Low Margins Curtails Production of Glucose, Marie & Milk Biscuits

The Rs.36,000 crore Indian Biscuit Industry has demanded complete waiver on Good & Services Tax on ‘Low Price High Nutrition’ (LPHN) Biscuits priced under MRP Rs.100/- per Kg.

As per Mayank Shah - Vice President & Spokesperson of the ‘Biscuit Manufacturers Welfare Association, “LPHN biscuits are the only hygienically produced affordable snack sold in small packs retailing at Rs.2/- to Rs.5/-. Consumed mainly by low income group, any increase in price of LPHN biscuits causes a direct reduction in demand. While there is a 62% weighted average hike in input costs (Maida, Sugar and Vegetable Oil) over the last decade the Biscuit Manufacturers have been unable to increase their realisation pro-rata.”

Glucose Biscuits offer consumers 72 Kilo Calories/ Per Rupee compared to 55 by Bread, 18 by Potato Chips and 29 by Namkeens. All three enjoy concessional rate of taxes. A 70 gram pack of Glucose Biscuits which retails at Rs.5/- offers 315 K calories which is about 16% of the daily dietary recommend allowances by the government.

Last year the Biscuit Industry procured agriculture produce of over Rs.13,300 crore. Sugar prices have more than doubled in the last decade and current wheat flour & vegetable oil prices make net margins on LPHN biscuits reduced to just 3%. Fear of an advent of negative margins phase forces manufacturers to curtail production, leaving demand un-satiated. Glucose Biscuits retailed at Rs.70/- per Kg today, attracting net taxes of Rs.7.21, which is higher than the value addition earned by the industry (Rs.7.01 only).

Mayank Shah explained, “The Government may tax all Premium Biscuits as they deem fit and we are a highly compliant industry with last annual contribution to the exchequer at Rs.3075 crore. However, on behalf of over 600 manufacturers of Low Price High Nutrition Biscuits retailed at up to MRP of Rs.100/- per Kg, I urge the GST Council to completely exempt LPHN Biscuits.”