What the budget proposal means for cold-chain.
(Union Budget of India 2015-16)
It is amply clear that to properly utilise the cold-chain, and to initiate a supply of fresh farm produce to consumers, the supply chain operator, at the source end (farm gate), needs to prepare the harvested produce for travel from farm gate to market. This involves pre-conditioning procedures (e.g. washing, waxing, de-sapping), retail packaging and labelling, pre-cooling, before undergoing climate controlled storage and transportation and ripening. None of these measures alter the essential characteristics of agricultural produce as no food processing is involved – the farm produce is delivered fresh and whole, from farm to market. These preconditioning procedures make it possible for agricultural produce to be marketed more efficiently and help to reduce losses in supply chain and to prolong the freshness of produce.
Under the provisions in India’s Finance Act, in regards to service tax (see Section 66D (d) (iii) of Chapter 5 of Finance Act 1994 and Chapter VA of Finance Act 2003), processes carried out at an agricultural farm which do not alter the essential characteristics of agricultural produce but only make it marketable for the primary market do not fall under the Negative List. However, elsewhere (Section 65B(5) of the Act), “agricultural produce” is defined to mean any produce of agriculture on which either no further processing is done or such processing is done as is usually done by a cultivator or producer.