KPMG Predicts $70bn food retail to double by 2025
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Cold Chain stays Hot!
Budget 2011-12
This Budget continued the focus on cold chain development in India.
Main points
Full infrastructure status granted to cold chain sector. More so, Viability Gap funding was announced for the cold chain. External Commercial Borrowings was opened for this sector last year.
Customs duty to set up cold storages, further reduced to 2.5% - this immediatley translated into cost reduction for imported technology. Truck Refrigeration units were already exempted from basic customs duty last FY.
Excise duty exempted to cold chain equipment. Exemption from service tax to installation of cold storages was declared last year.
Food security bill announced for later this year. Declared that focus in 2011-12 to be on removal of supply chain bottlenecks in food sector.
Infrastructure spending to be increased by 23% with special focus on agriculture based infrastructure. Food storage capacity to be augmented - 15 more mega food parks to be set up; previously 15 such were already sanctioned in last fiscal.
To provide an added Rs 300cr to develop initiatives for horticulture marketing (initiatives). Corpus on rural infrastructure development was also increased to Rs180bn. Comprehensive policy to further develop PPP models underway.
There is no roll back to investment linked tax incentive announced last year and to ongoing grants and subsidy schemes.
Effect on Cold Chain Business
Applicable to setting up and operating ‘cold chain’, warehousing & transportation facilities for agricultural produce including apiary, horticultural, dairy, poultry, aquatic, marine or meat products.
New asset creation in this field is given a boost and Investments in cold chains and warehouses continue to stay eligible for 100% depreciation in the first year itself.
Expect increased foreign interest in cold chain in India.
With food security bill to roll in, expect a move from volume based to excellence based services.
Benefits will begin to accrue soon as policy implementation is triggered.
Cold Chain stays Hot!
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