Food Industry
India is the largest producer of pulses, milk, tea, cashew and mangoes and buffalo meat.

Indian Food Industry

Latest update: September, 2014

Growth of food processing industry in India

During FY06-13, the food processing industry GDP expanded at a CAGR of 6.3 per cent.

Growth of food processing industry in India

Food processing segments in India

Meat, fish, fruits, vegetables and oils accounts for 40.2 per cent in FY12.

Food processing segments in India

Exports of processed food and related items

During FY11-14, India's exports of processed food and related products increased at a CAGR of 33.2 per cent to reach US$ 22 billion.

Exports of processed food and related items

Shares in APEDA exports

Within APEDA products, cereals had the highest share (48 per cent) during FY 14.

Shares in APEDA exports

Updated: September, 2014

SECTORAL REPORT | April, 2014

Introduction

The Indian food industry is poised for huge growth, increasing its contribution in world food trade every year. In India, food has become a high-profit industry by reason of the scope it offers for value addition, particularly with the food processing industry getting recognised as a high-priority area in this liberalised era.

Accounting for about 32 per cent of the country's total food market, the food processing industry is one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth. The total food production in India is likely to double in the next 10 years with the country's domestic food market estimated to reach US$ 258 billion by 2015.

The role of the Indian government has been instrumental in the growth and development of the industry. The government through the Ministry of Food Processing Industries (MoFPI) is making all efforts to encourage investments in the sector. It has approved proposals for joint ventures (JVs), foreign collaboration, industrial licences and 100 per cent export oriented units.

Market size

The Indian food industry stood at US$ 135 billion in 2012 and is expected to grow at a compound annual growth rate (CAGR) of 10 per cent to about US$ 200 billion by 2015, according to a report by KPMG.

Indian agricultural and processed food exports during April-May 2014 stood at US$ 3,813.63million, according to data released by the Agricultural and Processed Food Products Export Development Authority (APEDA). In 2013-14, the total processed/value added agricultural products exported and the foreign exchange equivalent earned therefrom stood at Rs 4,627.99 crore (US$ 752.39 million) as compared to Rs 3,689.26 crore (US$ 599.89 crore) during the previous year.

The branded quick service restaurant (QSR) market in India, which has attracted international brands such as McDonald's, Subway, Nando's, Domino's and KFC currently stands at US$ 13 billion and is set to get bigger with new emerging players.

Marine product exports from India touched US$ 5.01 billion during FY14, according to Ms Leena Nair, Chairperson, Marine Products Export Development Authority (MPEDA).

Investments

The foreign direct investment (FDI) equity inflows in food processing industries during April 2000-July 2014 stood at US$ 5,949.21 million, as per data released by Department of Industrial Policy and Promotion (DIPP). The following are some of the investments and developments in the sector:

  • ITC Ltd plans to foray into new categories such as beverages that include fruit juices, tea and coffee, and chocolates and dairy products. As a part of its plan to enter the dairy sector, the company is constructing a milk processing unit at Munger in Bihar.
  • Bisleri International Pvt Ltd has launched its first branded soda in Hyderabad. "This is our first experiment in the country. We will scale it up to other states in the days to come," said Mr Santosh AS Borkar, Director - South Zone, Bisleri International Pvt Ltd. The company would also be setting up eight water plants in Telangana and Andhra Pradesh.
  • Nissin, owner of Top Ramen Noodles, has launched a differentiated noodle - Scoopies Mad Masala Short Noodle. The company commissioned its third factory in Odisha earlier this year, with an investment of Rs 100 crore (US$ 16.25 million), from where the product would be manufactured.
  • Food Bazaar plans to tap the under-branded food and beverages space in the Indian domestic market with the help of private labels to offer more choice to the consumers.
  • Hindustan Coca-Cola Beverages, the Coca-Cola Company's largest bottling partner in India, plans to set up a Rs 1,000 crore (US$ 162.48 million) bottling plant in Telangana and has also sought land for the proposed venture.
  • Café Coffee Day (CCD), in a bid to expand its market in India, plans to add 150 cafes and 120 more Xpress outlets across the country during FY15.

Government Initiatives

The Government of India is running various schemes for promotion and development of food processing industries in the country. Some of the major initiatives undertaken include the following:

  • The government has allocated Rs 180 crore (US$ 29.24 million) to various States/Union Territories (UTs) during FY15 for the schemes of National Mission on Food Processing (NMFP) including that of scheme of Technology upgradation/Establishment/Modernisation of food processing industries.
  • The General Council for National Food Security Mission (NSFM) has approved Rs 2,100 crore (US$ 341.24 million) for the scheme in FY15, which will focus to improve the production of oilseeds and pulses.
  • The MoFPI is exploring the potential and possibility of developing agro processing clusters in smaller areas of 25-30 acres. A national consultation was organised by the Ministry on 'Development of Agro Processing Clusters' in Delhi on August 8, 2014.
  • Spices Board of Department of Commerce under Ministry of Commerce & Industry has established a Spice Park at Puttady, Idukki district of Kerala as a processing centre for cardamom andpepper. The facilities in the Park include e-auction centre, grading and colour sorting machine, and Poly Urethane Form (PUF) godown for cardamom.
  • To make farming competitive and profitable as well as to step up investment, both public and private, in agro-technology development and creation and modernisation of existing agri-business infrastructure, the government has proposed to establish two more institutions of excellence in Assam and Jharkhand at par with Indian Council of Agricultural Research (ICAR) Centre at PUSA, New Delhi. For this purpose, an initial sum of Rs 100 crore (US$ 16.24 million) has been provided in the Union Budget 2014-15.

Road Ahead

In order to promote food processing industries, increase level of processing and exploit the potential of domestic and international market for processed food products, Vision Document-2015 was prepared by the Ministry, which envisaged trebling the size of investment in the processed food sector by increasing the level of processing of perishables from 6 per cent to 20 per cent, value addition from 20 per cent to 35 per cent and share in global food trade from 1.5 per cent to 3 per cent by 2015. To achieve these targets, an investment of Rs 100,000 crore (US$ 16.24 billion) is required by the year 2015.

Further,the adoption of food safety and quality assurance mechanisms such as Total Quality Management (TQM) including ISO 9000, ISO 22000, Hazard Analysis and Critical Control Points (HACCP), Good Manufacturing Practices (GMP) and Good Hygienic Practices (GHP) by food processing industry enables adherence to stringent quality and hygiene norms and thereby protects consumer health, prepares the industry to face global competition, enhances product acceptance by overseas buyers and keeps the industry technologically abreast of international best practices.

The allocation of Rs 2,000 crore (US$ 324.84 million) as a separate National Bank for Agriculture and Rural Development (NABARD) fund for food processing industries during the Union Budget 2014-15, is all set to give a big boost to this sector in India.

Exchange rate used: INR 1 = US$ 0.0162 as on September 26, 2014

References: Ministry of Food Processing Industries (MoFPI), Agricultural and Processed Food Products Export Development Authority (APEDA), Media reports and Press Releases, Department of Industrial Policy and Promotion (DIPP), Press Information Bureau (PIB), Confederation of Indian Industries (CII)

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

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