India's Union Budget
Budget 2016: How it affects India's food industry
The finance minister said that full FDI will now be allowed through the Foreign Investment Promotion Board, which will direct overseas investment in the sale of locally produced food.
“One hundred per cent FDI is to be allowed through the FIPB route in the marketing of food products produced and manufactured in India. This will benefit farmers and give impetus to the food processing industry, besides creating vast employment opportunities.”
Elsewhere, the food processing ministry was given a boost through significantly increased budgetary allocation, while the tax rate for relatively small companies will be lowered to promote expansion.
Businesses will also benefit from a price stabilisation fund to support market interventions and prevent abrupt price increases to staple foods.
Regarding agriculture, Jaitley set out policies which he said would double the income of long-suffering farmers over the next five years by improving the supply chain and water use, offering incentives and factoring in the impact of FDI.
“Improving connectivity from farm to market, fast-tracking irrigation projects, provision towards interest subvention for farmers and a crop insurance scheme are steps in the right direction,” he said.
“These steps will help our millions of farmers recover from the rough patch they have been going through and go a long way in boosting confidence and fuelling consumerism in rural India.”
Jaitley said that special attention would be given to ensure adequate flow of credit to farmers as he increased agricultural credit by INR500bn (US$7.3bn) for the coming year. To reduce the burden of loan repayments on farmers, a provision of INR150bn will be made towards interest subvention.
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