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Food Industry

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Food Industry

March, 2011


Propelled by the increasing disposable income, the food sector has been witnessing a marked change in consumption pattern. Currently, India is the world’s second largest producer of food in the world and the food processing industry is the one of the largest industries in India. In terms of production, consumption, export and expected growth, India is ranked fifth in the world.

India’s food industry is valued at US$ 180 billion of which the food processing industry is estimated at US$ 67 billion, according to a report ‘Food Processing and Agri Business’, done by KPMG.

The industry size has been estimated at US$ 70 billion by the Ministry of Food Processing, Government of India. The food processing industry contributed 6.3 per cent to India’s GDP in 2003 and had a share of 6 per cent in total industrial production. The industry employs 1.6 million workers directly. The industry is estimated to be growing at 9-12 per cent during the period 2002 to 2007. Value addition of food products is expected to increase from the current 8 per cent to 35 per cent by the end of 2025. Fruit & vegetable processing, which is currently around 2 per cent of total production will increase to 10 per cent by 2010 and to 25 per cent by 2025. The highest share of processed food is in the dairy sector, where 37 per cent of the total produce is processed, of this only 15 per cent is processed by the organized sector. The food processing industry in the country is on track to ensure profitability in the coming decades. The sector is expected to attract phenomenal investments of about Rs 1,400 billion in the next decade.


Exports of agricultural products from India are expected to cross around US$ 22 billion mark by 2014 and account for 5 per cent of the world’s agriculture exports, according to the Agricultural and Processed Food Products Export Development Authority (APEDA).

Exports of floriculture, fresh fruits and vegetables, processed fruits and vegetables, animal products, other processed foods and cereals stood at Rs 17728.71 from September 2010-2011, according to DGCIS annual data published by APEDA.

India will be setting up a global platform for spice trade. The organization named World Spice Organisation (WSO) will be headquartered in the Kochi, Kerela. Spice related organizations across the world will be coordinating prices across the world and address the issue of food safety regulations through WSO.


The export of spices and spice-based value added products during April-February 2010-11 was US$ 1,323.28 compared to the US$ 1,063.44 in the same period last year.


Fish production of the country has been growing continuously with improvement in productivity and utilisation of untapped resources. The total fish production is 6.4 million metric tonnes (mmt) of which 3.4 mmt is inland and 3.0 mmt is marine production. The Fishery sector contributes about 1.21 per cent of the total GDP and 5.37 per cent of the GDP from agriculture sector and provides employment to 14 million people.

Food Processing

FDI inflows to Food Processing Industries has set a target of USD 25.07 billion to be achieved by 2015.

Food processing industry is accounts for 32 per cent share in the entire food industry. It comprises of 2 per cent of fruits and vegetables and 15 per cent of processed milk. This industry contributes to 6.3 per cent of the GDP and about 13 per cent to export production. The food processing industry is expected to witness a growth of 10 per cent in the recent years to come.

The food processing sector attracted US$ 130 million of foreign direct investment (FDI) in the first eight months of the fiscal as compared to total FDI of US$ 1.2 billion.

Besides attracting FDI through schemes like mega food park, the government has also extended several fiscal incentives during this financial year to enhance FDI in food processing sector, including full exemption from excise duty for specified equipments to preserve, store or transport apiary , horticultural, dairy, poultry, aquatic and marine produce and meat and its processing products.