(a) whether the Government has any proposal to provide 100 per cent tax exemptions to food processing
units;
(b) if so, the details thereof;
(c) whether inspite of the tax exemption, the progress aimed for Food Processing Industry has not been
achieved; and
(d) if so, the reasons therefor alongwith the main hurdles being faced by the industry?
THE MINISTER OF STATE FOR FOOD PROCESSING INDUSTRIES (DR.CHARAN DAS MAHANT)
(a)&(b): Under Sub-section 11A of Section 81B of heIncome Tax Act, 1961, adeduction from profits
up to specified amounts [100% for the first 5 assessment years andthereafter 25% (30% in the case of a company)
for the another 5 assessment years] is allowed in the case of an undertaking deriving profits from
the business of processing, preservation and packaging of fruits or vegetables or from the
integrated business of handling, storage and transportation of food grains subject tospecified
conditions, if such undertaking begins to operatesuch business on or after the first day of April 2001.
Witha view to encourage preserving perishable food items like milk, poultry and meat, the Finance (No.2)
Act, 2009 amended sub-section (11A) of section 80 IB to also provide tax holiday in respect of the
business of processing, preserving and packaging of meat and meat products and poultry, marineand dairy
products for units which begin to operate such business on or after 01.04.2009.
Further, the Finance (No.2) Act, 2009 also extendedan investment-linked tax inventive by way of insertion
of a new section 35AD in the income tax Act, 1961 to the business of setting up and operating cold chain
facilities for specified products and to the business of setting up and operating warehousing facilities
for storage of agricultural produce, commencing operations on or after 01.04.2009. As per thissection,
100% deduction would be allowed in respect of the whole of any expenditure of capital nature (other than
on land, goodwill or financial instruments) incurred, wholly and exclusively, for the purpose of the
specified business during the previous year in which such expenditure is incurred subject to specified
conditions in order to give animpetus to the setting up of food processing units.
(c) & (d): The food processing sector is continuously growing, however, there appears to be a lot
of scope for further growth, which is often affected by constraints like perishability of products,
seasonal availability of rawmaterial, non-availability of processable variety of fruits/vegetables,
inadequate infrastructure both at farm-gate level and at secondary/tertiary level combined with
huge supply chain constraints.