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Indian Food Industry

June, 2014

Brief Introduction

India is the world’s second largest producer of food with the potential of being the biggest, backed by its food and agricultural sector. 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.

Agriculture, which provides employment to 52 per cent of the population, is estimated to account for 14 per cent of the country’s gross domestic product (GDP). Further, technology and advancements in agricultural sciences and mechanisation of farm operations has helped transform Indian agriculture and increased output considerably.

Presently, the Indian food processing industry accounts for 32 per cent of the country’s total food market. The Government of India has nominated two agencies, Agricultural & Processed food products Export Development Authority (APEDA) and Marine Products Export Development Authority (MPEDA), for promoting exports from India. Owing to them and the seemingly lucrative opportunities in this sector, the food industry in India has been attracting a lot of attention from foreign investors as the country is close to the markets of Middle East, Africa and South East Asia.

Market Size

India’s agricultural production is expected to grow at a rate of 4.6 per cent in 2014. With the second green revolution just around the corner, India’s production of foodgrains this year is expected to break the 2011–12 record of 259 million tonnes (MT). Presently, the overall grain stock position in India is about 62.1 MT, including 41.8 MT wheat and 20.3 MT rice.

India is the third largest fish producer and second in inland fish production in the world. Marine products contribute a fair share to India’s food processing industry. According to MPEDA, export earnings from marine products touched a record US$ 5 billion during 2013–14.

India has a livestock population of 470 million, which includes 205 million cattle and 90 million buffaloes. Total meat production in the country is about five MT annually. The country produces 450 million broilers and 33 billion eggs every year. Growth rate of egg and broiler production is 16 per cent and 20 per cent respectively.

The Indian food industry which presently stands at close to US$ 135 billion with a CAGR of 10 per cent, is expected to touch US$ 200 billion by 2015. The food processing industry in India attracted foreign direct investments (FDI) worth US$ 5,793.95 million during the period April 2000–March 2014, according to data published by Department of Industrial Policy and Promotion (DIPP).


The evolving Indian food industry has seen quite a few investments in the recent past. Investments have been observed both within the country and also by private Indian firms abroad. Some of the notable investments are as follows:

  • Hindustan Coca-Cola Beverages and Jain Irrigation plan to invest Rs 50 crore (US$ 8.42 million) over 10 years in the second phase of their joint venture (JV) project, Unnati, which will help farmers grow more mango trees.
  • PepsiCo has joined hands with the Clinton Foundation to source cashew fruit from farmers in Maharashtra for its Indian juice business. This partnership is expected to stimulate social and economic development in emerging markets through a social enterprise model.
  • 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 in FY 15.
  • 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 consumers.
  • Everstone Capital has picked up 51 per cent stake in Domino’s Pizza’s Indonesian local franchise, PT Dom Pizza, for US$ 20 million.
  • Bisleri International has opened its first overseas production unit in Bangladesh's capital Dhaka under a franchise agreement with local firm Chittagong Fashion. The facility has a production capacity of 6,000,000 bottles per month.

Government Initiatives

Some of the notable recent government initiatives in the sector are as follows:

  • The Uttarakhand government under Mr Harish Rawat, Chief Minister, has planned to implement the National Food Security Scheme in the state by the end of June 2014 and has issued stringent orders to complete all formalities at the earliest.
  • Mr Ram Vilas Paswan, Food and Civil Supplies Minister, plans to provide minimum support prices (MSP) to farmers through effective procurement and efficient management of foodgrain stocks and thereby strengthen the public distribution system (PDS) in the next five years.
  • Bhabha Atomic Research Centre (BARC) under the Department of Atomic Energy, Government of India through its Centre for Incubation of Technologies (BARCIT) has signed an MoU with M/s Veena Industries for incubation of technology for ‘Biodegradable and Edible films for Food and Pharmaceuticals Packaging’. The biodegradable edible films for food and pharmaceutical packaging from natural resources will help overcome the disadvantages of plastic packaging materials.
  • National Fisheries Development Board has taken up an initiative to supply subsidised fish transport vehicles to fishermen and women societies in Andhra Pradesh so as to help them transport fish to places of their choice and get the highest prices for their catch.
  • The Kerala State Coastal Area Development Corporation (KSCADC) in association with National Agricultural Innovation Project under Indian Council of Agricultural Research (ICAR), has developed a food processing technology to convert the highly nutritious small pelagic fishes into sweets, desserts and snack-like dishes.
  • The MPEDA under the Ministry of Commerce is undertaking a major co-branding drive, which will promote the brand equity of Indian marine products in regulated markets.

Road Ahead

The Confederation of Indian Industry (CII) has estimated that the food processing sector has the potential to attract US$ 33 billion of investment in 10 years and generate employment of around nine million persons.

Also, the opportunities in food and grocery retail in India are immense, given that it constitutes about 69 per cent of India’s total retail market, as per panel members at the seventh Food and Grocery Forum India.

The revival of the agriculture sector could open up opportunities for developing a number of other businesses in the food industry, such as integrated cold chains, mega food parks and processable varieties of crops, among many others. To promote food processing industries in India, the MoFPI has finalised the Vision 2015 document, which envisages tripling the size of 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.

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

Exchange rate used: INR 1 = US$ 0.0168470 as on June 4, 2014