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ACKNOWLEDGEMENT I am heartily thankful to my supervisor, .

, whose encouragement, guidance and support from the initial to the final level enabled me to develop an understanding of the subject. Lastly, I offer my regards and blessings to all of those who supported me in any respect during the completion of the project. Name: Date:

Contents: I. Abstract II. Title of the Project III.Aim of the Project 1. Introduction 1.1. Small scale enterprise advantages 1.2 Disadvantages of Small scale enterprises 2. Literature Review 2.1. 2.2. 2.3. 2.4. 2.5. 2.6. 2.7. 2.8. 2.9. 2.10. 2.11. 2.12. 2.13. 2.14. 2.15. 2.16. 2.17. 2.18. 3.1. Scope of Small Business in India Food Processing Industry in India Investment Opportunities Retail business in the Indian Food Processing sector Marketing Proposals Prospective in Indian Market India's Potential market for Untapped Food Processing Industry Initiatives of Indian Government Milk and Dairy Products Investments in Food Processing Sector Future Prospects Retail sector benefits to the food processing sector SWOT Analysis Food processing sector in India Contribution of meat and meat products to Exports Industrial Growth Indian Poultry Sector and Its Future Fruits and Vegetables Sector in India Research Questions 14 16 17 18 19 20 21 24 25 26 27 29 31 31 4 5 5 6 6 7 8 8 9 10 11 12 13

3. Research Methodology

3.2. 3.3. 3.4. 3.5.

Structure of Research Contribution and expected outcome Purpose of Research Research Findings

32 32 33 36 40 43

4. Recommendations and Conclusion 5. References

I. Abstract:

Small-scale industries take up a position of strategic significance in Indian economy in analysis of its significant offerings to employment, manufacturing and exports of products. How ever, from 1991 small-scale industries in India are found in an extremely competitive market due to internationalization, Indian economic liberalization and reduction of industry specific defensive procedures. This report aims at identifying the opportunities for small scale food processing enterprises in India, the business challenges faced by the small scale food processing businesses in India, the strategies formulated by the small scale food processing enterprises to tap the opportunities and overcome the challenges, the various factors that need to be considered by the small scale food processing businesses to improve their performance, the reason for failure of small scale industries in the market, the various policies and reforms introduced by the government to encourage the small scale food processing businesses in India. This report also investigates the effect of internationalization and Indian economic liberalization for small-scale industries and examines its expansion and performance in terms of products, employment, results and exports to other nations. The report concludes by giving recommendations to make sure of the survival and growth of small-scale food processing industries in India.

II. Title of the Project: The title of the projects is Scope of food processing business (Small scale business) in India. This is chosen as the title since it has the potential to know the resources and factors that help a small business in setting up its venture and the management of the small business. III. Aim of the Project: The aim of the project is to: Critically evaluate the opportunities and challenges for food processing industries in India. Determine and compare the various strategies formulated by the food processing industries to improve their performance. Study the various policies and reforms introduced by the government to encourage the food processing industries in India

1.

Introduction:

Small scale industries make significant contributions to financial and social progress of a country. In all economies they constitute the vast majority of business establishments, are usually responsible for the majority of jobs created and account for one third to two thirds of the turnover of the private sector (J. William Petty, Leslie E. Palich 2008). In many nations they are the main sources of increase in employment and performance of a country over the last twenty years. In developing nations they are termed as an important self-help tool for eradication of poverty. In changing economies, the important target nations give the best picture of the transitions in ownership formats, organizational culture and organizational behavior over the past few years. A small scale industry is an industry that is owned by an individual or a private company and run with a less number of workers and comparatively less amount of sales. Small scale enterprises are generally owned by private companies, partnerships, or by individuals. The official meaning of "small" changes traditionally, by nation and by business, but normally has less than 100 workers in India and less than 50 workers in the European countries. But, in Australia, a small scale enterprise is termed by the Fair Work Act 2009 as an enterprise with less than 15 workers. By contrast, a medium scale enterprise has fewer than 500 workers in the United States, less than 250 in the European countries and less than 200 in Australia. (McGoldrick, 2002, p. 459). Other than the number of workers, other procedures utilized to categorize small scale enterprises consists of sales turnover of the company annually, worth of assets and resources and current revenues. These conditions are implemented by the European countries, for example, number of employees, revenues and profit and loss statement totals. Small scale enterprises are normally not competitive in their area of business. Small scale enterprises are prevalent in many nations, based on the financial structure in function. The best examples of small scale industries consist of super markets, other small retail shops like bakeries or other small shops, beauty parlors, other small businesses, small restaurants, resorts, small scale manufacturing companies etc. The other types of small scale enterprises are generally established in private locations are often termed as micro enterprises. As per Wakefield and Baker, 1998, this expression is utilized by the global companies like the World Bank and the International Finance Corporation. The expression "mom and pop business" is a general informal term for a sole family controlled operation with fewer workers or no workers besides the owners of the business. When considered by the number of workers, the United States and the European countries classification of micro enterprises are similar i.e. less than 10 workers. 1.1 Small scale enterprise advantages:

