To encourage long-term growth of start-ups in the food sector, the government could consider exempting incubators from taxes and customs duty levied on the goods they import, according to a joint report by industry body Ficci and YES Bank. Incubators offer hand-holding to start-ups in their developmental phase.
The report titled ‘Start-Ups: Transforming India’s Food Processing Economy’ — released on Friday by commerce and industry minister Suresh Prabhu on the occasion of ‘FICCI Foodworld India 2018’ — also suggested that there should be tax breaks for start-ups procuring items essential for businesses like hardware, software and communication equipment. Besides, it recommended that “given their role in mentoring and connecting innovators to business growth opportunities, funds contributed to incubators should be treated at par with investments in Research and Development activities for businesses, and proportionally the entities that contribute funds to incubators should also be eligible for the 200% tax benefit currently applicable to R&D investments.” A streamlined tax regime can remove hurdles which impact start-ups, the report said.
Speaking on the theme ‘capitalising food processing in the digital era’, Mr. Prabhu said the government was working on an agriculture export strategy that would give primacy to value addition and job creation. Referring to the potential of marine products exports, he said the emphasis is on value-added exports.
‘200 start-ups’
According to the report, there are close to 200 start-ups in the food processing and allied ecosystem. The food processing sector, valued at $260 billion, and food services and retail, valued at $400 billion, provide ‘immense opportunities for enterprising start-ups to address the challenges and fill in the gaps existing in the food value chain’.
They would hence help develop robust, scalable and replicable models that can transform India’s food processing economy, it said.
