Soaring food prices coupled with weak monsoon has taken toll on biscuit industry, especially the SME units, in the country. The Rs 6,000-crore industry is looming under the escalating prices of major raw materials used in making biscuits.
Wheat, sugar, edible oil and milk powder are the essential commodities used for manufacturing biscuits. From past few months, prices of all these commodities have soared causing trouble for the industry. Since January 2009, prices of sugar, a key input for manufacturing biscuits, have risen by over 35% and likely to increase further, thanks to weak monsoon.
The annual biscuit output stood at 17.25 lakh tonne in financial year 2008-09. However,
April-August 2009, the industry saw a 10% decline in production.
Indian Biscuit Manufacturers? Association (IBMA) president BP Agarwal said, ?We have written to the concerned ministry urging immediate steps to curb prices.? While addressing the annual general meeting of IBMA, he said special allocations of sugar and wheat should be made to the biscuit manufactures in the SME segment to tide over the crisis faced due to rise in input prices.
Cost of production has also been adversely impacted due to price hike in petrol and diesel which indirectly leads to high transportation cost.
Along with this, biscuit industry has to bare the burden of taxation such as value added tax (VAT) of 12.5%, state/local taxes, entry tax/octroi, purchase tax and excise duty on packaging materials. The Centre had reduced the excise duty from 8% to 4% in Budget 2009-10.
However, Agarwal said the government should also reduce VAT on biscuits as the tax on products such as bread, jam, ketchup and jelly is minimal.
The Biscuit industry is a labour intensive and employes 3.25 lakh people directly and 35 lakh people indirectly.
However, escalation in the cost of production coupled with price hike in raw materials has led to the closure of 8-10 small scale biscuit units and rendering 7,000 jobless.