Taxes on processed foods are the highest in the country compared to the rest of the world, according to Gokul Patnaik, President of All India Food Preservers' Association.

Apart from the central tax, processed foods are taxed by state governments also as they wrongly perceive it as a luxury item.

The burden of purchase tax, sales tax, octroi duty and other cess levied on these items was already quite high and with this increase in the central excise duty to 16 per cent, the total burden on taxes on some processed food items will be over 50 per cent.

Because of the perishable nature of the items like fruits, vegetables, dairy and other animal products used in the manufacture of final products, a depression in demand may cause hardships to the farm community and may even force them to resort to distress sales, said the Association.

The body has also said that out of the total production of fruits and vegetables in India (which makes the country the second largest producer of these items in the world), only as much as two per cent is processed. There are large-scale losses in the post harvest stage amounting to as much as over Rs 50,000 crore per year. Under the present circumstances, the government should have awarded more concessions to this sector in the budget, said the Association.