Mr Saigal was speaking at the international conference on cold-chain infrastructure organised by Ficci and the International Association of Refrigerated Warehouses (IARW) here on Tuesday. Pointing out that the Finance Ministry was convinced about the need for such a decision, Mr Saigal said an increase productivity of the food processing sector by 10 per cent would push up the GDP by seven per cent as per studies now being conducted. This is also expected to generate 13 million jobs.

However, Mr Saigal made it clear that income tax sops would not be given as the relief would go to large entrepreneurs. The relief would be in terms of exemption from sales tax, octroi and excise tax.

The food processing sector in India is paying the highest tax rate in the world, which works out at around 40 per cent. This is against unprocessed food which is not taxed at all.

Mr Saigal also pointed out that the government is also coming out with a Food Act to replace the obsolete Prevention of Food Adulteration Act.Giving the broad parameters of the new legislation, he said there would be provision for a futures market, setting up of an equalisation fund for compensating food processors when raw material prices go up, creation of a development fund, formulation of food fortification parameters and evolution of genetically active seeds and plants. The new Act is likely to be in place soon. According to Mr Saigal, there is also a need to ensure higher remuneration to farmers. It is necessary to have refrigerated chains to store products for longer time and to ensure a higher shelf life for them.

He said the food processing industry should streamline distribution channels across the country as is being done by industries such as biscuits.