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.
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).
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:
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:
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)