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Indian Processed Food Industry

Executive Summary
The size of global processed food industry is estimated to be valued around US $3.6
trillion and accounts for three-fourth of the global food sales. Despite its large size only
6! of processed foods are traded across borders compared to "6! of ma#or bul$
agricultural commodities. %ndian food-processing industry is miniscule in comparison and
is estimated to be US $&' billion and is li$ely to gro( at over "'! on the basis of an
e)pected *D+ gro(th rate of ,-,.-! p.a. .ith enormous scope for value addition
increase in the consumption of processed food products in %ndia and many fiscal
incentives being planned by the government this sector is poised to maintain the gro(th
momentum in the future. /oreover the advent of the .T0 regime and the possibility of
reduced subsidies in developed countries can add to %ndia1s strengths in food production
and processing industry. %ndia accounts for less than ".-! of international food trade
despite being one of the (orld1s ma#or food producers (hich indicates huge potential for
both investors and e)porters. .ith rapid increase in the per capita income and purchasing
po(er along (ith increased urbanization improved standards of living there lies a large
untapped opportunity to cater to "''' million domestic consumers. %t is estimated that
3'' million upper and middle class consume processed food. .ith the convenience needs
of dual income families 2'' million more consumers are e)pected to move to processed
food by 2'"'. The mar$et size for the processed foods is thus bound to increase from US
$"'2 billion currently to US $33' billion by 2'"&-"- assuming a gro(th of "'!. The
share of the value added products in processed foods (ould almost double from US $&&
billion currently to US $,, billion during the same period gro(ing at the rate of "-!.
This presents enormous opportunities for investment in processed food sector.
Several global food giants and leading %ndian industrial enterprises are already ma$ing
their presence felt in a big (ay in the sector. Some of them are 3estle %ndia 4adbury5s
%ndia 6elloggs 7industan Unilever %T4-8gro *odre# 9oods and /T: 9oods.
%t is estimated that the food production in %ndia is li$ely to gro( t(o-fold in the ne)t ten
years. Thus there is ample of opportunities for investments in food and food-processing
technologies e;uipments especially in areas of canning dairy < food-processing
specialty processing pac$aging frozen food and thermo processing cold chains and in
the area of food retail. /inistry of food processing in its =ision 2'"- document has
estimated the size of processed food sector to treble processing level of perishable to
increase from 6! to 2'! value addition to increase from 2' ! to 3-! and %ndia1s share
in global food trade to increase from ".- ! to 3!.The government1s focus to(ards food
processing industry as a priority sector (ill ensure policies to support investment in this
sector and attract more 9D%. %ndia (ith its vast pool of natural resources and gro(ing
technical $no(ledge base has strong comparative advantages over other nations.
8ccording to 4%% estimates food-processing sector has the potential of attracting US $33
billion of investment in "' years and generate employment of > million person-days. The
food-processing sector in %ndia is clearly an attractive sector for investment and offers
significant gro(th potential to investors. The report outlines the tremendous gro(th
potential in the sector and various opportunities for investments. .e initiate coverage on
:uchi Soya and ?a$shmi @nergy <9oods (ith a AUB recommendation.
%ndia is the (orld1s second largest producer of food ne)t to 4hina and has the potential
of being the biggest (ith the food and agricultural sector. The food processing industry is
one of the largest industries in %ndia-it is ran$ed fifth in terms of production
consumption e)port and e)pected gro(th. The food industry is on a high as %ndians
continue to have a feast. 9uelled by (hat can be termed as a perfect ingredient for any
industry C large disposable incomes - the food sector has been (itnessing a mar$ed
change in consumption patterns especially in terms of food. %ncreasing incomes are
al(ays accompanied by a change in the food bas$et. The proportionate e)penditure on
cereals pulses edible oil sugar salt and spices declines as households climb the
e)penditure classes in urban %ndia (hile the opposite happens in the case of mil$ and
mil$ products meat egg and fish fruits and beverages. 9or instance the proportionate
e)penditure on staples Dcereals grams pulsesE declined from &- per cent to && per cent in
rural %ndia (hile the figure settled at 32 per cent of the total e)penditure on food in urban
%ndia.
8 large part of this shift in consumption is driven by the processed food mar$et (hich
accounts for 32 per cent of the total food mar$et. %t accounts for US$ 2>.& billion in a
total estimated mar$et of US$ >".66 billion. The 4onfederation of %ndian %ndustry D4%%E
has estimated that the food processing sector has the potential of attracting US$ 33 billion
of investment in "' years and generate employment of > million person-days.
The *overnment has formulated and implemented several +lan Schemes to provide
financial assistance for setting up and modernizing food processing units creation of
infrastructure support for research and development and human resource development in
addition to other promotional measures to encourage the gro(th of the processed food
sector. 9ood processing is a large sector that covers activities such as agriculture
horticulture plantation animal husbandry and fisheries. %t also includes other industries
that use agriculture inputs for manufacturing of edible products. The /inistry of 9ood
+rocessing*overnment of %ndia indicates the follo(ing segments (ithin the 9ood
+rocessing industryF
G Dairy fruits < vegetable processing
G *rain processing
G /eat < poultry processing
G 9isheries
G 4onsumer foods including pac$aged foods beverages and pac$aged drin$ing (ater.
Though the industry is large in size it is still at a nascent stage in terms of development
of the country5s total agriculture and food produce only 2 per cent is processed.
Processed Food Industry: A sunrise sector
9ood-processing industry is significant for %ndia1s development because it has important
lin$ and synergy (ith industry and agriculture the t(o main support of the economy.
Total size of food-processing industry is around US $&' billion gro(ing at "'! and the
size of processing sector is estimated to be US $2.-3 billion. The industry is mainly
unorganized (ith H-! of the processing units belonging to the unorganised category the
organized category though small is gro(ing fast. The food production is e)pected to
double in the ne)t "' years and the consumption of value added food products is
e)pected to gro( at a much faster pace. This gro(th (ill benefit the economy increase
agricultural yields create employment and raise the standard of living of various
associated people. :ising consumer affluence and economic liberalization is opening up
ne( opportunities in the sector .
The food-processing industry has been identified as a focus area for development and has
been included in the priority-lending sector. /ost of the food-processing industries (ith
the e)ception of beer < alcoholic drin$s and items reserved for small scale sector li$e
vinegar bread and ba$ery have been e)empted from the provisions of industrial
licensing under %ndustries DDevelopment and :egulationE 8ct ">-". 8utomatic approval
up to "''! of e;uity in case of foreign investment is available for most of the processed
food items. .ith over "."' billion consumers and fourth largest economy in terms of
purchasing po(er parity U34T8D and 8T 6earney has ran$ed %ndia amongst the top
three investment destinations in the (orld.
