Union food processing industries minister Chirag Paswan has emphasised the impact of recently introduced GST reforms to be felt equally by farmers and consumers due to the backward integration of these reforms.

“The kind of commitment the industry has shown, I am extremely confident that not only the consumers will get benefitted, but through backward integration, the farmers will also get benefitted,” said Paswan during a media briefing on Thursday.

Paswan said that the food processing industry is set to benefit the most with these reforms due to the rate cuts seen in essentials and agricultural products. The GST rate on ‘prepared/preserved vegetables, fruits, nuts’ has been slashed to 5% from the previous 12% under the new reforms.

For Paswan this in turn will lead to reduced prices for daily vegetables and fruits impacting every single household. Additionally, he said that this will pave way for further formalisation of the unorganised sector.

This becomes pertinent particularly because demand for processed food has seen exponential growth over the years, particularly driven by growth in international markets.

However, Paswan says that these GST benefits will only be transferred to consumers if industry players such as those owning cold storage and food processing units, or involved in value addition along the supply chain refrain from investing in farmer groups improving their yield. However, he assures that the industry players, with whom he had a series of interactions, have expressed interest in carrying out the investments in the said direction.

“The supply chain should be in a way that the farmers also get the benefit, it should not be only from one side. The backward integration is also equally important, and with these reforms, the industry will have a lot more to invest, and when [they do], I would want them to invest in farmers, in organising that also through FPOs or through SHGs,” Paswan added.

Paswan added that with India striving towards self-reliance, and with the rise of urbanisation and with it the concept of nuclear families or working couples, the ready-to-eat and processing industry is set to see further growth. This will additionally lead to a massive reduction in wastage thus empowering the farmers with declining post-harvest losses.

“I believe that the more the processing sector grows, the more we will be able to minimise post-harvest losses,” Paswan said.