Last Updated: May 05, 2015
Global CEO, Domino's Pizza Inc
Updated: March, 2015
SECTORAL REPORT | March, 2015
The Indian food industry is poised for huge growth, increasing its contribution in world food trade every year. In India, the food sector has emerged as a high-profit sector on the back of the scope it offers for value addition, particularly with the food processing industry getting recognised as a high-priority area.
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 (JV), foreign collaboration, industrial licences and 100 per cent export oriented units.
The Indian food and grocery market is the world’s sixth largest, with retail contributing 70 per cent of the sales. It is projected to grow at the rate of 104 per cent, touching US$ 482 billion by 2020.
The Indian food processing industry accounts for 32 per cent of the country’s total food market, 14 per cent of manufacturing GDP, 13 per cent of India’s exports and six per cent of total industrial investment.
Indian food service industry is expected to reach US$ 78 billion by 2018.
The Indian gourmet food market is currently valued at US$ 1.3 billion and is growing at a CAGR of 20 per cent. It is expected to cross US$ 2.8 billion by 2015.
Indian food brands are increasingly finding prime shelf space in retail chains abroad. These include Bikanervala Foods, MTR ready to eat foodstuff and ITC’s Kitchens of India.
The online food ordering business in India is in its nascent stage. Share of online food ordering would be in single digits of the overall food ordering business which in 2014 was estimated to be around Rs 5,000-6,000 crore (US$ 800.19-960.12 million). We are growing at 20-30 per cent month-on-month.
The poultry sector of India is expected to register double-digit growth in 2015 on the back of stable feed prices and encouraging rural demand.
According to the data provided by the Department of Industrial Policies and Promotion (DIPP), the food processing sector in India has received around US$ 6,215.46 million worth of foreign investments during the period April 2000—Janaury 2015.
Some of the major investments in this sector in the recent past are:
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 billion) is required by the year 2015.
Some of the major initiatives taken by the Government of India to improve the food processing sector in India are as follows:
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 enable adherence to stringent quality and hygiene norms and thereby protect consumer health, prepare the industry to face global competition, enhance product acceptance by overseas buyers and keep the industry technologically abreast of international best practices.
The allocation of Rs 2,000 crore (US$ 319.98 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$ 0.0159 as on March 20, 2015
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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