South Asia radius

Fat tax on the cards for next month’s Budget

By RJ Whitehead

- Last updated on GMT

© iStock
© iStock

Related tags Junk food Nutrition

Budget watchers are predicting an increase to taxes on fast food and sugary drinks on February 1 after senior ministers put pressure on the prime minister to introduce a health levy.

A delegation of 11 politicians and officials met Narendra Modi to discuss introducing a fat tax on foods they deemed unhealthy. The proceeds would be used to fund health schemes, one member of the group told Times of India​.

Momentum has been growing in India for fiscal action to be taken on food and drinks containing high levels of sodium, sugar and saturated fats. Since a proposal reached the Lok Sabha last April, the government has formed a committee under the health secretary to guide its policy direction.

The FSSAI, the food regulator, has recently issued guidelines to stop the sale of junk food near schools and govern labelling. It is also “working on mechanisms to regulate consumption of junk food​,” said CK Mishra, the health secretary, who was among those who met Modi.

Fizzy drinks are also mentioned in plans for a new goods and services tax, which will likely be rolled out by September. The beverage category has been singled out for a so-called “sin​” tax, grouped alongside tobacco and luxury cars, to the dismay of the industry.

In its most recent guise last year’s tax proposal now covers foods with high content of sugar, fat or salt, potentially bringing brands such as Maggi, Cadbury, Lays and Kurkure under its umbrella. It would also come in addition to the sin GST rate, according to media reports.

Kerala is currently the only Indian state to demand a fat tax on junk food. In last year’s budget, the southern state introduced a 14.5% tax on burgers, pizzas and pasta served at branded restaurants.

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Law Commission to recommend life imprisonment for adulterators

India’s Law Commission is expected as soon as this week to give its recommendations on amending the penal code for adulteration crimes, which include an enhancement to the severest penalty to life imprisonment.

Adulteration

Having considered the laws relating to the adulteration of food, the Law Commission is ready to present a raft of recommendations on changes to Section 272 and Section 273 of the IPC.

Its views were sought by the government after the Supreme Court demanded a review of the  “grossly inadequate​” penal provisions in place today.

Food adulteration is currently punishable with a fine up to INR1,000 (US$14.70) under a long unchanged section of the Indian Penal Code.

The Law Commission is expected to agree with the court and recommend a maximum penalty of life for cases involving death—bringing the Centre in line with states such as Uttar Pradesh, West Bengal and Odisha. It will also recommend an increase in financial penalties.

It has also been reported that special courts to fast-track adulteration cases are on the cards.

Ready-to-mix market to see double-digit growth in wealthier India

India's ready-to-mix food market could be worth as much as US$284m by 2020, an annualised increase of 15.7% fuelled largely by the increasing disposable income of a growing middle class.

India

According to a new report by Future Market Insights, the growth of organised retail and an increase in the number of working women with less time to spend in the kitchen have also been contributing to the growth of the ready-to-mix market.

Usually grouped into snacks, dessert and curry mixes, ready-to-mix food lines should soon see a period of expansion bringing wider offerings, it said.

In one example, MTR Foods has recently introduced new range of snacks variants including salty, pepper and spicy banana chips, and Huli Thengols—a snack made of yogurt—for a market that is constantly looking for new varieties in authentic snacks. 

Other prominent players include ITC, Gits Foods, Kohinoor, Ushodaya Enterprises and BambinoAgro Industries. 

The snacks mix segment is projected to account for around 51% of market share by 2020, owing to strong demand. The curry mix sub-segment, meanwhile, is expected to record strong growth of around 16%. 

Organised channels are expected to see strongest sales growth, at 16%, followed by online purchasing.

Hectic lifestyles and growing demand for packaged food, coupled with increasing disposable income, are expected to fuel the growth of India’s ready-to-mix market over the next five to six years​,” the report said, predicting that ready-to-mix foods will soon be seen as mainstream convenience products. 

The market is, however, hindered by a combination of weak distribution channels, price-sensitive consumers and low awareness of ready-to-mix products by shoppers.

This year, companies are expected to focus on adopting new technology for better cooking performance, while increasing their attendance at exhibitions, seminars and workshops to drum up business.

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