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GST to prove death knell for food processing SMEs, says AIFPA

All players with an annual turnover of Rs 1.5 crore need to get themselves registered with the tax authorities under the GST

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The Goods and Services Tax (GST) will prove to be a death knell for small players in the food-processing sector, warned Subodh Jindal, the president of All India Food Processors Association (AIFPA). Players said that the rules of the game are now tilted completely in favour of large Multi-National Corporations (MNCs).

Speaking the sidelines of ASSOCHAM's 12th Global FAD 2018 (that focuses on food processing, agribusiness and dairy) in Ahmedabad, Jindal said that while the new tax regime has improved liquidity situation for large companies, it has worsened the situation for smaller players.

"There was no tax refund on Service Tax on consultancy services during the previous regime. The large companies take such services on a routine basis. Now clubbing all the taxes under one roof has enabled them to get a refund of GST paid on such services. On the other hand, we have difficulty in getting GST refund on exports," said Jindal.

Under GST, all players with an annual turnover of Rs 1.5 crore need to get themselves registered with the tax authorities. While earlier they were filing quarterly returns, now they have to file monthly returns, making compliance costlier and complex.

He alleged that the new regime has been borrowed blindly from western countries, where large corporations are the norm, while in India, small industries are a norm. There are lakhs of SMEs in the sector providing jobs to locals in remote places. If these are wiped out, there will be huge amount of job losses," he warned. "Small players cannot compete with large MNCs in production of grain flours because of economies of scale. Large players can procure raw materials at lower cost. They have better systems for quality control," he said.

Suraj Savalia, CMD of Patson Group of Companies, which manufacture and export processed food items said that large MNCs have experts for all segments associated with business, while in small companies, the owner looks after all the managerial functions. "The new regime has tilted the balance in favour of large MNCs. If proper safeguards are not given to local SMEs, they will be wiped out," said Savalia.

Mega Food Park in Surat to become operational by Nov

The Mega Food Park at Mangrol in Surat will become operational by November, Ashish Doshi, director of Gujarat Agro Infrastructure Mega Food Park Private Ltd, said on Wednesday. The park will enable processing of horticulture crops. South Gujarat is known for its fruits. Moreover, it will provide rail, road and port connectivity to transport finished products within the country and for exports. The facility will play a major role in increasing the income of farmers in the neighbouring tribal areas, he added.

KNOW YOUR TAX

  • All players with an annual turnover of Rs 1.5 crore need to get themselves registered with the tax authorities under the GST 
     
  • While earlier they were filing quarterly returns, now they have to file monthly returns, making compliance costlier and complex 
     
  • Small players cannot compete with large MNCs in production of grain flours. The large players can procure raw materials at lower cost. They have better systems for quality control
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