GST: Small-scale ice-cream makers about to shut shops

Sumeer Singh

Tribune News Service

Bathinda, April 26

Worried by 18 per cent GST (goods and services tax), a major chunk of the ice-cream industry in the state is in dire straits today.

Unable to cope-up with increased manufacturing (production) cost and high rate of tax, a large number of small-scale ice-cream makers have either stalled manufacturing for the season or started procuring finished products from big ice-cream manufacturing brands.

There are dozens of ice cream makers in the state who have decided to shut operations completely.

A small-scale ice-cream maker in Bathinda said, “I was paying a nominal 0.25 per cent tax under the TOT scheme (tax on turnover) but 18 per cent GST is a huge burden. I cannot bear the compliance cost and required infrastructure to operate under GST. Taking small-scale manufacturers in the ambit of the composite scheme (under GST) would have made my survival possible. Now I am left with no option but to procure finished ice-cream products from big brands in city.”

The situation of medium-scale manufacturing units is no different, who were earlier (before GST) paying 14.5 per cent VAT (value added tax), but are now subjected to pay 18 per cent GST.

Increased production and compliance cost (GST) has taken toll on their sales margin.

Talking to The Tribune, Sandeep Kashyap, owner of an ice-cream manufacturing firm in Patiala, and president of Pun Ice-Cream Manufacturers’ Association (Punjab), said, “To stay afloat in an insipid market scene, increasing rate of ice cream is not a viable alternative for us. Owing to increased production cost, GST induced lull in the market, the sales have dwindled up to 50 per cent in the past one year.”

Kashyap added, “Unable to bear high production cost, around a dozen small scale ice-cream makers have placed orders for finished products with us.”

There are more than 500 ice-cream manufacturing units spread across different districts in the state.

There are around 12 ice-cream makers in Bathinda, 15 in Patiala, 60 in Ludhiana, 10 in Jalandhar and around one and a half dozen in Amritsar.

Kuldeep Kumar Jindal, vice-president of the association, said, “More than 80 small and medium-scale ice-cream makers in the Malwa region have started procuring finished products from big brands in the state and from Gujarat (hub for ice-cream manufacturing) as well. Fearing further losses, others have cut-down on production volume.”

He added that keeping the ice-cream industry out of the composite scheme’s (under GST) ambit has done irreparable damage to the small and medium-scale ice cream makers.

“Moreover, the Union government is meeting out step-motherly treatment to our industry by reducing rate of tax for big brands from 28 per cent (VAT 15.5% and excise 12.5%) to 18 per cent GST while this uniform tax structure has put additional burden on small and medium-scale manufactures.