Low level of processing
The industry has very lo( processing level i.e 2.2! for fruits and vegetables around
3-! in mil$ 2"! in meat and 6! in poultry products (hich is significantly lo(er by
international standards. 9or e.g. processing of agriculture produce is around &'! in
4hina 3'! in Thailand H'! in Arazil H,! in the +hilippines and ,'! in /alaysia.
=alue addition to agriculture produce in %ndia is #ust 2'! (ith (astage estimated to be
valued at around US "3billion$..
Food-processing- a growing market
.ith rapid increase in the per capita income and purchasing po(er along (ith increased
urbanization improved standards of living there lies a large untapped opportunity to
cater to "''' million domestic consumers. %t is estimated that 3'' million upper and
middle class consume processed food. .ith the convenience needs of dual income
families 2'' million more consumers are e)pected to move to processed food by 2'"'.
The mar$et size for the processed foods is thus bound to increase from US $"'2 billion
currently to US $33' billion by 2'"&-"- assuming a gro(th of "'!. The share of the
value added products in processed foods (ould almost double from US $&& billion
currently to US $,, billion during the same period gro(ing at the rate of "-!. This
presents enormous opportunities for investment in processed food sector.
Several global food giants and leading %ndian industrial enterprises are already ma$ing
their presence felt in a big (ay in the sector. Some of them are 3estle %ndia 4adbury5s
%ndia 6elloggs 7industan Unilever %T4-8gro *odre# 9oods and /T: 9oods.
8ccording to *overnment estimates :s "''' billion investment is needed in this sector
across all segments of the value chain from agri inputs to logistics to front-end
infrastructure and distribution out of (hich bul$ of investment (ill be from private
sector. 8s a result various private corporate houses li$e :eliance have ventured in this
space (ith full vigor. 7ence there is immense potential for investment in this sector. To
facilitate the prompt gro(th of food-processing industry the *overnment has
implemented the scheme for infrastructure development comprising a food par$ scheme
establishing pac$aging centers integrated cold chain facilityI value added centers and
irrigation facilities.
Where the opportunity lies- areas for investment
%t is estimated that the food production in %ndia is li$ely to gro( t(o-fold in the ne)t ten
years. Thus there is ample of opportunities for investments in food and food-processing
technologies e;uipments especially in areas of canning dairy < food-processing
specialty processing pac$aging frozen food and thermo processing cold chains and in
the area of food retail.
0ne of the $ey reasons for lo( levels of food processing is poor infrastructure for
storage mar$eting and distribution of food products. 2--&'! of agri-produce is lost post
harvest season. 8ccording to estimates %ndia1s mar$etable surplus is set to increase by
3-' mtpa to ,H' mtpa by 2'"2. &'! of the increase D"-' mtpaE (ould be accounted by
perishable fruits and vegetables. The need for investments in the areas of infrastructure
and supply chain is evident from the fact that %ndia1s current storage infrastructure for all
food items is only "'' mtpa.
The *overnment has announced various policy and fiscal measures to e)pand the storage
capacity. %t has announced "--2-! capital subsidy scheme for facilitating construction of
rural godo(ns and has also sanctioned "6 mt of ne( capacity the last five years.
Cold chain
The estimated cold-storage capacity at ">.- mt is less than "-! of the annual horticulture
production and is mainly dominated by potatoes D,'! of capacityE. The size of cold chain
industry is estimated to be around US $2.2-2.H billion and is e)pected to gro( at 2'-2-!
annually. 9D% to the e)tent of "''! is allo(ed in the sector. .ith the rising focus on
horticulture increasing corporate participation and advent of food par$s and agri e)port
zones is li$ely to result in significant restructuring of cold storage infrastructure (ith an
estimated investment of US $,-"' billion.
=oltas Alue-Star and 6irlos$ar +neumatic are some of the cold storage players and
e;uipments. :adha$rishna 9oodland and Sno(man 9rozen are ma#or providers of cold
storage facilities. 4oncor is setting up a country(ide net(or$ of "& cold-chain comple)es
for horticulture in Delhi /umbai and Aangalore among other places.
Supply chain
8n efficient supply chain not only brings do(n the price of the end product but also
eliminates intermediaries by connecting farmers directly to the super stores. %t has thus
become an important aspect of organised retail setup. The food supply chain in %ndia is
highly fragmented (ith numerous intermediaries and lac$ of economies of scale.
Sophisticated applications such as demand forecasting data integration financial flo(
management supply-demand matching information sharing (ill enable it to become
mature and efficient.
Food safety management systems
The tightening of restrictions and the introduction of the Sanitary and +hytosanitary
8greement by global industry bodies li$e the .orld 7ealth 0rganisation D.70E have
led to increased adherence of safety norms and regulations. %ndian companies (ill have to
strictly adhere to international food safety standards in order to gain a larger share of
(orld trade.
achinery
%n pac$aging freshness and hygiene remains a $ey factor in determining buying by
consumers. %n recent times a number of ne( technologies have emerged both in
processing and pac$aging (hich have made an impact on the shelf life of food products.
Food par!s
3' mega food par$s (ith investments of around US $""' million are coming up across
the country to attract 9D% in the food-processing sector. The food par$s (ill have
facilities ranging from cold storage sorting grading food-processing pac$aging and
;uality control and :<D laboratories. The government for these food par$s has
identified /aharashtra 8ndhra +radesh +un#ab and Jhar$hand and one 3ortheast region.
Food retail
9ood and groceries form ma#or portion DH-!E of the retail pie. 7o(ever it has the lo(est
level of penetration of "! in organized retail. Aranded foods mar$et size is gro(ing at
"--2'!. +layers have outlined ma#or e)pansion plans recognizing the opportunity.
Industry Analysis
Driving Forces
Abundant availability of raw material
%ndia has varied agro climatic conditionsI it has a (ide-ranging and large ra( material
base suitable for food-processing industries. %t has a vast coastline of ,''' $m vast
marine land (ith "' ma#or ports. %ndia produces annually >' million tones of mil$
Dhighest in the (orldE "-' million tones of fruits and vegetables Dsecond largestE &,-
million livestoc$ DlargestE 2'& million tones food grain Dthird largestE 6.3 million tones
fish Dthird largestE &,> million poultry and &-2'' million eggs. %ndia5s agricultural
production base is huge.
?o( cost production base for domestic and e)port mar$et can be set up considering
%ndia1s comparatively cheap labour force and lo(er cost of production. %ndia has access
to significant investments to facilitate food-processing industry.
"emographic trends
The food-processing industry has a bright future due to demographic environment in
%ndia (hich is a $ey positive.
#ising income levels leading to large customer $ase
%ndia (ith its population of more than " billion accounts for close to "H! of the global
population. %t is one of the most attractive consumer mar$ets in the (orld (ith the
increase in income levels across the population segments. 9ood and grocery comprise the
largest share of the spending pie follo(ed by personal care items thus offering a lot of
scope for the food-processing industry. 8ccording to 348@: data the consuming class
(ith an annual income of US $>,' D:s &-'''E or above is gro(ing and is e)pected to
constitute over ,'! of the population by 2''>-"'. The increase in income levels and
higher tendency to spend provides great opportunities for companies across various
sectors.
