JAIPUR: The cookie crumbles when it comes to biscuits, or this is what the bake-man says. The biscuit-manufacturing sector in the country has complaints of discrimination against it by the Centre and State governments in imposition of excise and VAT. The glucose biscuit, the source of nutrition for ordinary folks, is taxed more than potato chips, cheese, pasta and ice cream, the industry says.

According to the Biscuit Manufacturers' Association (BMA), the organised sector -- which accounts for more than 50 per cent of the 20-lakh tonnes of biscuits manufactured in the country every year— is made to pay 8 per cent excise and 12.5 per cent VAT for every 1 kg pack. This is when no excise is imposed on potato chips, valued at Rs.300 per kg, and cheese, priced at Rs.200 per kg. The VAT rate in the case of potato chips is only 4 per cent. "The biscuit industry, which contributes Rs.3555 crores every year to the agriculture sector by way of wheat flour, sugar and vegetable oil consumed by it, is a neglected area. The industry cannot sustain itself any more with this kind of taxation and low returns," said BMA president Maria R. Iyer talking to media persons here.

"The present margins in the biscuit industry are unsustainable. The last time the prices of popular category biscuits such as glucose, Marie and milk were revised was in 1996," Ms. Iyer pointed out. The glucose, Marie and milk categories, most popular with the middle and lower income groups, constituted 80 per cent of the total annual biscuit sales. They are mainly sold in packets of 50, 75 and 100 grams priced from Rs.2 to Rs.5 per pack.

"The price freeze, going on since 1996, has been voluntary though there had been an over 55 per cent increase in input costs. We feel a rounded off price increase to the next rupee would be unbearable for most of the consumers. The price revision would also force the consumers to shift to the products from the unorganised sector which would a compromise on quality and nutrition," Ms. Iyer argued.

The profit margin in one kg of glucose biscuit, priced at Rs.40, had been reduced to a mere 13 paise, she said.

When put together, the Rs.5400-crore glucose-Marie-milk category and the cream-chocolate-salted category (Rs.3100 crores) is Rs.8500 crore business annually.

"The bread as a category has been deservingly treated in taxation by the Central and the State authorities. However this is not the case with the biscuit category whose agricultural input is higher than the Rs.2200-crore bread segment," said BMA Rajasthan president Manoj Sharda.

Rajasthan is one of the top five biscuit consuming States in the country with an estimated 65,000 tonnes sale (valued at Rs.270 crores) annually.

In a representation submitted to the president of the State's VAT Committee, S. N. Gupta, BMA pleaded that with the introduction of VAT the industry is being made to pay 12.5 per cent tax against the earlier Sales Tax of 8 per cent.

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