Prime Minister Manmohan Singh on Tuesday called for rationalisation and simplification of the tax structure for the “sunrise” food processing industry which, he said, had the potential to transform rural economy.

“Though primary agricultural commodities are mostly exempted from taxes, processed foods are subjected to multiple levies. There is therefore an urgent need to rationalise and simplify the tax structure,” he said opening the first-ever State Ministers’ Conference on Food Processing here.

“The food processing industry is fragmented and most of the players are small and unorganised. This poses a special challenge to the development of the industry as a whole. The small-scale sector will require hand holding to make them profitable and even competitive in the world market,” he said.

“The State governments can play and should play an important catalytic role in this effort in partnership with bankers, financial institutions and technical and management institutions.” Small and Medium Enterprise clusters could be identified for all-round upgrading by infusing new technology, through new packaging methods and by providing adequate marketing support.

Impressive growth

Despite the economic slowdown, the food processing industry in India grew at an impressive rate of 14.7 per cent in 2008-09, Dr. Singh said. He asked it to “think big” and “think globally” about the future of the sector. “There is no reason why they should not emerge as global brand names just as our IT industry has done to our great satisfaction.”

“I recognise that there are a number of constraints in both the forward and backward linkages in the sector. But if we get our act together, as we must, India can emerge as a leader in the global food processing industry.”

Recognising that a few States already formulated their own policies, Dr. Singh urged others to do the same. The Agriculture Produce Marketing Committee Act should be implemented and so also the Goods and Service Tax, aimed at integrating State economies and creating a single, unified Indian market.

Recognising the effort of the Ministry to draw up a national food processing policy, Dr. Singh asked the States to work in cohesion and seize the immense opportunities on offer “This is a sunrise industry and if we give it the importance it deserves, it has the potential to dramatically improve rural livelihood opportunities and employment, to bridge the rural-urban divide and to improve farming methods and practices.”

Noting that the southern States were aware of the potential of the industry, while central and northern States were also catching up with them, Food Processing Minister Subodhkant Sahai said the States should formulate an investment-friendly policy.

Vast potential

While Food Processing Secretary Ashok Sinha described the immense potential of the sector, Agriculture Secretary T. Nanda Kumar emphasised the need for convergence, delivery and strong partnerships with farmers.