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We would like to propose simplification of CENVAT waiver: Danfoss president
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February 18 , 2015
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In view of the forthcoming Union Budget 2015-16, Ravichandran
Purushothaman, president, Danfoss India (an infrastructure, food supply,
energy efficiency and climate-friendly solutions company), has put
forward the following expectations for the benefit of the food
processing sector in the country.
“As a strong player in the
manufacturing sector, we expect the government to address key issues of
energy security, skill gap and food inflation.
The Make in India
initiative envisioned by our prime minister has definitely fuelled the
industry growth engine. However, while ease of doing business is
important, it is equally important that necessary infrastructure is in
place for industries to manufacture. Since power is an important element
in this regard, we expect a special focus on initiatives that could
promote energy efficiency in the Budget. Improving the energy efficiency
of existing infrastructure through incentivisation and having the right
policies for new infrastructure not only improves this ratio but also
contributes to lowering GHG emissions.
While we expect the Budget
to indicate a greater contribution from the manufacturing sector
towards the GDP, specific directives need to be rolled out to measure
energy efficiency achieved to ensure we are running sustainable
businesses. In this regard, we would reckon that a reduction in excise
duty by 5 per cent can further incentivise the local production of
energy efficiency products. Today there is no tool or policy that
mandates the use of energy efficiency products in industries. In fact,
energy efficiency should reflect in our GDP.
Additionally, given
that MSME inevitably form the backbone of the country’s economy, and the
fulcrum on which Make in India success depends, tax reforms will be
crucial. On this front, we hope rolling out of the GST Bill will enable
these sectors by easing indirect taxation laws.
Food inflation
is another issue that will require close monitoring. Last year’s Budget
saw an encouraging allocation of Rs 5,000 crore towards the Warehouse
Infrastructure Fund to help conserve food wastage which in turn will
control inflation. This time, in addition to developing cold chain, we
hope the entire process from farm to fork is taken into consideration.
Here, we would like to propose simplification of the CENVAT waiver that
can be availed of by cold chain equipment users. The current dictate
demands intensive documentation to testify that the equipment is being
used for agriculture/horticulture produce storage purposes. Also, in
case of sectors unregistered under Excise department such as
agriculture, the stipulated conditions are not even applicable,
defeating the very purpose. Furthermore, sectors such as dairy and ice
cream do not find the impetus in availing this waiver given the
cumbersome process. The same is the case for cold rooms required in
distribution / for distributors. The distributors are not excise
registered, though they handle excisable product. To make the process
more efficient, government will need to give clear direction to enablers
such as NABARD on the exact allocation for agriculture and horticulture
grid and ease the movement of the produce between states and allocate
specific Budget to improve the infrastructure required for the movement.
Encouraging the food processing sector can help divert the
excess produce kept in warehouses and ensure economic mobility in the
sector. Last year, the government made investment allowance @ 15%
available to manufacturing units making an investment of Rs 100 crore or
more in a financial year which was subsequently reduced to Rs 25 crore
per annum. However, Over 90% of food processing industries come under
the small sector band and may not have the flexibility of investing Rs
25 crore in one financial year. Since the percentage of investment
allowance is fixed at 15% the manufacturing unit concerned will get only
15% of the amount invested in plant & machinery during the
specified financial year which will not suffice. Therefore, we recommend
that this minimum investment requirement be done away with to provide
stimulus to SMEs in general & processed food industries in
particular.
Furthermore, Centre and states should fix the PDS
system and ensure that food is not wasted in godowns. Additionally,
R&D of cold chain systems dovetailed to India could be provided with
tax incentives.
The next big deterrent to development we see is
lack of skilling. There is a lot that the manufacturing sector can learn
from the services sector. More provisions must be made to encourage
skilling, ‘upskilling’ and ‘reskilling.’ Only if we are provided with
adequate skills can the sector grow to meet both local and global
demands. This can be achieved through PPP and a conducive atmosphere
that fosters greater collaboration between industry experts, government
and private players. Developing customised curriculum through industry
academia initiatives is a growing trend and must be encouraged. This
apart, the industry itself should allocate sufficient resources to
enable continuous learning and improve employee skill sets. Again when
it comes to cold chain and food processing, skilling again cannot be
overlooked. There is a need to modernise agriculture and empower farmers
with the know-how of modern technology (basics, soft and technical
skill) and urge their adoption to conserve harvest.”
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