Saturday, August 11, 2012

“You have to put all processed food items in the Zero VAT Category...”

Balram Singh Yadav, Managing Director, Godrej Agrovet, analyses the industry in an exclusive interview to B&E

Godrej Agrovet has been associated with agribusiness and food processing for quite some time now. Here, Balram Singh Yadav, MD, Godrej Agrovet, gives rare insights into the dynamics of the industry...


B&E: Distribution and intermediation due to a fragmented supply chain increase costs in India by 15-30%. What should the government do to overcome such barriers?

BSY: Two things need to be addressed for this. Firstly, investment should be made in education of farmers on post-harvest technology. This is of particular importance to fruits and vegetables. Secondly, government should invest in storage and transportation in cold chain by subsidizing entrepreneurs and forming private-public partnerships.

B&E: Do you believe contract farming as a model will become successful to allow growth of large food processing units in the country?

BSY: Contract farming is difficult because of fluctuations in market prices at the time of harvest. Farmers are against fixed price procurement regime as they believe that they will not get the benefit of higher prices if they exist at the time of harvest. However, in case of price contract, farmers have always insisted on a price above Minimum Support Price even market prices are below that. Legal framework for enforcement of contract in contract farms is very poor.

B&E: How should the incentives for R&D in India’s food processing sector be enhanced so that rapid technological innovation can take place?

BSY: R&D expenses are already eligible for tax deduction at 150% level. Since R&D takes a long time, the government could give more deduction for R&D expenditure. The biggest support government can give the food sector is to put all Processed Foods in Zero VAT category.

Read more....

Posted by at
Labels: , , , , , , , , , , ,