Dairies seek scrapping of 16% duty on milk powder
TIMES NEWS NETWORK[ SATURDAY, DECEMBER 13, 2003 03:08:04 AM ]

NEW DELHI: The dairy industry has demanded that the government immediately remove the 16% excise duty imposed on concentrated milk, pointing out that there was a clear distinction between this and condensed milk which was placed on par with the former in the Central Excise Tariff.

Emphasizing that continued imposition of excise duty on concentrated milk was completely against the interest of milk farmers and the consuming public, the Tamilnadu Chamber of Commerce and Industry maintained at a press briefing here that condensed milk is a value-added product with sugar and other additives mixed with milk, whereas concentrated milk was only shrunk milk with no additives.

Arguing that the Centre’s decision to levy the 16% duty on concentrated milk was completely counter to public interest, chamber president R Rathinavelu said  milk in its concentrated form and devoid of water, was not only much easier to transport to shortage areas from glut areas, but also far cheaper in comparison to normal milk transportation in times of shortage. Milk, he pointed out, could usually be concentrated to 1/4th of its volume and be expanded as pure milk at the consuming end by adding water, and with absolutely no loss in aroma.

In contrast, the process of denaturalisation involved in the manufacture of milk powder meant that thermal shock damaged milk proteins which is not the case with concentrate milk. It is a paradox that milk powder is exempted from excise duty, whereas concentrated milk is levied 16% excise duty, Mr Rathinavelu said.

Comparing the transport costs to shortage areas for normal milk with concentrated milk, the TCCI, Madurai president pointed out that transportation of normal milk in a tanker lorry from south to the north to cover a distance of approximately 2000 kms and back worked out to around Rs 3.20 per litre.

By concentration, though, the volume was shrunk to one third and transport cost per litre would work out to only around Rs 1.07. The actual saving per litre would be around Rs 2, he said.