Says sector leader in budget reactions

 The new duty structure proposed for imported agro-processed foods and powdered milk will affect the growing dairy and food processing industry, said a leading business in the sector in its reaction to the new budget.

According to the proposed budget, the duty on powdered milk imports is likely to go down from the existing 12 percent to 5 percent. The budget has also set zero regulatory duty on such imports.

Pran-RFL Group said this duty structure will encourage import of milk powder and hurt the local dairy industry.

As a whole, the duty on importing powdered milk has been slashed from 36 percent to 24 percent in the proposed budget.

The conglomerate said the imposition of 10 percent supplementary duty on fruit juice will hike retail prices.

"Entrancement of tariff on main raw material of fruit drink from Tk 4 to Tk 6 per kg will affect the retail price of fruit juice."

The proposed budget does not enhance or impose any additional duty on non-organic carbonated beverages, which are discouraged in many countries, the company said in a statement.

The removal of supplementary duty on imported powdered milk in repacking stage (from bulk to retail pack) at 2.5 percent will reduce retail prices of imported powdered milk and stymie the growth of the local dairy industry.

Dairy sector is a source of biogas (methane), which is renewable energy.

The sector provides organic fertiliser for depleted soil as a byproduct besides providing valuable raw materials for leather and other industries.

Livestock currently contributes 2.79 percent of the country's gross domestic product (GDP) and the exports of leather and leather goods contribute 4.31 percent to the total export earnings.

The removal of tariff value during production stage for payment of VAT on flavoured milk (mango, banana, chocolate and yogurt) will increase VAT on retail pack of the products by more than 60 percent, Pran-RFL Group said.

"This will push up the prices of these products in the market to the detriment of local milk production," said Maj Gen (retd) Amjad Khan Chowdhury, chief executive of the company.

He demanded an exemption of 3 percent VAT at trading stage for liquid milk from the present 1.5 percent for all dairy products.

The proposed duty will also discourage employment generation in non-urban rural areas, said Chowdhury. "More than Tk 40 billion have been kept reserved in the budget as subsidy to the agriculture sector but the dairy sector does not enjoy any similar facility."

“The imposition of supplementary duty (SD) at 10 percent on fruit juice is clearly unjustifiable as it does not fall within the purview of SD which is only justifiable on grounds of being 'luxury item, non-essential and socially undesirable'.”

-The Daily Star