay.

“We have received many other proposals from the industry like cutting import duties on packaging and finished products but for the time being we are concentrating on bringing down excise duties only,” he said.

A Ficci survey has recommended a nine-point fiscal incentive package, including no import duty on packaging machinery and slashing of import duty on finished packaging materials.

The aggregate import duty on aseptic packaging machinery is 27.48%, which includes countervailing duty (CVD) of 16%. Since aseptic filling machines are not being manufactured in India, the government should remove CVD of such machines, the industry has recommended.

The Indian packaging industry is worth $18.8 billion with average growth rate of more than 15% and its linkages are extensive. The government is keen to create world-class manufacturing units and vocational institutes specifically designed to train manpower for the packaging industry.

There are 700 packaging machinery manufacturers in India, the majority of whom are in the small and medium sector. In the 2007 Budget, the government reduced excise duty on ready-to-eat packaged food and instant food items like idli mix.

According to industry estimates, processed food consumption in India stands at Rs 4,60,000 crore. However, the processing done in India is largely at the primary level. The level of processing and value addition is significantly lower than developed countries and many developing countries.

13 Feb, 2008, 0232 hrs IST,Rajat Guha, TNN

Source: economictimes.indiatimes.com