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Food Industry

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Food Industry

March, 2012


The Indian food and drinks market has witnessed strong growth over the past few years. Liberalisation of the economy and growing income of middle class population have had a positive impact on consumer spending and consumption in both rural and urban areas. Indian consumers now spend a significant proportion of their income on food and other essential commodities. Numerous other factors like demographic and macro-economic conditions have also given boost to expenditure on food and beverages in the country.

The total food production in India is expected to double in the next ten years and there is ample opportunity for huge investments in food and food processing technologies, skills and equipments.

The food processing industry in India stands at US$ 135 billion and is projected to grow with a compound annual growth rate (CAGR) of 10 per cent to reach US$ 200 billion by 2015.

The food industry is divided into various segments namely, milk and allied products (dairy), meat and poultry, seafood, bakery and confectionery, fruit and vegetables, grain, pulses and oilseeds (staple) products, alcoholic and non-alcoholic products (beverages), and packaged food.

The food processing industry in India is witnessing quick growth. In addition to the demand side, there are changes happening on the supply side as well with the growth in organised retail, increasing foreign direct investment (FDI) in food processing and introduction of new products.

The growth has happened because the Government of India has given a priority status to all agro-processing businesses. Government incentives in the field of mega food parks, cold chain and exports benefits are also playing an important role in encouraging food processing.

Key Players

The major players operating in the Indian food and beverages industry include Dabur India Limited, Godrej Industries Limited, Hindustan Lever Limited, Britannia Industries Limited, ITC Limited, Nestle` SA, PepsiCo, Inc, Cadbury Schweppes PLC, Future Group, RPG Enterprise and Godrej Agrovet Limited.

Food Processing Industry

Food processing industry is one of the major sectors in India in terms of production, growth, consumption, and export. The turnover of the total food market is approximately US$ 69.4 billion out of which value-added food products comprise US$ 22.2 billion. India's food processing sector covers fruit and vegetables; spices; meat and poultry; milk and milk products, alcoholic beverages, fisheries, plantation, grain processing and other consumer product groups like confectionery, chocolates and cocoa products, soya-based products, mineral water, high protein foods etc.

India is the world's largest producer of milk, second largest producer of fruits and vegetables and the third largest fish producer and it ranks second in inland fish production. With a huge agriculture sector, abundant livestock, and cost competitiveness; India is fast emerging as a sourcing hub of processed food. India produces 200 million tonnes (MT) of food grains each year.

India's comparative advantage lies in its favourable climate, geographic location - it is geographically close to key export destinations (Middle East, South East Asia), large agriculture sector and livestock base, long coastline, and inland water resources.

Government of India anticipates US$ 21.9 billion of investments in food processing infrastructure by 2015. Investments, including foreign direct investment (FDI), will rise with strengthening demand and supply fundamentals. The FDI inflow into agriculture and food processing during April 2000-April 2011 was US$ 4 billion.