The inclusion of low-priced glucose and other biscuits under the proposed Goods and Services Tax regime will probably lead to shutting down of about 240 biscuit factories.
They have sought exemption under the GST saying these low-prices biscuits under Rs 100 per kilogram are low margin products and are currently exempted from the central excise duty.
A proposed flat 12 per cent GST on biscuits will be a grave injustice to the poor as biscuits retailed below Rs 100 per kg are treated as merit goods. If these products are included then about 240 biscuit factories will shut down.
Low-cost biscuits which at present account for 40 per cent of total sales may fall down to 20-25 per cent if they are taxed under GST.
Biscuit manufacturers, however, are in consensus that the government can levy high tax of even up to 18 percent on higher priced biscuits.
Biscuit manufacturers make only 2-3 per cent profit on below Rs 100 per kg biscuits.As per Biscuit Manufacturers Welfare Association, biscuits industry at present in India in estimated at Rs 37,500 crore.