Budget 2023 Expectations: Food and beverage sector seeks restoration of input tax credit

Indian food and beverage industry is hoping for reintroduction of input tax credit in this year’s budget as the countdown to the biggest annual economic extravaganza begins. As inflation leads to rising cost pressure, government allowing input tax credit could prove to be a succor for the sector, opine experts.

Non availability of input credit is the biggest loss for the F&B industry, Rajat Agrawal, Chief Executive Officer at Barista Coffee Company said adding that the absence of it is having a bearing on the balance sheet of the company. Compared to other industries, F&B business stands at a distinct disadvantage, the CEO said.

 The quick service restaurant chain runs espresso bars and cafes across the country.

Its reintroduction will not only support the F&B business, but also give a much needed impetus in the post pandemic world, Agrawal said. This demand has also been endorsed by Vinay Maheshwari, Founder & CEO, The Health Factory.

“Looking forward to changes in Input Tax Credit (ITC) and Special provisions for companies that are committed towards making healthier products under the Make in India initiative,” Maheshwari said. “It will give a tremendous boost to companies hit during the pandemic days who are slowly recovering from it,” he added.

Meanwhile, Agrawal also seeks special incentives and easy credit eco-system for the sector for funding growth and to further push government’s flagship ‘Make in India’ initiative by using indigenous goods.

Prolonged lockdowns due to Covid-19 in 2020-21 and spiraling inflation over 2022 have been the biggest undoing for the sector. Food start-ups were hit badly as a result of this, opines Shikhar Veer Singh, Co-Founder of Samosa Singh, a start-up founded in 2016.

He seeks relaxations that could mitigate impact of rising cost that is denting margins for start-ups such as Samosa Singh.

Maheshwari also seeks government support to the food processing sector under the MSME incubator scheme along with measures to connect the MSME sector using the PM Gati Shakti project to leverage the supply chain infrastructure.

“This will help in increasing the reach to more customers and continue to grow their business,” he added.