#elatively young population
%ndia has a relatively young population (ith close to --! of population in the age group
of 2'- -> years. This group is also high in consumption and therefore this trend is
e)pected to provide a further boost to the gro(th of consumption in %ndia.
Changing lifestyles
%ncrease in literacy and e)posure to (estern lifestyles by more and more urban
consumers have led to change in mindset and preference. %ncrease in the population of
(or$ing (omen and increase in nuclear double income families in urban areas are some
of the other factors that are influencing the lifestyles. 8s a result there has been an
increase in demand for processed ready-to-coo$ and ready-to-eat food. 8ccording to
@uromonitor money spend by %ndians on meals outside the home has more than doubled
in the past decade to about US $- billion a year and is e)pected to further double in the
ne)t - years. Thus there lies significant gro(th potential for the sector and its investment
attractiveness.
Increase in consuming class in rural areas
3early H'! of %ndia1s population resides in rural areas and account for nearly -'! of
%ndia1s consumption. @ven (ith increasing urbanization and migration it is estimated that
63! of %ndia5s population (ill continue to live in rural areas in 2'2-. 8verage income
levels for rural %ndia (ill increase (ith higher agri-incomes and a gradual shift from farm
to non-farm employment. 3H! of rural households could move into the middle income-
and-above consuming class by 2'"' according to 348@: survey from #ust "--"H! in
the late ">>'s. This (ill result in a consuming class of -6 million rural households by
2'"' more than half of %ndia5s overall estimated middle class by this time. This (ill open
up vast and relatively une)plored section of %ndia to companies.
Indian Food Processing Industry by sectors
%ndia5s food-processing sector covers fruit and vegetablesI meat and poultryI mil$ and
mil$ products alcoholic beverages fisheries plantation grain processing and other
consumer product groups li$e confectionery chocolates and cocoa products soya-based
products mineral (ater high protein foods etc. The most promising sub-sectors includes-
soft-drin$ bottling confectionery manufacture fishing a;uaculture grain-milling and
grain-based products meat and poultry processing alcoholic beverages mil$ processing
tomato paste fast food ready-to-eat brea$fast cereals food additives flavors etc. 7ealth
food and health food supplement is another rapidly rising segment of this industry (hich
is gaining vast popularity amongst the health conscious.
The dairy sector has an estimated consumer demand for mil$ and mil$ products at :s
"&'' billion gro(ing at about ,! p.a. +oultry meat is estimated to have production of
"., million tones gro(ing at a 48*: of ""!. Aesides ready-to-eat D:T@E industry still
nascent in %ndia is estimated to be about :s - billion gro(ing at 3'! p.a and e)pected to
cross :s "- billion by 2'"'. The (ine sector is gro(ing at about -'! p.a is e)pected to
have a mar$et size of :s 2' billion by 2'"'.
Dairy
/il$ and mil$ products is rated as one of the most promising sectors in the processed
food industry. %ndia is the largest producer of mil$ in the (orld (ith production of >H."
million tones in 2''--'6 gro(ing at a 48*: of &!. 8ccording to estimates by Dairy
%ndia the size of the %ndian dairy mar$et is :s 22H3&' crores (hich is e)pected to more
than double to :s -2'H,' crores by 2'"". %ndia1s total mil$ production is pro#ected to
cross "'' million tones by end of 2''H according to the tenth five-year plan estimates.
/il$ and mil$ products account for a significant "H! of %ndia1s total e)penditure on
food. %ndia is on the verge of assuming an important position in the global dairy
industry8bout 3-! of mil$ produced in %ndia is processed. The organized sector
comprising of large dairy plants processes about "3 million tones (hereas the
unorganised sector Dhal(aiis and vendorsE process about 22 mtpa.
Fruits and Vegetable Processing
%ndia is the 2nd largest producer of fruits D-' million tonesE and vegetables D"'' million
tonesE. The installed capacity of fruit and vegetable processing industry has increased
from "".', la$h tones in ">>3 to 2".", la$h tones in 2''6. The industry is still nascent
and #ust about 2.2! of the total output of fruits and vegetables is processed as per
estimates. The country5s share in the (orld trade of processed fruits and vegetables is still
less than "!. ?i$e(ise the consumption of value added fruits and vegetables are also
lo( compared to the primary processed food in general and fresh fruits and vegetables in
particular. This thro(s up a huge opportunity for the sector through increased penetration
in the domestic mar$et. The government e)pects the processing in this sector to gro( to
"'! in 2'"' and 2-! of the total produce by 2'2-.
%rains
%ndia produces more than 2'' million tones of different food grains every year. 8ll ma#or
grains li$e rice (heat maize barley and millets li$e #o(ar Dgreat milletE ba#ra Dpearl
milletE < ragi Dfinger milletE are produced in %ndia. 8bout "-! of the annual production
of (heat is converted into (heat products. There are "'''' pulse mills in the country
(ith a milling capacity of "& million tones milling about H-! of annual pulse production
of "& million tones.
Meat and poultry processing
8t &,- million %ndia has the (orld1s largest livestoc$ population- accounting for over
--! and "6! of the (orld1s buffalo and cattle populations respectively Dthe (orld1s
largest bovine populationE. %t ran$s second in goats third in sheep and camels and
seventh in poultry populations in the (orld. +rocessing of meat products is licensed under
/eat 9ood +roducts 0rder D/9+0E ">H3. Total meat production in the country is
estimated at - million tones annually. %ndian consumer prefers to buy freshly cut meat
rather than processed or frozen meat. 8 mere 6! of production of poultry meat is sold in
processed form. 0f this only about "! undergoes processing into value added products
D:eady-to- eatK :eady-to-coo$E. +rocessing of large animals is largely for the purpose of
e)ports. This is because of lo( processing of value added meat products and consumer
preference for fresh meat. The total processing capacity in %ndia is over " million tones
p.a of (hich &'--'! is utilized. %n meat < meat processing sector poultry meat is the
fastest gro(ing animal protein in %ndia. The estimated production is "-''''' tones
gro(ing at 48*: of "3! through ">>"- 2''-. %ndia ran$s among the top si) egg
producing countries and ran$s among the top five chic$en producing countries. +er capita
consumption has gro(n from ,H' grams in 2''' to about ".6, $g in 2''-. This is
e)pected to gro( to 2 $g in 2''>. *ro(th in Auffalo meat production has been less rapid
D48*: of -! in the last 6 yearsE. The current production levels are estimated at ".>
million mt. 0f this about 2"! is e)ported. /utton and lamb is relatively small segment
(here demand is outstripping supply (hich e)plains the high prices in domestic mar$et.
The production levels have been almost constant at >-'''' mt (ith annual e)ports of
less than "'''' mt. This has restricted large processing companies from developing
business interests in this sector.
