labels: industry - general, finance - general, economy - general, governance, union budget 2005
FMCG sector reacts positively news
28 February 2005
Hindustan Lever (HLL), Tata Tea, Agrotech foods, Cargill Foods, Kalleshwari Mills, Bunge Ltd, Procter &Gamble and other companies in the foods and FMCG space are likely to be a happy lot.

For HLL, Tata Tea and Khaitans the abolition of surcharge of Re 1 on per kg of tea is a welcome step. Apart from this there is the proposal for a massive 'replantation and rejuvenation' for domestic tea plantations which will benefit tea exporters reeling from competition.

Excise on refined edible oils (Re 1 per kg) and vanaspati (Rs 1.25 per kg) has been scrapped which will benefit edible oil makers like Cargill Foods, Agrotech Foods, Bunge India and Marico especially so since this puts these companies on par with edible oil makers like Adani Wilmar operating in the excise free zones of Kandla in Gujarat.

Utpal Sengupta, managing director Agro tech Foods

Utpal Sengupta managing director Agrotech Foods Ltd, said, "Overall I'd say this is a good budget. The FM has been able to keep the reforms agenda moving in the right direction, in spite of significant political pressure from different constituents of the UPA.'

He added that, "Some questions to do with the implementation of the various schemes and initiatives remain. For example, while setting the VAT ball rolling is commendable, issues on how it is going to be implemented is not yet fully resolved, and one is concerned that there could be considerable dislocation in end-March/early-April," he said.

Companies like Amul, Nestle, HLL and Britannia will benefit from the halving of import duty on refrigeration vans to 10 percent.

Companies like HLL and Procter & Gamble will also benefit from the duty cut on detergents.

Other fillips to the foods industry is that the import duty on cloves has been cut to 35 percent, area specific excise exemptions for North East, J&K, Himachal Pradesh are likely to continue to encourage FMCG companies to relocate to these areas.

The reduction of taxes will leave additional disposal income in the hands of consumers which will spur demand for FMCG products.

Lastly the implementation of VAT from April 1, 2005 will pave the way for a singular tax going forward, which will help companies cut costs and become competitive.


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FMCG sector reacts positively