The Indian food market is estimated at over US$ 182 billion, and accounts for about two thirds of the total Indian retail market. Further, according to consultancy firm McKinsey & Co, the retail food sector in India is likely to grow from around US$ 70 billion in 2008 to US$ 150 billion by 2025, accounting for a large chunk of the world food industry, which would grow to US$ 400 billion from US$ 175 billion by 2025.

Exports

Exports of agricultural products from India are expected to more than double to top US$ 20.6 billion in the next five years, according to the commerce ministry.

According to estimates by the Agricultural and Processed Food Products Export Development Authority (APEDA), the share of India's farm product exports in the global trade will grow from 2 per cent now to over 5 per cent.

Exports of fresh and processed vegetables, fruits, livestock and cereals rose 10 per cent to US$ 8.67 billion in 2008-09.

Spices

Despite a global slowdown, Indian spice exports are growing. India exported 470,520 tonnes of spices valued at US$ 11.68 billion—an all-time high—in 2008-09.

During the 2007-08, 444,250 tonnes valued at US$ 11.01 billion were exported. Compared with 2007-08, exports had shown an increase of 19 per cent in rupee value and six per cent in dollar terms.

Food Processing

The Indian packaged processed foods industry is estimated at US$ 10.87 billion – US$ 13.05 billion, including biscuits, chocolates, ice-cream, confectionery, snacks, cheese and butter. Growing at a healthy 14-15 per cent over the past two-three years, major players in the sector include Britannia, Nestle, Amul, ITC Foods, Parle, Kellogg’s, GlaxoSmithKline, Wrigley and Frito-Lay, among others.

The industry received foreign direct investments (FDI) totalling US$ 143.80 million in 2007-08 against US$ 5.70 million in the previous fiscal. The cumulative FDI received by the industry from April 2000-August 2009 stood at US$ 878.32 million.

However, India’s share in exports of processed food in global trade is only 1.5 per cent; whereas the size of the global processed-food market is estimated at US$ 3.2 trillion and nearly 80 per cent of agricultural products in the developed countries get processed and packaged.

In order to further grow the food processing industry, the government has formulated a Vision-2015 action plan under which specific targets have been set. This includes tripling the size of the food processing industry from around US$ 70 billion to about US$ 210 billion, raising the level of processing of perishables from 6 per cent to 20 per cent, increasing value addition from 20 per cent to 35 per cent, and enhancing India’s share in global food trade from 1.5 per cent to 3 per cent. This would require an investment of US$ 20.6 billion.

According to an Ernst and Young (E&Y) presentation, the food processing industry in India will grow 30-40 per cent as against the present 15 per cent in the next 10-years.

Prime Minister Dr Manmohan Singh on October 6, 2009 laid out a blueprint for rapid growth in the country’s food processing sector. The Prime Minister said that this can be achieved by simplifying the tax structure, formulating a National Food Processing Policy and improving rural infrastructure.

Moreover, according to Union Minister for Food Processing Industries, Subodh Kant Sahai the central government is envisaging an investment of US$ 21.50 billion in the food processing industry over the next five years, a major chunk of which it plans to attract from the private sector and financial institutions.

Snacks and Confectionery

The Indian market holds enormous growth potential for snack food, which is estimated to be worth US$ 3 billion, with the branded snack market estimated to be around US$ 1.34 billion, growing at 15-20 per cent a year. While the growth rate of the US$ 1.56 billion unorganised sector is 7-8 per cent.

Health Food

Recognising the growth potential of the branded health food sector in India, fast moving consumer goods (FMCG) majors are foraying into this sector in a big way. As Hindustan Lever Ltd (HUL) is test marketing its health food brand, Kissan Amaze, in three southern states in India, Godrej Hershey Foods & Beverages Ltd (GHFBL), a joint venture between Godrej Beverages & Foods Ltd and Hershey Company, is planning to introduce select brands from its international portfolio in the domestic market.