Fis Processing
%ndia is the third largest fish producer in the (orld and is second in inland fish
production. 9ish production in the country has increased from '.H- mt in ">-'--" to 6.-'
mt in 2''--'6. %n 2''--'6 it contributed about "! of the total *D+ and -.3! of the
*D+ from agriculture sector. The geographic base of %ndian marine fisheries has ,"",
$m. coastline 2.'2 million s;.$m. of e)clusive economic zone including '.- million s;.
$m. of continental shelf and 3>3H fishing villages. %ndia is endo(ed (ith rich fishery
resources and has vast potential for fishes from both inland and marine resources.
+rocessing of fish into canned and frozen forms is carried out almost entirely for the
e)port mar$et. %t is (idely felt that %ndia1s substantial fishery resources are under-utilised
and there is tremendous potential to increase the output of this sector. The potential could
be gauged by the fact that against fish production potential in the e)clusive economic
zone of 3.> million tones actual catch is to the tune of 2.,H million tones. 7arvesting
from inland sources is around 2.H million tones. %n last si) years there (as substantial
investment in fisheries to the tune of :s 3''' crores of (hich foreign investments (ere
of the order of :S.H''.
Government Regulation and Support
Since liberalisation several policy measures have been ta$en (ith regard to regulation <
control fiscal policy e)port < import ta)ation e)change < interest rate control e)port
promotion and incentives to high priority industries. 9ood-processing and agro industries
have been accorded high priority (ith a number of important relieves and incentives.
Some of the important policy changes are as follo(s
#egulation and Control
8s per e)tant policy 9D% up to "''! is permitted under the automatic route in the
food infrastructure Dfood par$ cold chainK(arehousingE.
8utomatic approval to 9D% up to "''! e;uity in 9+% sector e)cluding alcoholic
beverages and a fe( reserved items.
9oreign investments are allo(ed in SS% reserved items under an e)port obligation
Dpic$les chutneys bread pastry hard-boiled sugar candy rapeseed oil sesame oil
groundnut oil s(eetened cashe( nut products ground and processed spices other than
spice oil and oleoresin tapioca sago and its flourE.
9D% up to "''! is permitted on the automatic route for distillation < bre(ing of
alcohol sub#ect to licensing by the appropriate authority.
3o industrial license is re;uired for almost all of the food < agro processing industries
e)cept for some items li$eF beer potable alcohol < (ines cane sugar hydrogenated.
8nimal fats < oils etc. and items reserved for e)clusive manufacture in the small-scale
sector.
Up to a ma)imum of 2&! foreign e;uity is allo(ed in SS% sector
Fiscal policy and ta&ation:
:upee is no( fully convertible on current account and convertibility on capital account
(ith unified e)change rate mechanism is foreseen in coming years.
:epatriation of profits is freely permitted in many industries e)cept for some (here
there is an additional re;uirement of balancing the dividend payments through e)port
earnings.
?iberal corporate ta) policy is applicable for e)port and domestic earnings income ta)
rebate allo(ed D"''! of profits for five years and 2-! of profits for the ne)t five yearsE
for setting up of ne( agro-processing industries to process and pac$age fruits <
vegetables.
9ruits < vegetables and dairy machineries are completely e)empt from central e)cise
duty. 4entral e)cise duty on preparation of meat poultry and fish pectin pats and
yeast is also completely e)empt.
Luantity restrictions on all food products have been removed. +ea$ rate of customs
duty has been reduced from 3'! to 2-! De)cluding agricultural and dairy productsE and
duty structure on designated items has been rationalized.
4ustoms duty on refrigerated goods transport vehicles has been reduced form 2'! to
"'!.
@)cise Duty of "6! on dairy machinery has been fully (aived off and e)cise duty on
meat poultry and fish products has been reduced from "6! to ,!.
'&port promotion:
9ood-processing industry is one of the thrust areas identified for e)ports. 9ree Trade
Mones D9TME and @)port +rocessing Mones D@+ME have been set up (ith all
infrastructures. 8lso setting up of "''! @)port 0riented Units D@0UE is encouraged in
other areas. They may import free of duty all types of goods including capital foods.
4apital goods including spares up to 2'! of the 4%9 value of the capital goods may be
imported at a concessional rate of customs duty sub#ect to certain e)port obligations
under the @+4* scheme. @)port lin$ed duty free imports are also allo(ed.
Units in @+MK9TM and "''! @0Us can retain -'! of foreign e)change receipts in
foreign
currency accounts.
-'! of the production of @+MK9TM and "''! @0U units is saleable in domestic tariff
area.
8ll profits from e)port sales are completely free from corporate ta)es. +rofits from
such e)ports are also e)empt from /8T.
8gri e)port zones and food par$s
Setting up of 6' agri zones for end-to-end development for e)port of specific product
from geographically contiguous areas.
-3 food par$s approved to enable small and medium food and beverage units to set up
and to use capital intensive common facilities such as cold storage (arehouse ;uality
control labs effluent treatment plant etc.
Regulatory Framework
There are different la(s that govern the food-processing sector in %ndia. The prevailing
la(s and standards adopted by the *overnment to verify the ;uality of food and drugs is
one of the best in the (orld. /ultiple la(sKregulations prescribe varied standards
regarding food additives contaminants food colours preservatives and labeling. %n order
to rationalize the multiplicity of food la(s a *roup of /inisters (as recently set up to
suggest legislative and other changes to formulate a modern integrated food la( (hich
(ill be a single reference point in relation to the regulation of food products. The food
la(s in %ndia are enforced by the Director *eneral of 7ealth Services /inistry of 7ealth
and 9amily .elfare *overnment of %ndia D*0%E.
(arious food laws applica$le to food and related products in India are:
Prevention of Food Adulteration Act )PFA*+ ,-./ and #ules )inistry of 0ealth 1
Family Welfare*: 4overs specifications related to food colour preservatives pesticide
residues pac$aging and labeling and regulation of sales. 2he Standards of Weights
and easures Act+ ,-34+ and Standards of Weights and easures )Pac!aged
Commodities* #ules+ ,-33F Designed to establish fair trade practices (ith respect to
pac$aged commodities
8griculture +roduce D*rading < /ar$ingE 8ct D/inistry of :ural DevelopmentE.
@ssential 4ommodities 8ct ">-- D/inistry of 9ood < 4onsumer 8ffairsE.
Fruit Products 5rder )FP5*+ ,--.F Specifications and ;uality control re;uirements
regarding the production and mar$eting of processed fruits and vegetables s(eetened
aerated (ater vinegar and synethic syrups.
eat Food Products 5rder+ ,-36 )FP5*: 8dministers the permissible ;uantity of
heavy metals preservatives and insecticide residues for meat products
il! and il! Products 5rder+ ,--7F :egulates the production distribution and
supply of mil$ productsI establishes sanitary re;uirements for dairies machinery and
premisesI and sets ;uality control standards for mil$ and mil$ products.
