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Budget 2017: Parag Milk Foods' CMD shares four-point wishlist for dairy industry

With Budget 2017 just around the corner, Parag Milk Foods’ Chairman and Managing Director Devendra Shah shared his four-point wishlist for what he expects from Finance Minister Arun Jaitley’s financial statement. Here’s what he said:

After the government’s demonetization move to shift towards a cashless economy for long-term economic growth, all eyes are now on the Union Budget for clarity on taxation policy and regulatory issues, and norms for support of cashless economy.

This year, we hope to see supportive policies for the Dairy Sector.

I’ve a wishlist for the FM to give the dairy sector a much-needed boost:

1) Boost investment in dairy sector

Given market access, remunerative prices to farmers, dairy can become a potent tool for equitable growth and income distribution. Genuine impetus to the dairy sector can lead to elusive balanced and inclusive growth where our villages progress alongside urban India. Given this, it is reasonable to assign the status of ‘Agriculture products’ to milk products, therefore bringing Milk & Milk Products to NIL under GST.

2) Create alternate livelihood for farmers

After demonetization, there were some reports suggesting that farmers faced difficulties in sowing Rabi crops because of the unavailability of new currency notes in sufficient numbers. Given this, going ahead food inflation could become a challenge. Keeping the unpredictability of monsoon in mind, the government should provide for an alternate source of earning for farmers. Private dairy sector should be provided with additional incentives to ease the lives of farmers.

3) Boost dairy growth through private sector

With India being at the top of the milk producers’ list in the world, it currently contributes about 15 % to the total milk production of the world. After the entry of private players, there has been a sharp rise in the production and demand for milk and milk products in the country. However, the sector is still underdeveloped and extremely fragmented. A subsidy on purchase of milk from farmers under cashless conditions shall be initiated to bring double advantage in terms of supporting farmers from vagaries of monsoon and also bringing economy to cashless.

4) Develop Infrastructure

Proper packaging of milk products is one of the most important aspects of the industry. Currently there’s a serious dearth of necessary infrastructure for chilling plants and bulk coolers which leads to a lot of wastage due to spoilage. We will be looking out for incentives to invest in cold chain infrastructure in terms of subsidy and tax relief. Milk packaging should be made exempt of all duties like excise, CST, Octroi, and so on and should be considered under the food processing industry. If a meaningful impetus were to be given to the dairy industry, all machinery and equipment used by the industry should be exempt from import duty.