Budget 2022: Revise custom duty on raw materials for chocolates

The Indian chocolate industry has grown by leaps and bounds over the past few years. On the consumer front, there has been a call for healthy snacking options, giving a further boost to innovative brands that are brining forth healthier chocolate options. From heart-healthy dark chocolate bars to chocolate barks infused with immunity boosting ingredients such as Ashwagandha and Tulsi, the chocolate industry is evolving at a robust pace.

Needless to say, there is huge growth potential in the sector. Slated to grow at an impressive CAGR of 12.1 percent between 2021 and 2026 as per IMARC Group, the chocolate industry is looking forward to the Union Budget 2022, awaiting certain measures that can help the sector achieve its optimum potential.

Here’s a look at the key expectations from Finance Minister Nirmala Sitharaman in Budget 2022:

Slash GST

A GST of 18 percent is currently levied on chocolates. This is a high percentage that often acts as an impediment to growth, especially for smaller industry players with boutique offerings. The segment expects a reduction of the GST to 12 percent, which will give a significant fillip to brands, fostering further innovation. The benefits from a lower GST may also be passed on to the customers, fuelling the category’s growth.

Revisit the import duty

New-age chocolate brands are striving to create lip-smacking confectionaries and desserts that can compete with global offerings in terms of taste and quality. However, there is a considerable roadblock facing the brands – a high customs duty on raw materials. If the government reduces the customs duty on raw materials for chocolate brands, brands will be able to sell their products at lower costs. This will ultimately boost sales and benefit the category in a big way.

Set-off losses for upto 10 years

The COVID-battered economy has impacted most industries, including the chocolate sector. With the COVID threat still looming and the future of the outbreak uncertain, brands will benefit a great deal if business losses are allowed to be carried forward for up to 10 years. Such an amendment to the Income Tax Act will help impacted brands to set off the losses faced in 2020 and 2021 against future profits. 100 percent income tax exemption can also help brands find their footing after two years of plight.

At the cusp of hypergrowth given the growing demand, the chocolate industry will welcome the aforementioned benefits to navigate this turbulent time with greater ease of doing business and a more favourable cost of doing business.