India as a destination – agro-industry & food processing – growing market
- Posted on October 7, 2021
Agro-industry & Food processing in India is poised for growth. Policy measures taken to streamline & broaden this market will catalyze the agro-industry to new heights. The sector presents huge opportunities for overseas investors exploring the Indian market. India can easily become the manufacturing hub to supply global markets. Indian states are pitching independently to global players by creating ideal conditions for this industry.
With talented skill sets, fiscal & non-monetary benefits on offer, advanced research in universities, infrastructure geared to industry needs, etc; India is becoming the top choice for foreign direct investments (FDI), joint ventures & technology transfers arrangements. Global players looking to diversify production bases find India interesting. The emphasis for value addition in the agriculture sector is very clear. By increasing use of arable lands & with higher yields, India is looking to become the food basket of the world.
Food processing industry in India is ready to contribute to the global food trade with tremendous potential for value addition. Presently this sector accounts for nearly 32 % of the country’s food market. In the period April 2020 to January 2021 exports of principal food commodities crossed US $ 32 billion. Complementing basic food grains production are horticulture, livestock, milk production & sugarcane farming. India is the largest manufacturer of Pulses, Mangoes, Banana, Milk, ginger, Buffalo meat, spices and 2nd biggest manufacturer of rice, wheat, potato, garlic, cashew nut, groundnut, dry onion, peas, pumpkin, gourds, cauliflowers, sugarcane, tea, fish production & aquaculture in the globe. India produces 17 % of vegetables worldwide. About 40 % of the world’s mangoes and 30 % of bananas & papayas are produced in India.
MNCs producing Cold drinks, Wafer chips, Juices, Italian pasta, pizza, burgers, sandwiches, cornflakes, oats, ketchup, etc are commonplace. Even developing countries like Thailand, Philippines and Brazil are processing more than 70% of their produce. It’s strategic location & convenient connectivity makes India an ideal export hub for eastern & western markets with food importing locations like Middle East & Africa in close proximity. Large food processing companies like Britannia, Parle, Hindustan Lever, Kohinoor Foods, McCain Foods, MTR Foods, Nestle, Venky’s etc have growth plans for catering to the Indian middle market clientele. Resultantly, many ancillary industries required in their manufacturing supply chain will benefit.
With the favorable eco-system & specific focus, this sector would grow exponentially. Rising household income, organized retail markets & rapid urbanization are the major demand drivers domestically. Opportunities exist in waste removal measures like innovative farm preservation systems, skill development, cold storage facilities, cold chain transportation mechanism, processing infrastructure, research & development for processed food and packaging, etc. Taking advantage of wetlands aqua-horticulture can be developed. By exploring IQF (individually quick frozen) for fruits & vegetables, producing pulp, pastes, purees, sauces, canning, dehydration, pickling etc shelf life of the farm produce is enhanced. Similarly livestock & marine processing is another area of potential.
The Prime Minister’s Kisan Sampada program is a comprehensive scheme aimed to streamline this sector from the farm to the retail outlet. The government offers fiscal benefits to small & medium enterprises in food processing by way of incentives which include capital subsidies, tax rebates, reduced customs & excise obligations. The National Bank of Agriculture & Rural Development (NABARD) fund provides concessional loans to mega food parks & devices hooked up therein. Foreign Direct investment at 100 % in the automatic route is permitted. Renovated countrywide projects for creation, expansion & maintenance of agro-processing clusters & setting up linkages are ongoing. With increased attention in this sector, several Agri-export zones, mega food parks & cold chains have been installed. The Food Safety & Standards Authority of India (FSSAI) provides testing laboratories & certifies products for the industry.
Mega Food Parks are based on ‘cluster’ approach and focus on creation of state-of-the-art support infrastructure in a well-defined agri/horticultural zone for setting up of modern food processing units in the industrial plots provided in the park with well-established supply chain. Cold chains & value addition services cover creation of infrastructure facilities along the entire supply chain viz. pre-cooling, weighing, sorting, grading, waxing facilities at farm level, multi product/ multi temperature cold storage, Controlled Atmosphere (CA) storage, packing facility, IQF, blast freezing in the distribution hub and reefer vans, mobile cooling units for facilitating distribution of horticulture, organic produce, marine, dairy, meat and poultry. Grant-in-aid for storage infrastructure such as ripening chamber, pack houses, pre-cooling units are available. Creation of backward & forward linkages to provide seamless integration for the industry by plugging gaps in the supply chain in terms of raw material availability & access to the markets, financial assistance for setting up primary processing / collection centers at farm gate & modern retail outlets.
Financial assistance to undertake demand driven R & D work for benefit of the food processing industry in terms of product and process development, efficient technologies, improved packaging, value addition etc. are extended. In the interest of consumer safety, public health & need to ensure quality of food products manufactured / sold in the market; stringent parameters are prescribed by the food safety regulator. Grants-in-aid are given in the form of reimbursement of expenditure towards implementation of HACCP/ISO Standards/Food Safety/Quality Management Systems. The “Nivesh Bandhu” is a dedicated portal aimed at facilitating ease of doing business & presenting information on incentives & policies on a single platform. The pan-India electronic portal “E-NAM” networks the existing Agricultural Produce markets. The Dedicated Investment Targeting and Facilitation Desk (ITFD) at Invest India assists potential investors in a structured manner & help frame policies & strategies to sensitize the investment community about opportunities as well as policies.
The key stakeholders on this initiative are the Ministry of Food processing Industries, Ministry of Fisheries, Animal Husbandry & Dairying, National Horticulture Board, Agriculture and Processed Foods Export Development Authority (APEDA), Marine Products Export Development Authority (MPEDA). Educational Institutes like National Institute of Food Technology Entrepreneurship and Management (NIFTEM), Indian Institute of Food Processing Technology (IIFPT), Central Food Technological Research Institute (CFTRI) & Central Marine Fisheries Research Institute (CMFRI) promote in-depth research & development in food science & technology.
Annual global production in Food processing is estimated at $7 trillion. The processed food market in India is expected to reach US $ 470 billion by 2025 with supportive infrastructure & other initiatives of the Government. This growing Indian market presents ample potential to global mid market players to enter the country thru direct investments, collaborations, joint ventures, technology transfer agreements at this opportune time.
Agro-industry & Food processing in India is poised for growth. Policy measures taken to streamline & broaden this market will catalyze the agro-industry to new heights. The sector presents huge opportunities for overseas investors exploring the Indian market. India can easily become the manufacturing hub to supply global markets. Indian states are pitching independently to global…