With a huge agriculture sector, abundant livestock, and cost competitiveness; India is fast emerging as a sourcing hub of processed food. India's food processing sector covers fruit and vegetables; spices; meat and poultry; milk and milk products, beverages, fisheries, plantation, grain processing and other consumer product groups such as confectionery, chocolates and cocoa products, soya-based products, mineral water, high protein foods etc.
The Indian food services industry is estimated to be nearly worth Rs 75,000 crore (US$ 13.79 billion) and is growing at a healthy compound annual growth rate (CAGR) of 17 per cent, according to a Franchise India report released at the Indian Restaurant Congress.
The Indian food services industry is anticipated to grow at a CAGR of around 12 per cent during 2012-2015, as per a RNCOS research report titled, 'Indian Food Services Market Forecast to 2015'.
Moreover, India's market for organic food consumption has also been recognised as one with the largest potential worldwide, as per RNCOS research report titled, 'Indian Organic Food Market Analysis'. The report further highlighted that the sector will grow at a CAGR of 15 per cent during 2011-2013.
The Indian food processing industry accounts for 32 per cent of India's total food market. The industry is estimated to be worth US$ 121 billion, it is one of the largest industries in India, and is ranked fifth in terms of production, consumption and exports.
The fruits and vegetables export from India in April-December 2012 was recorded for Rs 37.02 billion (US$ 681.14 million). Of the total exports, fresh grapes was recorded to Rs 5.45 billion (US$ 110.72 million), while walnuts were Rs 1.29 billion (US$ 23.76 million) and fresh mangoes stood at Rs 2.23 billion (US$ 40.99 million).
The Ministry of Food Processing receives a number of proposals from private industries for establishing food processing industries in the country. The total amount released by the Ministry under the aforesaid scheme during 2012-13 (as on February 15, 2013) is worth Rs 145.74 crores (US$ 26.81 million).
The food processing industries attracted foreign direct investments (FDI) worth US$ 1,681.97 million between April 2000 to December 2012, according to the latest data published by Department of Industrial Policy and Promotion (DIPP).
Beverages
The ready-to-drink tea and coffee market in India is expected to touch Rs 2,200 crore (US$ 404.78 million) in next four years, according to estimates arrived at the World Tea and Coffee Expo 2013.
In India, the branded tea segment is valued at Rs 6,000 crore (US$ 1.10 billion) on back of growing affluence of Indian consumers. India is the world's largest consumer, second largest producer and fourth largest exporter of tea and accounts for nearly 30 per cent of global output, as per an industry report.
Hatsun Agro Product Ltd plans to set up a 250,000 litre a day milk processing plant in south Tamil Nadu. The company will invest about Rs 50 crore (US$ 9.19 million) in the plant to come up in Tirunelveli.
Government Initiatives
Mr Tariq Anwar, Minister of State for Agriculture and Food Processing Industries, Government of India, at a meeting with Dr Agnes Kalibata, Minister of Agriculture and Animal Resources, Republic of Rwanda, has expressed his willingness to intensify mutual cooperation in the field of agriculture between the two countries.
The Government of India plans to construct 11 new food grain godowns at different locations in the State of Assam to strengthen the public distribution system.
In 2012-13, the total food grain production will be over 250 million tonnes (MT). The Rashtriya Krishi Vikas Yojana intends to mobilise higher investment in agriculture and the National Food Security Mission is expected to bridge yield gaps. In the Union Budget 2013-14, Mr P Chidambaram, Minister for Finance, announced the provision of Rs 9,954 crore (US$ 1.83 billion) and Rs 2,250 crore (US$ 413.98 million), respectively, for the aforesaid two programmes.
Additional provision of Rs 10,000 crore (US$ 1.84 billion) for National Food Security Act has been allocated in the Union Budget 2013-14. The Act is expected to be passed soon by the Parliament.
The National Policy on Food Processing aims at increasing the level of food processing from 10 per cent in 2010 to 25 per cent by 2025. The Government allows 100 per cent FDI in the food processing sector.
The Ministry of Food Processing Industries (MoFPI) has formulated a Vision 2015 Action Plan that includes trebling the size of the food processing industry, 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.
Some of the other initiatives include:
- The oilmeal export from India has registered a growth of 35 per cent to touch 656,948 tonnes in February 2013, due to improved demand for soyameal. Oilmeal import by South Korea between April 2012 and February 2013 was at 844,015 tonnes (717,274 tonnes) consisting of 173,568 tonnes of soyameal, 313,613 tonnes of castor meal
- The Government of Andhra Pradesh is coming out with a five-year plan for the food processing sector involving significant doses of private investments for infrastructure development
- The Centre has also planned to set up 30 food parks, as per Mr Rajesh Kakkar, Secretary, Ministry of Food Processing and Industries
Road Ahead
With massive scope for value addition, growing trend in the consumption pattern of processed food products in India and many fiscal incentives being planned by the Government, the sector is estimated to be capable of maintaining the growth momentum in the future.
Anticipating the future growth, many big international players are entering the Indian market by partnering the domestic players. This trend will emerge more strongly by 2015, providing opportunities to local players to widen their product portfolios.
Exchange rate used: INR 1 = US$ 0.01840 as on March 9, 2013
References: Ministry of Food Processing Industries (MoFPI), Agricultural and Processed Food Products Export Development Authority, RNCOS, Media reports, Department of Industrial Policy and Promotion (DIPP), Union Budget 2013-14, Press Information Bureau (PIB)