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Food Processing Industry Analysis

March, 2013

India is the world's largest producer of milk, second largest producer of fruits and vegetables and the third largest fish producer. With a large agriculture sector, abundant livestock, and cost competitiveness, India is fast emerging as a sourcing hub of processed food.

The sector's total output stood at US$ 93.1 billion in FY10. The size of the sector has been growing fast; output expanded at a compound annual growth rate (CAGR) of 16.9 per cent over FY05-10. Exports of processed food and related products stood at US$ 19.7 billion in FY11, thereby recording an average annual growth of 14.7 per cent since FY09.

Strong growth in per-capita income has resulted in greater demand for food items. Young population and increasing media penetration has led to a surge in demand for packaged food, alcoholic and non-alcoholic beverages, snacks, savouries, etc. The Government of India (GOI) has allowed 100 per cent export-oriented units to sell up to 50 per cent of their produce in the domestic market. Export earnings are also exempted from corporate taxes. The Government has helped by investing in agri export zones (AEZs), mega food parks and easier credit.

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