Revise the customs duty on raw materials for chocolates
The Indian chocolate industry has grown by leaps and bounds over the past few years. On the consumer side, there has been a call for healthy snack options, giving new impetus to innovative brands that offer healthier chocolate options. From heart-healthy dark chocolate bars to chocolate barks infused with immunity-boosting ingredients like Ashwagandha and Tulsi, the chocolate industry is changing at a rapid pace.
Needless to say, the growth potential of the sector is enormous. Predicted to grow at an impressive CAGR of 12.1% between 2021 and 2026 according to IMARC Group, the chocolate industry is eagerly awaiting the 2022 Union budget, pending certain measures that can help the sector reach its potential. optimum.
Here is an overview of Finance Minister Nirmala Sitharaman’s main expectations in the 2022 budget:
An 18% GST is currently levied on chocolates. This is a high percentage that often acts as a barrier to growth, especially for smaller industry players with boutique offerings. The segment expects a reduction in GST to 12%, which will give brands a significant boost, driving innovation. The benefits of lower GST can also be passed on to customers, fueling category growth.
Review import duty
New-age chocolate brands are striving to create lip-smacking confections and desserts that can rival global offerings in taste and quality. However, brands face a considerable obstacle: a high customs duty on raw materials. If the government reduces tariffs on raw materials for chocolate brands, the brands will be able to sell their products at a lower cost. This will ultimately increase sales and greatly benefit the category.
Compensation for losses up to 10 years
The COVID-battered economy has impacted most industries, including the chocolate sector. With the COVID threat still looming and the future of the outbreak uncertain, brands will benefit greatly if business losses are allowed to be carried forward for up to 10 years. Such an amendment to the Income Tax Law will help affected brands offset losses incurred in 2020 and 2021 from future profits. A full income tax exemption can also help brands regain their footing after two years of difficulty.
On the cusp of hyper-growth given rising demand, the chocolate industry will welcome the above benefits to navigate this turbulent time with greater ease of doing business and more favorable cost of doing business.
(The author is the founder-director and CEO of the luxury chocolate brand SMOOR)
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Posted: Saturday, January 29, 2022, 1:20 PM IST