2he Food Safety and Standards Act+ 7884: %n 8ugust 2''6 the *overnment of %ndia
had passed a ne( legislation 9ood Safety and Standards 8ct. The 8ct proposes
establishment of a ne( authority the 9ood Safety and Standards 8uthority
reorganisation of scientific support pertaining to the food chain through the
establishment of an independent ris$ assessment body and a ne( 9ood ?a( merging
eight separate 8cts.
G The %nfant /il$ Substitutes 9eeding Aottles and %nfant 9oods D:egulation of
+roduction Supply and DistributionE 8ct ">>2 and :ules ">>3.
G The %nsecticide 8ct ">6,.
G @)port DLuality 4ontrol and %nspectionE 8ct ">63.
G @nvironment +rotection 8ct ">,6.
G +ollution 4ontrol D/inistry of @nvironment and 9orestsE.
G %ndustrial ?icenses.
G A%S 8ct ">,6.
G =0+ D4ontrolE 0rder C ">&H.
G S@0 D4ontrolE 0rder -">6H.
P!"I#I$% A&D '$()"A*I!&%
Policy Initiatives
*iven the size of the industry and the nascent development stage the food processing
sector is a $ey focus area for the *overnment of %ndia. The importance of the sector is
further enhanced by the fact that over H' per cent of the population depends upon
agricultural activity for livelihood. The government has therefore been focusing on
commercialization and value addition to agricultural produce minimizing preKpost
harvest (astage generating employment and e)port gro(th in this sector through a
number of regulatory and fiscal incentives. The industry is largely unorganised (ith a
small but gro(ing organised sector. The popularity of food and agro products is not
surprising (hen the sector is no( offering a gro(th of more than "-' per cent in sales.
.ith such promise in the sector a number of foreign companies have #oined the fray.
.hile US brands such as /cDonald5s +izza 7ut and 6entuc$y 9ried 4hic$en have
become household names more are on their (ay. The ne( (ave in the food industry is
not only about foreign companies arriving here attracted by the prospective size of the
mar$et. %t is also about the migration of the /ade in %ndia tag on food products traveling
abroad. %ndian food brands and fast moving consumer goods D9/4*sE are no(
increasingly finding prime shelf-space in the retail chains of the US and @urope. These
include 4obra Aeer Ai$anervala 9oods /T: 9oods5 ready-to-eat food stuff %T45s
6itchen of %ndia and Satnam 0verseas5 Aasmati rice. The *overnment has formulated
and implemented several schemes to provide financial assistance for setting up and
modernizing of food processing units creation of infrastructure support for research and
development and human resource development in addition to other promotional measures
to encourage the gro(th of the processed food sector.
G The 4entre has permitted under the %ncome Ta) 8ct a deduction of "'' per cent of
profit for five years and 2- per cent of profit in the ne)t five years in case of ne( agro
processing industries set up to pac$age and preserve fruits and vegetables.
G @)cise Duty of "6 per cent on dairy machinery has been fully (aived off and e)cise
duty on meat poultry and fish products has been reduced from "6 per cent to , per cent.
G /ost of the processed food items have been e)empted from the purvie( of licensing
under the %ndustries DDevelopment and regulationE 8ct ">-" e)cept items reserved for
small-scale sector and alcoholic beverages.
G 9ood processing industries (ere included in the list of priority sector for ban$ lending
in ">>>.
G 8utomatic approval for foreign e;uity up to "'' per cent is available for most of the
processed food items e)cept alcohol beer and those reserved for small-scale sector
sub#ect to certain conditions.
G The Union 4ommerce /inistry has approved a brand promotion campaign for value
added N/ade in %ndiaO cashe( being launched in the .est 8sian mar$et by /arch end.
The campaign mooted by 4ashe( @)port +romotion 4ouncil of %ndia D4@+4%E involves
a financial assistance of US$ 3&&H,H by the /inistry.
G 9ull repatriation of profits and capital has been allo(ed.
G Mero duty import of capital goods and ra( material for "'' per cent e)port oriented
units.
G Sales of up to -' per cent in domestic tariff area for agro based "'' per cent e)port
oriented units is allo(ed.
G *overnment grants have been given for setting up common facilities in agro 9ood +ar$.
G 9ull duty e)emption on all imports for units in e)port processing zones has been done.
Food Safety and Standard Act+ 7884
Till the year 2''- thirteen different la(s (ere applicable on the food and food
processing sector. /ultiple la(sK regulations prescribe varied standards regarding food
additives contaminants food colours preservatives and labeling. %n order to rationalize
the multiplicity of food la(s a *roup of /inisters D*o/E (as set up to suggest
legislative and other changes to formulate integrated food la( to be a single reference
point in relation to regulation of food products. Aased on the recommendations of the
*o/ the ministry of food processing enacted the 9ood Safety < Standard 8ct D9SS8E
2''6. Salient features of the actF
G 9SS8 (ill be aided by several scientific panels and a central advisory committee to lay
do(n standards for food safety. These standards (ill include specifications for
ingredients contaminants pesticide residue biological hazards and labels.
G The la( (ill be enforced through State 4ommissioners of 9ood Safety and local level
officials.
G @veryone in the food sector is re;uired to get a licence or a registration (hich (ould be
issued by local authorities.
G @very distributor is re;uired to be able to identify any food article to its manufacturer
and every seller to its distributor. 8nyone in the sector should be able to initiate recall
procedures if he finds that the food sold had violated specified standards.
Foreign "irect Investment
The government of %ndia is planning to offer "'' per cent foreign direct investment and
income ta) benefits in the food processing sector.
9oreign direct investment D9D%E in the country5s food sector is poised to hit the US$ 3-
billion mar$. %n the last one year alone 9D% approvals in food processing have doubled.
The cumulative 9D% inflo( in food processing reached US$ 2,'& million in /arch 5'6.
%n 5'-- '6 the sector received approvals (orth US$ &" million. This figure is almost
double the US$ 22 million approved in 2''&-'-. 3early 3' per cent of 9D% in this sector
comes from @U countries such as 3etherlands *ermany %taly and 9rance. Some of the
successful ventures from @U countries are +erfetti 4adbury *odre#-+ilsbury 3utricia
%nternational /an#ini 4omaco etc. The US-based private e;uity fund 3e( =ernon
+rivate @;uity ?imited D3=+@?E has decided to invest :s &- ' million in 6ochi-based
masala ma#or @astern 4ondiments the flagship company of @astern *roup.
8merica5s largest chocolate and confectionery-ma$er 7ershey is ac;uiring -" per cent
sta$e in *odre# Aeverages < 9oods for US$ -& million.
(ision strategy and action plan
/inistry had commissioned a =ision preparation for the gro(th of 9+% sector. The =ision
Document (as released on 8pril 'H 2''-. The =ision envisages that industry should aim
to increase processing level of perishables from 6per cent to 2' per cent increase value
addition from the present level of 2' per cent to 3&per cent and share in global trade up
from ".6 per cent to 3 per cent thus tripling the size of processed food industry by 2'"-.
