Home » Budget 2001 - 02 » Union Budget 2001-02 » Post Budget Scenario » FMCG

Post Budget Scenario


FMCG Industry

Budget Offers
Import duty on crude edible oil increased from current 35-55% to 75%.

Customs duty hiked from 35% to 70% for import of copra, coconut, tea and coffee.

Import duty on refined edible oils increased to 85% from 45-65% currently.

Vanaspati manufacturers would be charged a duty of 55%, up from 25%, on imports of crude palm oil

Soda ash import duty reduced from 35% to 20%.

Food-processing industry got a special mention this year. All food preparations based on fruits and vegetables completely exempt from excise duty. This will include a very wide range of products of common use like pickles, sauces, ketchup and juices, etc.

The development allowance available for the tea industry has been raised to 40% from 20%. This additional allowance would be used only for replantation, rejuvenation and modernisation of tea plantations.

10% surcharge on customs duty removed.

The Impact
Companies like HLL, Tata Tea, Marico benefit because of the hike in customs duty on tea and edible oils. Tata Tea and HLL will also benefit as a result of increase in the tea development allowance.

Detergent companies which import soda ash for raw material will benefit. However, companies like Nirma, which have an in-house raw material sourcing plant, will not benefit much. Nestle will not be impacted by the hike in import duties in coffee, as Nestle imports coffee beans and not packaged coffee. Infact, it will have an advantage over any company importing packaged coffee in terms of costs.

As a result of removal of excise duty on some processed foods, HLL, Nestle and Marico will again benefit given the fact that sauces, juices and other some items form a significant part of their processed food business.