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Recently, India has taken many progressive measures and introduced bold reforms with a view to further ease doing business in the country.
These have included the introduction of the goods and services tax (GST), the replacement of the Foreign Investment Promotion Board (FIPB) — the erstwhile body responsible for clearing FDI proposals that required government approval — with the online Foreign Investment Facilitation Portal (FIFP), and online filings and payment of taxes from a corporate law and tax compliance perspective.
Such reforms (other than GST, which was introduced later) have been duly recognised by the World Bank in its 2018 edition of its report on Doing Business that was published earlier this week. India has shown an improvement in 8 of the 10 sub-parameters gauged by the Bank, improving its rankings by a historic 30 spots to reach No. 100 when it comes to ease of doing business among a total of 190 countries ranked.
India’s most significant improvement has been with respect to paying taxes, improving by 53 spots in 2018. It also ranks highly when it comes to protecting minority interests , getting electricity and getting credit.
It has been focusing on the development of world-class infrastructure too to accelerate growth in manufacturing, ensure scientifically planned urbanisation, and to further attract foreign investments. India has commenced the development of integrated trade corridors and has launched Bharatmala, to streamline road development projects.
With the three-day World Food India 2017 taking place in Delhi tomorrow, let’s take how reforms and policy decisions have specifically affected the food processing sector. The levels of food processing are low today, despite India being the largest producer of dairy, and second-largest producer of several fruits and vegetables, and certain forms of meat.
However, the sector offers vast growth potential, given India’s population, rising affluence, rapid urbanisation, abundant availability of raw materials and more recently the growth of organised retail.
Further, the economy has liberalised policies and introduced reforms for promoting investments, developing supply chain infrastructure and improving overall processing levels of food. One such landmark amendment was passed in 2016, by which 100% FDI is now permitted for retail trading (including through ecommerce) of food products manufactured and/or processed in the country.
The ministry of food processing industries also offers several schemes and incentives for the development of food processing and related infrastructure under the central food processing scheme, Kisan Sampada Yojana, with an aim to benefit 20 lakh farmers and generate 5.3 lakh jobs by 2020. Such schemes include providing capital grants for the development of mega food parks, cold chain infrastructure, preservation facilities and agro-processing clusters.
The Food Safety and Standards Authority of India (FSSAI) has also been aligning itself with Codex Alimentarius (literally, food code) international food standards to promote fairness and safety when it comes to India’s international food trade.
Further, the FSSAI has also been introducing several other initiatives to promote ease of doing business in India, including online applications for registration and licensing of food businesses, single-window clearances for imported food products, organising training for food safety professionals and implementation of IT interfaces to minimise visits of food business operators to FSSAI offices.
These measures reflect the intent of GoI to develop a business-friendly environment for food processing, develop a robust infrastructure framework, and promote foreign investments and collaborations in the Indian food processing and related sectors.
With total consumption of the food and beverage segment in India expected to increase from $369 billion to $1.142 trillion by 2025, output of the food processing sector at market prices is expected to increase to $958 trillion for the same period. These estimates show the vast market opportunity offered by the Indian food processing, food retail, transport, logistics and related infrastructure sectors to players in the food processing value chain.
The writer is India region tax leader, consumer products and retail, EY India