The latest Indian budget will have a major impact on food companies, and here are the highlights.
Peak rates lowered by about 5%. Foreign companies remain at 48%.
Employee Stock Option Plans (ESOPs) of MNCs’ managers, including Coke’s and Pepsi’s, will now be taxed.
Development Allowance for tea upped from 20% to 40% (good news for Levers, Tata Tea)
Packaged food made from fruit/vegetables, (juices, sauce, jam, etc.) 0.5%, versus 16.5%, benefiting Parle, Britannia, Pepsi, Nestlé, Cadbury.
Other packaged food products 16%. Earlier 8% for biscuits (Parle, Britannia, Sara Lee) and 24% for Chocolates (Amul, Nestle, Cadbury).
Carbonated soft drinks, vending machines concentrates reduced from 40% to 32%, primarily benefiting Pepsi and Coke.
10% surcharge on all customs duties is abolished.
Foreign food majors will be disappointed at the sweeping hikes, and other non-tariff barriers : All foods, included imports, have to carry a Maximum Retail Price (MRP) printed on the consumer pack, besides many other packing, marking and health regulations. A countervailing duty reckoned on the MRP with 40% to 50% abatement to cover trade commissions and transportation.
Edible Oil: Unrefined from 41.1% – 62.01% to 82.91%, refined from 56.26% – 79.25% to 93.36%. Tea, coffee, copra, coconut, desiccated coconut from 44.4% to 76.8%.
Spirits will now attract a new CVD equal to State Governments’ taxes, in addition to the Customs Duty which remains ‘unchanged’ at 222.4% versus WTO limit of 150%.
By Navroz Havewala, just-food.com correspondent