'The Organised Sector Is Being Unfairly Taxed'

C Ramachandran, director, Nilgiris Mechanised Bakery and president, Karnataka Wrap Bread Manufacturers Association tells Vyas Sivanand
about the market, hurdles faced by the organised sector and the benefits of foreign influence…

EH&C: Could you comment on the current bakery scenario in Karnataka?

C RAMACHANDRAN: The bakery business is booming and there has been a sudden increase in the number of bakeries. Awareness among people has grown and they are now informed customers. The demand is increasing steadily and there is a huge variety available to choose from.

Do you think it will be healthy competition with foreign players entering the Indian market?

At present, products from abroad are mainly pre-packed cakes, cookies etc, which are sold at a considerable price. Even so, there is still a high demand for them.

What could be highly beneficial is if their highly developed technology and processes are incorporated in India. We recently employed a consultant from abroad for the bakery section of Nilgiris and within 15 days, he generated excellent results by incorporating a series of methods, which we are now using successfully.

What are the main hurdles faced by the organised bakery sector?

Taxes imposed by the government, which do not apply to the unorganised sector, are killing the organised sector. There are only about 60 organised bakers in Karnataka. We have to pay about 36 per cent taxes, which includes local taxes. Central excise also applies to the organised sector bakeries that have a turnover over Rs 1 crore and on certain items like cakes, chocolates and biscuits etc.

I see the unorganised sector and sweet meats like gulab jamun, burfi etc as a threat as they are not taxed. Keeping this in mind there is nothing that the authorities are doing to control the mess.

What is the association doing about it?

We have approached the government several times with regard to this tax issue, but nothing works. They believe that it is only right for bakers to pay these taxes as they make a considerable amount of money, which is not the case.

Apart from addressing these concerns the association also keeps members updated about the various laws, weights and measures, etc. We try to educate members about the latest technology available that can be implemented to better their business.

What are the changes that have taken place in the bakery sector in the past few years?

Except for tools and equipment, the basic method has remained the same. That said many of the changes that have taken place have been in the basic recipes. For example, previously bread was just about mixing flour, yeast, sugar, water but now there is a lot more to it like a variety of enzymes and vitamins.

As for machinery, imported machines are available but they are also very expensive. Locally developed machinery is gearing up and will reach international standards soon. Sourcing of quality raw material is not a problem as it is available locally. The benefits of this have trickled down in the form of customers receiving high quality products from even the local baker.

How about qualified labour in the sector?

Unlike before, many educational institutes are promoting specialised courses and modules on bakery. The industry will develop at a faster rate with more well educated young people taking up jobs in the sector or starting their own bakery business.