India is the second largest producer of food and holds the potential to be the biggest on global food and agriculture canvas, according to a Corporate Catalyst India (CCI) survey. The food industry in India comprises food production and the food processing industry. The food processing industry is one of the largest in India – it is ranked fifth in terms of production, consumption, export and expected growth.
Agriculture sector is vital for any nation and in India is the principal source of livelihood for more than 58 per cent of the population. Agriculture sector has touched a growth rate of 4.4 per cent in the second quarter of 2010-11 thereby achieving an overall growth rate of 3.8 per cent during the first half of 2010-11.
Area under food crops has increased from 122.78 million hectare (ha) in 2001-02 to 125.73 million ha in 2010-11 (4th advance estimate). Production of food grains has increased from 212.85 million tonne (MT) in 2001-02 to 241.56 MT during 2010-11(4th advance estimates). The food grain production target for the year 2011-12 has been fixed at 245 MT, which is likely to be achieved on back of favourable weather conditions.
The Indian food industry is projected to grow by US$ 100 billion to US$ 300 billion by 2015, according to a report by a leading industry body and Technopak. During the period, the share of processed food in terms of value is expected to increase from 43 per cent to 50 per cent.
Food processing industry is of enormous significance for India's development as it has linked economy, industry and agriculture in India, efficiently and effectively. The three pillars being together have synergised the development process and promoted the growth of the nation to a great extent.
There are 25, 367 registered food processing units in the country whose total invested capital is Rs 84,094 crore (US$ 17.81 billion), as per a competitiveness report of the National Manufacturing Competitiveness Council. This information was given by Dr Charan Das Mahant, the Minister of State for Food Processing Industries, in a written reply to the Lok Sabha.
The food processing sector is presently growing at an average rate of 13.5 per cent per annum. The Vision Document 2015 envisages increasing the value addition from 20 per cent to 35 per cent by 2015.
Food processing industry is one of the largest industries operating in India and is divided into several segments.
The Food Processing Industry operates across various segments that include:
Value addition of food products is expected to increase from 8 per cent to 35 per cent by 2025. Fruit & vegetable processing is also expected to increase from the current level of 2 per cent to 25 per cent of total production by 2025, as per the CCI report. Dairy sector – that holds highest share in processed food market – holds large potential to be exploited. The report reveals that 37 per cent of the total dairy produce is processed of which only 15 per cent is done by the organised sector. Hence, there lies a plethora of opportunity for investment and development.
The food processing industries in India has attracted foreign direct investment (FDI) worth US$ 1,273.96 million from April 2000 to June 2011, according to the data provided by Department of Industrial Policy and Promotion (DIPP).
The Indian non-alcoholic drinks market was estimated at around US$ 4.43 billion in 2008 and is expected to grow at a compound aggregate growth rate (CAGR) of around 15 per cent during 2009-2012, according to a report published by market research firm RNCOS, titled "Indian Non-Alcoholic Drinks Forecast to 2012".
As per the report, the fruit/ vegetable juice market will grow at a CAGR of around 30 per cent in value terms during 2009-2012, followed by the energy drinks segment which will grow at a CAGR of around 29 per cent during the same period.
France's Groupe Danone is merging its distribution operations in India with its probiotic drinks joint venture (JV) Yakult Danone India Pvt Ltd for better synergies.
The increasing rate of real spending in rural areas, suggests increasing incomes, as per the household consumer expenditure survey for 2009-10, released by the National Sample Survey Office (NSSO). Rural Indian households are reportedly spending more on consumer goods like durables, beverages and services than five years ago.