New Delhi, Jun 26 (KNN) The increase in commodity prices (Wheat flour) coupled with rising refined palm oil (RPO), is eating into the margins of biscuit manufacturers in India, said Trade Promotion Council of India (TPCI) on Friday.

Speaking on the hike in input cost of raw material for the bakery industry, Mohit Singla, Chairman said, “The Indian biscuits manufacture is going through turmoil and disruption on account of the increased input cost to the tune of 35% to 40%, in the recent past. The industry is not able to honour contract on the agreed pricing, as the purchase of raw material such as wheat, refined palm oil and sugar have shoot.'' 

All three are the essential raw material of the bakery industry, therefore the industry is getting price uncompetitive in the international market despite the good quality.

Further, Chairman TPCI said that the biggest worry is despite having a good harvest and sufficient stocks of wheat and sugar prices are still shooting up.

''A slight rise in input cost can lead to the fear of shortage, the disruptive pricing trends is surely a reason to worry as this is a reality for other sectors as well. Most of the industry in India is inelastic and with the slightest deviation in market dynamics leads to large scale disruption,” he added.

While highlighting the government's decision where it has already approved 5 lakh tonne of maize import for the current financial year at a concessional customs duty of 15 per cent, the chairman said, ''there was news that the government is considering the import of wheat despite having more than a minimum stockpile level.''

''This wheat import will be much below the MSP and market will crash altogether for wheat, creating further volatility and speculation in the industry,” he asserted.

“Six months ago, the price of refined palm oil was Rs 58 a litre, then it shot to Rs 98 per litre and now at 80 per liter. Wheat flour which constitutes 66% of the total biscuit raw material has seen a price rise of Rs 2 per kg and sugar too has registered the rise of Rs 2 per kg. The projected growth of the biscuit industry is artifices the traders and middlemen still play havoc in the market, unfortunately, the government has no control over this,” said Arun Sehgal, Director, Richlite- a biscuits and cookies producing company.

India currently levies 37.5% and 45% import tax respectively on crude and refined palm oil.

Another player, Sunder Industries, manufacturer & exporter of biscuit & namkeen which supplies to the middle east, gulf countries and some part of the African market, its director exports, Vikram Setiya, said, “Due to heavy competition in the international market owing to pricing, the country like Turkey has emerged as a large producer of biscuits, they have huge production due to low labour cost and cheaper raw material. The trouble here is the price increase in palm oil nearly to the tune of 25/- per kg.''

''There is a huge demand for biscuits & namkeens in the international market. Also people love Indian taste, but due to the price we are not able to achieve our goal,” it added.

India exported USD 181 million worth of biscuits in 2019, the major countries of export of biscuits include- USA, EU, Russia and African countries.