Small scale enterprises are operated with least investments. The small scale enterprises are operated with an idea to generate more revenue with the minimum amount of investments in its operations. While most people run their small businesses from their neighborhood localities, many small businesses are now also being run from the home (Turley and Milliman 2000). These enterprises are best suited for the people who want to maintain a company without incurring risks and losses, small scale enterprises are suited for the unemployed people also. Since small scale enterprises are companies which are operated on minimum investments, they are very beneficial for those who look for earning fair earnings by functioning and maintaining a less expensive enterprise which they can manage at low costs. In a small scale enterprise, managing the assets and liabilities does not become a huge task. The assets of a company consist of revenues and properties of a company and liabilities consist of the amount which the company owes. In addition, maintenance of balance sheet and profit and loss sheets is also easy in a small scale enterprise. It is extremely simple to document the business dealings. Maintaining a record of the business transactions in a small scale enterprise can be effortlessly done and updated on a regular basis. A small scale enterprise owner can install an accounting procedure on the personal computer and record all the dealings that the company does. Most of the accounting activities in a small scale enterprise can be effortlessly controlled. (Donovan et al., 1994). There is a minimum requirement of investments for operating the enterprise and hence it does not become a major concern. Small scale enterprise funding, monetary support and financial aid is readily accessible to individuals operating a small scale enterprise. This support and funding are given to the enterprise owners through the local government, through banks and other large scale industries in the market. Generally there are a lot of financial institutions which give funds and grants to the small scale enterprises. Hence an individual can venture into small scale enterprise through loans or credits and other forms of funds given by the government and other financial organizations. 1.2 Disadvantages of Small scale enterprises: The main disadvantage of a small scale enterprise is that they are operated with very less investments and hence it should be marketed in a proper manner and planning should be done to frame strategies and to implement them. The improper maintenance of funds or grants can usually lead to the closure of a small scale enterprise very soon (Babin and Darden 1996). Hence it becomes very important to plan the business carefully and formulate appropriate strategies to run the business. A small scale enterprise often lacks authenticity which is a major drawback. Majority of the people choose to have dealings with an established and large scale enterprise rather than with a small scale enterprise which does not have any recognition in the market and which involves a lot of risk. Many small scale enterprises fail to create a brand name for themselves in the market. Hence a small scale enterprise should concentrate on marketing the company to survive in the market. Another disadvantage of small scale enterprise is the repayment of loans and funds are not done when the business is not running properly. (Singh, 2006, p 783).

