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Budget should boost dairy growth through private sector: Devendra Shah, Parag Milk Foods

Genuine impetus to the dairy sector leading to its growth will lead to that elusive balanced and inclusive growth where our villages progress alongside urban India.

The Government’s focus is on implementation of a cashless economy which supports long-term economic growth. All eyes are now on the Union Budget for clarity on taxation policy and regulatory issues, and norms for support of cashless economy. We hope to see supportive policies for the Dairy Sector.

1. Boost Investment in Dairy SectorDairying in India is not just an economic activity. It is an integral part of our society, our culture. No other industry can claim to touch lives of millions of farmers; more than half of them landless. Given market access, remunerative prices to farmers, dairy can become a potent tool for equitable growth and income distribution. Genuine impetus to the dairy sector leading to its growth will lead to that elusive balanced and inclusive growth where our villages progress alongside urban India. Given over 40% of population of India is vegetarian. Milk is now the largest crop of India and Milk products are the primary source of Protein for nutritional development of Population. It is reasonable to assign a status of Agriculture products shall be assigned to Milk Products. Therefore bringing Milk and Milk Products to NIL under GST is warranted.

2. Create Alternate Livelihood for farmers –  There have been some external reports stating of farmers difficulty to sow Rabi crops due to the unavailability of new currency notes in sufficient numbers. If the reports that large areas of agricultural land have remained unsown are true, food inflation can become a challenge. With unpredictable monsoon season, we shall look for alternate source of earnings for farmers. Keeping this in mind, Private Dairy Sector shall be provided with additional incentives for ease of farmers.

3. Boost dairy growth through private sector –  India is the largest producer of milk. The Indian dairy industry presently contributes about 15% to the total milk production of the world. Dairy Industry in India presents a plethora of opportunities. Earlier, dairy industry was dominated by co-operatives but since last 20 years with the entry of private players, we have seen a sharp rise in demand for milk and milk products.

The private sector have overtaken the cooperatives today. The overall industry is underdeveloped and extremely fragmented. Private Sector is now willing to further speed-up its investment in Indian dairy industry but an extremely poor state of farmers and no incentive for Private Dairy to develop farmers is becoming a real hurdle. A subsidy on purchase of Milk from farmers under cashless conditions should be initiated to bring double advantage in terms of supporting farmers from vagaries of monsoon and also bringing economy to cashless.

4. Develop infrastructure – To maintain quality, longer shelf life and to keep it fit for human consumption, proper packaging of milk products is essential. Investment in cold chain infrastructure should be promoted and support in terms of subsidy and Tax relief be granted. Packing of milk products should also be construed as processing for preservation and the packaging industry should be exempt from all duties like excise, CST, Octroi etc. and should be considered under the food processing industry. If a meaningful impetus were to be given to the dairy industry, all machinery and equipment used by the industry should be exempt from import duty.

5. Avoid loss of nation’s crop – Also, when there is a thrust on increasing the milk production, then there should be ample amount of facilities to handle it. There is a dearth of required infrastructure of chilling plants and bulk coolers due to which so much of milk goes waste due to spoilage. Bulk Milk Coolers cover long distances to and fro from the collection centre. There is a shortage of refrigerated vans and insulated tankers for ferrying the chilled milk to the processing plants. Government shall create a fund to support these activities by subsidizing these investment to a large extent for economic growth of the country.

The author, Devendra Shah is CMD, Parag Milk Foods Ltd.