Budget 2011: Provide fiscal incentives to promote eco-friendly packaging, says Sanjay Bhatia, Hindustan Tin Works Ltd

The packaging industry is a 65000 crore industry and is growing @ 15% pa; the market growth is believed to have a direct correlation to GDP of the country.

Budget is expected to deliver a clear path for the roll out of GST in terms of necessary legislative amendments and removal of CST, encourage food processing and packaging, reduction in food waste with special incentives to companies engaged in such business which will play a key role in tackling food inflation in the country.

We have urged the government to provide fiscal incentives to promote packaging which is environmental friendly, recyclable and sustainable. These incentives can be given in terms of subsidies, refund of indirect taxes, concessional duty on import of capital goods/inputs and income tax exemption.

With the recent ban on non-environment friendly Guthka packaging it is extremely important that some legislative changes come into existence which make other modes of packaging, which are environment friendly a more financially viable option for FMCG companies which use such materials for packaging their goods.

The recommendations made to the Government are as follows:

* Deemed export should be brought at par with physical export for the purposes of refund of excise duty in order to address the issue of CENVAT accumulation with the industry.

* Alternatively, the accumulated CENVAT credit should be allowed to be adjusted against the purchase of inputs so that excise duty should not be paid again on such inputs resulting into further accumulation of CENVAT.

* Appropriate fiscal incentives should be considered to promote packaging which is environmental friendly, recyclable and sustainable. These incentives can be given in terms of subsidies, refund of indirect taxes, concessional duty on import of capital goods/inputs and income tax exemption.