Tripling of the size of industry is estimated to generate direct employment of 2., million
and indirect employment of H.& million persons.
2a& #elief for Speed %rowth of FPI Sector
Budget of 2006- 07
:ecognizing the enormous benefits that the food processing industry can bring to
agriculture and #ob creation and to consumers food processing (ill be treated as a
priority sector for ban$ credit. 38A8:D (ill create a separate (indo( (ith a corpus of
US$ 22- million for refinancing loans to the sector especially for agro-processing
infrastructure and mar$et development. *overnment (ill also set up the 3ational %nstitute
of 9ood Technology @ntrepreneurship and /anagement. The +addy +rocessing :esearch
4entre at Than#avur (ill be developed into a national-level institute.
G 0utput of foodgrains li$ely to be 2'>.3 /T
G 2 per cent credit on farm loans
G To double farm loans in 3-Bears
G US$ 22 million fund to help tea gro(ers
G %ncreased funding for repair of (ater bodies
G To double farm loans in 3 years Short term credit to farm
9ood processing industry has been given a fillip as the condensed mil$ ice cream
preparation of meat fish and poultry pectins pasta and yeast have been fully e)empted
from e)cise duties.
'leventh Five 9ear Plan )7883-78,7* Initiatives
G To cope up (ith the gro(th of >! visualized during the ""th 9ive Bear +lan mil$
production has to be enhanced so that per capita availability is doubled as mil$
contributes almost 6'-6-! of the total livestoc$ product value
G To build participatory institutions of collective action for small-scale farmers that allo(
them to get vertically integrated (ith livestoc$ processors and input suppliers
G To create an environment in (hich farmers (ill increase investment in (ays that (ill
improve productivity in the livestoc$ sector
G To promote effective regulatory institutions to deal (ith the threat of environmental and
health crisis stemming from livestoc$
G To increase per ha. fish production through private sector to bring it at par (ith national
average
G To develop +83 culture for raising fish finger-lings
G :enovation of "6&2 seasonal ponds through 3:@* +rogramme to ma$e available
appro). 6''' ha. additional (ater area
G Development of fish seed production and infrastructure in vicinity of 3=D8 reservoirs
G +roviding employment to fisherman communities by allotting (ater bodies on long
lease for fish culture
G To introduce biotechnology in fish seed and fish production
Infrastructure "evelopment in Food Processing Sector
There is a lac$ of suitable infrastructure in the shape of cold chain pac$aging centres
value added centre modernized abattoirs etc. %mprovement in general infrastructure is
also an aid for energizing of sector. *overnment attaches highest priority to development
and e)pansion of physical infrastructure for facilitating prompt gro(th of industries. %n
order to address the problem of infrastructure in food processing sector the *overnment
has implemented the scheme for infrastructure development comprising the follo(ing
componentsF
Food Par! Scheme
The idea behind setting up of food par$s is that small and medium entrepreneurs find it
difficult to invest in capital-intensive activities. Therefore as a part of the strategy to
develop food processing infrastructure the /inistry has been pro actively pursuing the
tas$ of setting up of food par$s in different parts of the country. %n the food par$s
common facilities li$e cold storage food testing and analysis lab affluent treatment
plant common processing facilities pac$aging centre po(er supply (ater supply
seminar K conference K training
facilities etc can be assisted. 9inancial assistance for food par$s is provided at 2- per cent
for general and 33.33 per cent for difficult areas sub#ect to a ma)imum of :s. &' million.
Under the scheme '2 food par$s (ere assisted under ,th +lan 3> under >th +lan Scheme
and "' under "'th +lan. 8n amount of :s. ".'& billion has been sanctioned up to
December 2''-. 22 food par$s have become operational.
%n a bid to boost the food sector the *overnment is (or$ing on agrizones and the concept
of mega food par$s. T(enty such mega par$s (ill come up across the country in various
cities to attract 9oreign Direct %nvestment D9D%E in the food processing sector.
4orporate 4atalyst %ndia 8 report on %ndian 9ood +rocessing %ndustry
The *overnment has released a total assistance of US$ 23 million to implement the 9ood
+ar$s Scheme. %t has so far approved -' food par$s for assistance across the country. The
4entre also plans US$ 22 billion subsidy for at least "' mega food processing par$s.
Pac!aging Centres
The Scheme aims to provide facilities for pac$aging (hich may help in enhancement of
shelf life of food products and ma$e them internationally acceptable. 8ssistance at 2- per
cent of the pro#ect cost in general areas and 33.33 per cent in difficult areas sub#ect to a
ma)imum of :s. 2' million is provided for establishment of pac$aging centre. 8ssistance
is available to all implementing agencies. So far assistance of :s. "&-' million has been
sanctioned to one pac$aging centre in Jammu < 6ashmir.
Integrated Cold Chain Facility
The scheme is intended to improve viability of cold storages and enhance cold storage
capacity. 8ssistance at 2- per cent of the pro#ect cost in general areas and 33.33 per cent
in difficult areas sub#ect to a ma)imum of :s. H.- million is provided for establishment of
cold chain facilities. During "'th +lan an amount of :s. &'"' million has been sanctioned
to(ards assistance for three cold storages in *u#arat three in /aharashtra one each in
U.+. 6erala /anipur /eghalaya 8ndhra +radesh 7aryana Delhi and *oa. During >th
+lan assistance of :s. "&,.6 million (as e)tended to -3 cold storages.
(alue Added Centre )(AC*
The Scheme is intended to enhance value addition leading to enhanced shelf life higher
total realization and value addition at each level of handling and also to facilitate
traceability. 8ssistance at 2- per cent of the pro#ect cost in general areas and 33.33 per
cent in difficult areas sub#ect to a ma)imum :s. H.- million is provided for establishment
and modernization of value added centre. So far three =84s i.e. one each in
/aharashtra 7imachal +radesh and +un#ab have been sanctioned assistance involving an
amount of :s. ""'' million during "'th plan.
Irradiation Facilities
The scheme aims at enhancing shelf life of the food product through irradiation
techni;ues by preventing infestation li$e in flour sprouting and change in chemical
composition of the product Das in potatoE. 9inancial assistance at 2- per cent of the
pro#ect cost in general areas and 33.33 per cent in difficult areas sub#ect to a ma)imum of
:s. -' million is provided for establishment of irradiation facilities. So far four
irradiation pro#ects i.e. t(o in /aharashtra and one each in .est Aengal and 7aryana
have been sanctioned assistance involving an amount of :s. H,.> million.
oderni:ed A$attoir
The Scheme aims at scientific and hygienic slaughter causing least pain to the cattle and
ensuring better byproduct utilization. 8ssistance at 2- per cent of the pro#ect cost in
general 4orporate 4atalyst %ndia 8 report on %ndian 9ood +rocessing %ndustry
areas and 33.33 per cent in difficult areas sub#ect to a ma)imum of :s. &' million is
provided to local bodies for modernization of abattoirs. So far only one case i.e. of /4D
Delhi has been approved for grant of :s. &' million.
