The incentives announced in the Union budget 2023-24 for the cooperative sector are expected to boost dairy processing industry in the country, said ratings agency ICRA.

Finance Minister Nirmala Sitharaman in her budget speech said: “Co-operatives that commence manufacturing activities till March 31, 2024 shall get the benefit of a lower tax rate of 15 per cent, as is presently available to new manufacturing companies.”

Shamsher Dewan, Senior Vice President, ICRA said: “Setting up of new cooperatives, particularly with a view to include uncovered panchayats and villages augurs well for the dairy sector as more small and marginal farmers will be able to participate in organised milk procurement.”

The incentives for the cooperatives are likely to increase competition for the private players in the dairy sector.

“Private dairy players may start facing increased competition from such cooperatives in these regions. Moreover, low tax rates for new cooperatives which plan to put up manufacturing facilities can give impetus to dairy processing capacity growth,” said Dewan.

ICRA thinks that the sector will also receive increased funding availability as part of the higher agricultural credit targets announced, which would incentivise capacity addition and strengthening of supply chain infrastructure.

Source : The Economic Times Feb 01,2023