Cut GST rates in food processing to boost consumption: Nestle India


Interview with Suresh Narayanan, chairman and managing director, Nestle India

One must not say that there is a consumption slowdown, at least in the consumer goods until there is a decline in the secular trend in the segment, said Nestle India chairman and managing director Suresh Narayanan in an interview with Daanish Anand. And if the government takes steps to address problems related to taxation, agricultural growth, food processing and employment generation, then the secular growth trend will become positive, believes Narayanan.

What are your expectations from the Union Budget 2019, which will be presented on July 5?

Whatever the government does for employment generation, investment, agriculture and food processing and to encourage consumption in the economy is going to be an important step. The steps will help in addressing problems related to Goods and Services Tax, taxation and reduction in taxation, encouraging agricultural growth, food processing industry and employment generation. So if we do it all together, then I understand that our secular growth trend will become positive.

Do you have any specific demand related to your sector that should be taken care of by the finance minister?

Every step taken to have Ease of Doing Business in the context of a more enabling regulatory framework would help the food processing industry. Apart from this, we would like to request the government to reduce the GST rates in certain areas of the food processing industry as this reduction would give a boost to its consumption. Thirdly, the food processing ministry has done it in the past as well and I am very happy on the reappointment of Harsimrat Kaur Badal as the food processing minister. In her first tenure, she took steps under ‘Operation Green’, for the progress of certain crops such as tomato, onion and potato. The operation was designed to have the collection sources close to the farms and to build infrastructure over there. I think a robust and fast-paced implementation of the projects will help in moving ahead in terms of agricultural income and prices as well as employment generation.

Is the decline in consumption a worrisome issue for your company? By when do you anticipate an uptick in consumer sentiments?

The comments that I gave during our first quarter results were based on the secular trend of consumption, which was not hit a lot. If you look at the market information provided by Nielsen and other agencies, then you will find that there was a decline in rural consumption in the first quarter but in the third quarter of last year, the rural consumption was quite high. So the decline was a decline from those levels. But no, one must not say that there is a consumption slowdown, at least in the consumer goods until he/she can’t see a decline in the secular trend in the segment. Rest of the segments, mainly two-wheeler and automobile, are facing a different situation, but we haven’t seen such a secular trend in the consumer goods industry. So I expect that the government – with the mandate that Modi Government has received – through the Budget and the newly constituted Cabinet committees on investment, growth and employment should implement certain quick wins to improve the overall sentiments.

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