The GST is sounding to be silent alarm for the small players in the food processing sector. This trepidation was stated by Subodh Jindal, president, All India Food Processors’ Association (AIFPA) on the sidelines of the ASSOCHAM, 12th Global FAD, which took place in Ahmedabad recently which focused on food processing, agri and dairy business.
The assemblage said that the set of laws of the GST are now completely in favour of large multinational corporations (MNCs). Jindal expressed that as the new tax regime has improved the liquidity situation for large companies, but worsened the situation for the smaller ones.
“There was no tax refund on service tax on consultancy services during the previous regime. The large companies take such services on a routine basis. Now, clubbing all the taxes under one roof has enabled them to get a refund of GST paid on such services. We have difficulties in getting GST refund on exports,” said AIFPA head.
Under GST , all players with an annual turnover of Rs 1.5 crore need to get themselves registered with the tax authorities. They have to file monthly returns, making compliance costlier and complex, while earlier they were just filing quarterly return.
Jindal alleged that the new taxation system had been copied blindly from western countries, where large corporations are the norm, while in India, small industries are a norm. There are lakhs of small and medium enterprises (SMEs) in the food sector providing jobs to locals in remote and rural areass.
“If these are wiped out, there will be huge amount of job losses,” he warned, adding, “Small players cannot compete with large MNCs in the production of grain flours because of economies of scale. Large players can procure raw materials at a lower cost. They have better systems for quality control.”
Suraj Savalia (CMD), Patson Group of Companies, which manufacture and export processed food items said that large MNCs has expertise for all segments associated with business, while in small companies, the owner looks after total functionalities of his organization.
“The new regime has tilted the balance in favour of large MNCs. If proper safeguards are not given to local SMEs, they will be wiped out,” he added.