2. Literature Review: The food processing sector in India is extremely uneven sector, it majorly consists of fruits and vegetables, milk and milk products, beer and alcoholic beverages, meat and poultry, marine products, grain processing, packaged or convenience food and packaged drinks. Various researches have been done on a regular basis in various states of India to investigate the various features of the small scale enterprises. Majority of the researches are associated to economic characteristic, expansion of small scale enterprises, ownership in small scale enterprises, world trade organization rules on small scale enterprises and the researches are also associated with globalization and small scale enterprise. An analysis of some researches is stated here. Mathew, M.C. (2004) identified the cause for panic in the market research conducted on the small scale enterprises. The research identified that the vitality and the dynamism of the small scale sector which is expected under a period of deregulation in India has remained mostly unrealized. The research identified that the nation requires a strong small scale and medium scale companies strategy, which could link them to the global standards. The research recommended that at the policy stage, there is a requirement for a strategy by which the main features of the small scale and medium scale companies would become a topic of economic stability. A large number of industrialists in this sector are minute in terms of the manufacturing capacities and functioning, and are vastly categorized in the unorganized sector. This sector contributes for more than 70% of the manufacturing productivity and more than 50% in terms of price. Although the well organized segment is relatively minute, it is increasing at a much rapid speed. The whole chapter of literature review is supported by the statements of various authors and also the arguments made in various journals and articles about the scope of food processing sector in India. The literature review also attempts to identify the different aspects that should be taken into consideration to start a food processing enterprise in India. 2.1 Scope of small businesses in India: International trends have identified that small scale enterprises are the largest contributor to the economic stability of a nation. Small scale enterprises are major contributors in India also. It contributes to the economy of the country and also for the employment generation. In India more than 65% of the countrys population is concentrated in the rural and semi rural areas and hence small scale enterprises are more suitable for the majority of the population in India. (Kent, 2007). In India, agriculture is the primary occupation and after that small scale enterprises are the second largest source of employment. Any industry in India that has its investments and assets worth not more than Rs. 10 million are categorized as small scale enterprises. The Indian Government has introduced various policies to draw more financiers to the small scale enterprises in India. Some of the policies implemented consist of providing of guidance, accessibility of equipment and machinery on credit or hire, special incentives and exemptions for 8

establishing small scale enterprises in rural areas, tax exemption for small scale enterprises and support for promoting the goods in Indian market and international market. (Jacobs et al., 1991). Every small scale enterprise established in India has to be registered through Director of Industries in various states. The registration process is same in all the states of India except for some minor variations. There are a lot of reasons because of which the small scale enterprises in India have been growing recently. Principal among those reasons is the growth in the export capabilities of the Indian products, the sector is less money concentrated, the sector has accessibility of human resource training facilities, the procurement of equipment, machinery and labor is very easy, products from some of the small scale industries are purchased by the Indian government itself. (Murray and Deabler 1957). Below is the list of some of the sectors which have exclusive manufacture:
a) b) c) d) e) f) g) h) i)

Food and allied Industries Textile Products Including Hosiery Art Silk/Man-Made Fiber Hosiery Wood and Wood Products Paper Products Rubber Products Plastic Products Leather and Leather Products Chemicals and Chemical Products

Every small scale enterprise is accountable to be closed if the government finds them breaking the registration rules. A few of the actions taken by small scale enterprises that can draw the attention of the government are exceeding the investment limit, production of any new product that needs industrial license or violation of the ownership terms or the subsidiary norms. The increasing trade pattern in India shows that the small scale enterprise segment is expected to give more benefits to the investors. (Hofstatter and Lubbert, 1958). The financiers in this segment must make sure that they utilize all the available resources to get the profits. 2.2 Food Processing Sector in India: The food processing sector in India is extremely uneven sector, it majorly consists of fruits and vegetables, milk and milk products, beer and alcoholic beverages, meat and poultry, marine products, grain processing, packaged or convenience food and packaged drinks. A large number of industrialists in this sector are minute in terms of the manufacturing capacities and functioning, and are vastly categorized in the unorganized sector. This sector contributes for more than 70% of the manufacturing productivity and more than 50% in terms of price. Although the well organized segment is relatively minute, it is increasing at a much rapid speed.

Source: Ministry of Food Processing Industries Annual Report 2007-08 2.3 Investment Opportunities In the food processing sector, the investment opportunities are in the following areas:
a) b) c) d) e) f)

Fruits and Vegetables Fisheries Meat Grains Packaged and convenience goods Establishing infrastructure, cold chain, etc.

