Budget: Why biscuit makers are unhappy

The complete excise duty exemption on biscuits priced up to Rs 50 per kg announced in the Budget notwithstanding, small manufacturers are unhappy that there is nothing to chew for them.

"The proposal will benefit only a part of the industry as no exemption will be available to those manufacturers who sell biscuits above Rs 50 per kg," Federation of Biscuit Manufacturers of India Secretary Asad Wasi said.

It should be widespread, covering the entire industry, he added. Most of the manufacturers, particularly small scale manufacturers, are suffering from increasing raw material prices and have to sell their product for Rs 75 to Rs 80 per kg or will have to close their units, he said.

Wasi warned that giving a price-based exemption could result in a compromise with quality as manufacturers would start using low-quality and cheap raw materials to keep the price below Rs 50

per kg.

"The excise proposal would benefit only glucose biscuits manufactured by the three major players in the sector as only they can afford to sell their products at below Rs 50 per kg," B P Agarwal, CMD, Surya Food and Agro Ltd said.

Domestic biscuits market is worth Rs 4,000 crore (Rs 40 billion), of which Rs 2,500 crore (Rs 25 billion) pertains to glucose biscuits. Ninety five per cent of these are manufactured by the major players.

The biscuit makers, however, have not given up hope and plan to take up the matter with the authorities concerned.

"We will discuss the issue at the federation meeting on March 5 and will draft a memorandum of demand, which will be submitted to Finance Secretary and Food Processing Secretary," Wasi said.