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Decision to increase tariff on imports will trigger inflation: Food industry Leaders

Friday, February 9, 2018, 19:00 Hrs  [IST]
HBI Staff | New Delhi

Leaders of the food processing industry in the country have opined that the budget proposal to levy custom duty on more than 50 items across 10 sectors will trigger inflation in the long run as industry transfer the burden to the consumers through the finished products. While the government’s desire is to protect the domestic industry and encourage Make in India, the CEOs of the food and food processing industry in the country feel that the decision will ultimately end up in creating “sectoral differences”.

Speakers at a panel discussion organised as part of the 11th annual FoodWorld India by FICCI in Delhi, questioned the rationale of introducing tariffs. While more than half of the edible oil demanded in the country is met through imports, the industry felt that the decision to impose tariffs will put additional burden on the consumers.  

Suresh Narayanan, Chairman & Managing Director, Nestle India said that the question is whether India has the technological capabilities to produce ingredients which are really high-end that companies like Nestle use in their products. There is some amount of import necessary to adhere to standards. When duties are imposed on imports, the prices are bound to go up for products.  “Any kind of policy that is seen to protect the domestic industry is a short-term solution to a longer term strategy that we need to work on,” he said.  
Commenting on the issue, Siraj Chaudhry, Chairman, Cargill India, opined that while the lower inflation and lower commodity prices of major commodities give the legroom for government to bring in tariffs in the guise of protecting the local farmers and manufacturers, the challenge before the government would be how quickly they will be able to bring it down when the reverse journey of commodity prices happens.

Vikas Mittal, Managing Director-India & Subcontinent, McCain Foods also cautioned that such tariffs will result in “sectoral differences” in the long run. Such tariffs are beneficial where local capabilities exist, but in sectors where no local capabilities exist, imposition of duties will create long-term challenges, he observed.

“We need to be careful while imposing tariff on imports,” said Parth Patel, Business Director, South Asia, DuPont. Hemant Malik, CEO – Food Division, ITC Ltd., citing the way duties have been increased indiscriminately between last July and November, said that an additional 10% would definitely jack the prices up of such products in the market.  

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