Sector-Specific %overnment Policies
Fruits and vegetables
Though no industrial license is re;uired for setting up 9ruits < =egetable +rocessing
industries setting-up "'' per cent @)port 0riented Units re;uire specific *ovt.
approvals.
G /any 9ruits < =egetables +rocessing industries are eligible for automatic approval
of foreign technology agreement and up to -" per cent foreign e;uity participation
including tomatoes mushrooms < other frozen vegetables fruit nuts fruit-peel
fruit #ellies marmalades fruit #uices < vegetable #uices etc.
G This sector is regulated by the 9ruit +roducts 0rder ">-- D9+0E issued under the
@ssential 4ommodities 8ct
G 8ll processing units are re;uired to obtain a license under this order
G Some items li$eF pic$les < chutneys tapioca sago and tapioca flour are reserved for
e)clusive manufacture in the small scale sector
G @)port of fruit < vegetable products is freely allo(ed
Fisheries
G 9oreign e;uity is permitted in fish processing sector. 9ish processing pro#ects (ith a
minimum of 2' per cent value addition can be set up as "'' per cent @)port
0riented Units
G 8ll items can be e)ported freely e)cept for silver pomfrets of (eight less than 3''
grams
G @)port of marine products is allo(ed only after registration of the units as an
e)porter (ith the /arine +roducts @)port Development 8uthority D/+@D8E
4ochin
eat 1 Poultry
G The /eat +roducts 4ontrol 0rder ">H3 under the @ssential 4ommodities 8ct ">-&
regulates the manufacture ;uality and sale of all meat products
G 8 license is re;uired under this order to set up of a factory for producingKprocessing
meat products
G @)port of meat is sub#ected to pre-shipment inspection and a certificate is re;uired
from State 8nimal 7usbandry DepartmentKDirectorate of /ar$eting and %nspection
G Slaughter of co(s is banned in most of the States. @)port of beef is prohibited
G 8 3o 0b#ection 4ertificate D304E has to be obtained from the District
administration for the slaughter of cattle buffaloes etc.
4orporate 4atalyst %ndia 8 report on %ndian 9ood +rocessing %ndustry
G +ermission from the civic bodiesKState *overnment DDepartment of 8nimal
7usbandryE is also re;uired before setting up a meat processing unit integrated (ith
a slaughter house
il! 1 il! products
G /il$ and /il$ +roducts 0rder D//+0E regulates mil$ and mil$ products
production in the country. The order re;uires no permission for units handling less
than "'''' litres of li;uid mil$ per day or mil$ solids up to -'' tonnes per annum
G 8ll the mil$ products e)cept malted foods are covered in the category of industries
for (hich foreign e;uity participation up to -" per cent is automatically allo(ed
G %ce cream (hich (as earlier reserved for manufacturing in the small scale sector has
no( been de-reserved. 8s such no license is re;uired for setting up of large scale
production facilities for manufacture of ice cream
G Subse;uent to de canalization e)ports of some mil$ based products are freely
allo(ed provided these units comply (ith the compulsory inspection re;uirements
of concerned agencies li$eF 3ational Dairy Development Aoard @)port %nspection
4ouncil etc.
%rains
The :ice /illing %ndustry D:egulationE 8ct ">-, < :ice /illing %ndustry D:egulation <
?icensingE :ules ">-> have been repealed from 2, /ay ">>H.
G :ice milling and pulse milling sectors (hich (ere earlier reserved for the small scale
sector have no( been de reserved
G Since liberalization there is no license re;uirement for setting up or capacity
e)pansion of roller flour mills. The mills can obtain their (heat supply from any
source
G There is no license re;uirement or priceKdistribution controls on manufacture of
(heat products
Pac!aged Foods
G The industry is de licensed and automatic approval for foreign investment up to -"
per cent of e;uity De)cept for items li$e malted food and items (hich are reserved
for production in small scale sectorE is granted
G The setting up of "'' per cent e)port oriented units re;uires specific government
approval
G The pac$aging la(s and regulations affecting food products are mainly covered
under the Standards of .eights and /easures 8ct ">H6 and the Standards of
.eights and /easures D+ac$aged 4ommoditiesE :ules ">HH DS./8E specifying the
;uantity and pac$age labeling regulations for all products
G The +revention of 9ood 8dulteration 8ct ">-& and the +revention of 9ood
8dulteration :ules ">-- D+98E specify food adulterationKcontamination norms and
permissible ingredients from consumer health and safety point of vie(
4orporate 4atalyst %ndia 8 report on %ndian 9ood +rocessing %ndustry
G The 8gmar$ :ules relate to the ;uality specifications and needs of certain
agricultural products to be eligible for 8gmar$ certification
C0ALL';%'S A;" 5PP5#2<;I2I'S
The future of the %ndian farmer depends on the success of the food industry as %ndia5s
prosperity is predominantly lin$ed to the gro(th of incomes in the agrarian sector of the
economy. %ncreasing liberalization of the economy has tried to lift the protection that the
food and agriculture sector once en#oyed in the country. This has e)posed the sector both
to the opportunities and challenges of the global food economy.
The mar$et forces are compelling the %ndian agriculture producers to increase the ;uality
of their farm produce (hile continuing to maintain their cost competitiveness in order to
be able to compete effectively in the global food mar$et. @ven in the domestic mar$et
rising per capita incomes and changing demographic profile of the population has
ensured the gro(ing demand for processed and convenience foods. %ncreasing consumer
a(areness about health and hygiene has shifted the focus of the mar$et to PsafeP foods.
The %ndian food-processing sector is undergoing a veritable revolution - all the (ay from
the plate to the plough.
%ndian food processing industry has seen significant gro(th and changes over the past
fe( years driven by changing trends in mar$ets consumer segments and regulations.
These trends such as changing demographics gro(ing population and rapid urbanization
are e)pected to continue in the future and therefore (ill shape the demand for value
added products and thus for food processing industry in %ndia. The *overnment of %ndia1s
focus to(ards food processing industry as a priority sector is e)pected to ensure policies
to support investment in this sector and attract more 9D%. %ndia having access to vast
pool of natural resources and gro(ing technical $no(ledge base has strong comparative
advantages over other nations in this industry. The food processing sector in %ndia is
clearly an attractive sector for investment and offers significant gro(th potential to
investors.
Challenges faced $y the Indian industry
The most crucial challenge today that the %ndian food processing industry is facing is the
lac$ of suitable infrastructure in the shape of cold chain pac$aging centres value added
centre modernized abattoirs etc. %mprovement in general infrastructure is also a must
re;uirement for the industry to
progress.
