The Hindu Business Line : Retailers laud excise exemption on cold chain equipment

Mumbai, March 1 The Budget proposal to exempt certain cold chain refrigeration equipment from excise duty, might act as an encouragement for retailers to consider setting up their own back-end logistics.

Mr Andrew Levermore, Chief Executive Officer, Hypercity, said: “It is effectively a 16 per cent saving on the capital cost, which is substantial. “The supply chain infrastructure is made of many other expensive components, besides refrigeration, but this is definitely a step in the right direction. We will be able to revise our capital cost estimates down slightly, and the saving would flow to the consumers at the end of the chain.”

Mr B.S. Nagesh, Customer Care Associate & Chief Executive Officer, Shoppers’ Stop, said that achieving a particular scale was necessary for a retailer to be able to set up back- end infrastructure. But the boost to cold chain facilities would help the business, he explained.

“There are certain imported food items we cannot bring in due to absence of a proper cold chain support. Also, the supply chain will become more efficient as wastage will go down,” he said. The company, at present, outsources 100 per cent of its requirements for Hypercity.

An industry insider, on conditions of anonymity, said that the ideal situation would be when retailers would come together to share the infrastructure, just as in the telecom industry. “But the industry is nascent and the competition fierce. The industry will have to evolve over a period of time before we can achieve this,” he said.

Mr A.K. Joshi, Executive Vice-President and Chief Operations Officer, EM&RBG, Voltas Ltd, said, “The range of the products covered under exemption of excise duty has been increased. It is clear that the FM wants to encourage cold storage, but to what extent, we will only know once we get the blueprint of the proposal.”

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