Some other important initiatives that are needed are
G +romotion of appropriate crossbreeds (hile conserving indigenous breeds of
?ivestoc$
G @stablishment of livestoc$ mar$eting system
G +romotion of rural bac$yard poultry in a cooperative mar$eting setup
G Development of cooperative dairy firms
G @nhancing livestoc$ e)tension services
G @ncouraging private veterinary clinic
G %nstitutionalizing a frame(or$ for utilizing synergy bet(een restoration and creation
of (ater bodies for (ater harvesting and fishery 4orporate 4atalyst %ndia 8 report on
%ndian 9ood +rocessing %ndustry
G +rovision of an insurance pac$age to avoid distress
Strengths and opportunities that India en=oys
G %t is the seventh largest country (ith e)tensive administrative structure and
independent #udiciary a sound financial < infrastructural net(or$ and above all a
stable and thriving democracy
G Due to its diverse agro-climatic conditions it has a (ide-ranging and large ra(
material base suitable for food processing industries. +resently a very small
percentage of these are processed into value added products
G %t is one of the biggest emerging mar$ets (ith over " billion population and a 2-'
million strong middle class
G :apid urbanisation increased literacy and rising per capita income have all caused
rapid gro(th and changes in demand patterns leading to tremendous ne(
opportunities for e)ploiting the large latent mar$et. 8n average %ndian spends about
-' per cent of household e)penditure on food items.
G Demand for processedKconvenience food is constantly on the rise
G %ndia5s comparatively cheaper (or$force can be effectively utilized to setup large lo(
cost production bases for domestic and e)port mar$ets
G ?iberalized overall policy regime (ith specific incentives for high priority food
processing sector provide a very conducive environment for investments and
e)ports in the sector
G =ery good investment opportunities e)ist in many areas of food processing
industries the important ones being F fruit < vegetable processing meat fish <
poultry processing pac$aged convenience food and drin$s mil$ products etc.
'ecommendations
.hilst the *overnment initiatives aimed to bring about regulatory reforms and
infrastructure development in agriculture mar$eting and private sector investment in
infrastructure creation have created the much desired vibrancy in the sector in recent
times ho(ever there is a paramount need to ta$e big tic$et measures to catapult the
gro(th of food processing sector and ta$e it to the high gro(th tra#ectory.
Some of the measures that could be ta$en to spur the gro(th of the sector are as follo(sF
5vercoming long 1 fragmented supply chain:
To overcome the long and fragmented supply chain contract farming can emerge as a
significant opportunity for companies (hereby they can create direct farm lin$ages to
source appropriate ;uality ;uantity and varieties of inputs. 4urrently contract farming is
supported by the governments of fe( $ey producing states in %ndia. 8 fe( companies
have been successful in lin$ing up (ith farmers and some models of contract farming
based on profit sharing or social investment may emerge in the future.
Providing impetus to logistics 1 supply chain sector:
". Dedicated freight corridors in rail supplemented by concretized dual carriage(ays for
the State < 3ational high(ays (ill directly reduce the cost of goods supplied.
2. There is a need to develop a single entity of all multi-modal transportation instead of
splitting into rail surface and air as separate /inistries < entities. This entity needs to
remain customer < industry centric rather than as the *overnmental control mechanism.
3. Support to private rail operators by providing access to infrastructure of %ndian
rail(ays at concessional ratesI ta) holidays for purchase of (agons and creation of
infrastructure especially that of rail terminals for cargo consolidation and aggregation.
&. +rovide further incentives to 9T.Ms one of the ma#or drivers of (arehousing
business.
-. The *overnment should provide industry status to this sector and formulate a separate
/inistry for Supply 4hain < ?ogistics sector.
6. Support development of organized strategic logistics hubs by helping in land
ac;uisition and by providing ta) incentivesK ta) holidays.
H. Ta) incentives to /ulti modal ?ogistical 4entres (hich also have
manufacturingKe)porting capabilities.
,. %ncentivize 3+? operators in setting up end-to-end logistics and (arehousing set-up.
>. %ncentives for setting up (arehousingKcold storage infrastructure and customized
transportation net(or$ development.
G Formulation of Comprehensive ;ational Level policy on Food Processing
The comprehensive policy (ill ensure private sector investment in infrastructure
development increased farm productivity and up gradation of ;uality and give further
impetus to the food processing sector. The comprehensive national level food processing
policy (ould also ensure institutional strengthening capacity building across the value
chain and (ould also see$ to promote innovation in general and technological innovation
in particular.
G ;eed for Second %reen #evolution in Agriculture
The first *reen :evolution has run its course. 4ereal yields are rising very slo(ly (ater
tables are plunging and agricultural gro(th is also lo(. %ndia needs a second *reen
:evolution in %ndia (hich ta$es rice and (heat cultivators beyond the grain production
stage to agro-food processing and gives value addition and (ould also solve the issue of
constraints in ra( material procurement. This high end initiative re;uires commitment
from all the sta$eholders in the food value chain.
G Inter inisterial Wor!ing %roup to Address the Issues
The *overnment should set up %nter /inisterial .or$ing *roup D%/.*E under the
leadership of /inistry of 9ood +rocessing to loo$ at comprehensively addressing various
issues that are holding this sector bac$.
.
G <nderta!e appropriate measures to address the s!ill %ap Issue in the sector:
aE The government should allocate separate budget for human resource development for
food processing sector for enhancing and up gradation of the s$ills and implementation of
the various schemes for s$ill development. 8ll the s$ills development cells and other
organizations and ministries should (or$ in tandem for effective implementation of the
ob#ectives set.
bE There is a need for immediate adoption of %T%1s by the food processing industry in
various clusters across the country to upgrade the lo(er end s$ills. The candidates after
training couldbe directly employed by the industryI this model is already prevalent in
some parts of the country at a small scale but no( it needs a big push from the industry.
G Promote agri-food par!s $y involving industry participation for $etter functioning
of these par!s>
G a!e concerted efforts to enhance private sector investment in infrastructure
development+ increasing farm productivity and up gradation of ?uality>
G All Industry incentives under single window clearance>
C5;CL<SI5;
The %ndian food industry presents a very large opportunity to every sta$eholder. This is
primarily driven by a robust consumer demand the changing nature of the %ndian
consumer (ho is more informed and (illing to try ne( productsI and the strong
production base of the country. 3eedless to add the several gaps in the current
production and delivery systems actually present a huge opportunity for the gro(th of
companies (illing to bet long term in this sector.
7o(ever the gro(th of food processing companies has been sub-optimal because of high
cost lo( level of productivity high (astage and lac$ of competitiveness of %ndian food
products in the global mar$et. Therefore to fully leverage the gro(th potential of the
sector current challenges that are being faced by the industry need to be properly
addressed and steps need to be ta$en to remove the bottlenec$s hampering the sectoral
gro(th. 9%44% survey has thus acted as a first step in identifying these challenges thus
providing a roadmap for all the sta$eholders to (or$ on and thus contributing in
realizing the immense potential of this industry.