Remarkably, there have been a lot of changes in the food processing sector with the investments from the private sector companies to market the food processing sector. These private sector companies are building a unique model in the Indian context for the development of food processing sector. The entry of large scale multinational enterprises has attracted huge investments in this sector and it has also created a positive effect in the small and medium scale enterprise sector in the food processing segment. Policy Initiatives of the Indian Government:

The majority of the processed food products are tax exempted on the basis of licensing under the Industries (Development and regulation) Act, 1951, the products held in reserve for the small scale enterprise segment and alcoholic beverages are an exception. Automatic sanction for overseas equity for the sector upto 100% is offered for majority of the processed food products apart from alcohol, beer and those set aside for small scale segment under specific conditions.

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Small scale food processing enterprises were included in the group of top priority segment for bank loans since 1999. The excise duty which is levied on the processed fruit and vegetables was reduced from 16% to 0% since the 2001-2002 budget. Government of India has given income tax holiday and other subsidies for the food processing sectors since 2004-2005 budget.

2.4 Retail business in the Indian Food Processing sector: In India, the urban food processing market size is projected at Rs 35 billion. The Indian market prospect for processed food is vast and expanding quickly. The retail boom in India in the recent past will generate a massive demand for the Indian food processing segment in the following years. Indian Government has declared 2007 as the year of food processing. The private segment in India is still to recognize its full scope in the food processing in retail segment, as the Indian market has yet to be explored. The private companies are now identifying the scope of making money in the food processing sector. Guaranteed Business for the Private Companies: The modern cities have the capacity of the development procedure. But the modern cities lack agricultural land and hence they cannot produce food; but the rural areas main occupation is agriculture and hence they are the main sources of food. Thus the food produced in the rural areas has a guaranteed market in the urban areas. Hence the food processing sector in urban areas serves the purpose of supplying to the urban customers and increasing revenues for the farmers. There are some discrete properties of urban areas demand for food. The purchasing power of urban customers is high. The increasing average revenue of urban customers is becoming the source for increasing demand for processed food in Indian market. A substantial number of women in urban areas are employed and this is generating a demand readymade food. The density of urban population is large and hence there is a requirement of a large number of retail food outlets. The retailing in Indian food processing industry is expected to have an exponential rise. This is giving rise to new concepts like super and hyper markets in the Indian market. The main sources for improved demand for processed food in the Indian market are, increase in the income levels, shift in the lifestyles of urban customers, increased number of income sources in a family, changing tastes of customers and changing attitudes of the urban customers, requirement for time saving food consumption, demand for fresh food and increasing awareness of the customers.

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The Indian government has projected that in the Eleventh Five Year Plan the food processing segment is expected to pump in investments worth approximately Rs. 100 billion. Recognizing the requirement for a rigid structure for the Indian retailing sector, the Indian Government has combined 16 laws concerning the Indian food processing segment into a single legislation and this is estimated to be implemented from the 200910 financial year. 2.5 Marketing proposals: To strike the vast demand for processed food in the Indian market, a well-organized marketing structure is essential to introduce production driven by the consumer demand; marketing turns out to be vital to boost agricultural development. In addition to that it lessens the role of intermediaries, boosts the farmers' revenues and reduces customer prices. An effective marketing structure can decrease the losses incurred by farmers in selling their products, encourage graded manufacturing, packaging facilities and safety in food processing process, encourage production driven by the consumer demand, facilitate high product value and increase exports to other nations. Marketing norms are required, since they are vital for the development of the prospective demand for food in the urban areas. Dr. M.S. Swaminathan, the head of the National Commission on Farmers, has recommended to encourage partnership between public and private sectors and also to encourage investments from the private sectors to reap the benefits of the food processing sector prospectives. According to the Ministry of Food Processing Sector, there are 8,956 regulated markets in India. Among these markets most of them do not have minimum infrastructure. Hence, huge investment is required to give minimum agricultural infrastructure in India. It is projected that at least Rs 1200 million is required for the improvement of these regulated markets. The government has to take initiative to support partnerships between public and private sectors since they guarantee effective utilization of resources and improved administration norms. To support this, there are various instances of booming partnerships between public and private sectors. The wholesale market in India has been modernized and Safal market in Karnataka is the best example for this. Cargill Farm gate enterprise, e-Chaupal by ITC, Haryaalee Kissaan Baazar, Shubh Laabh from Mahindra, and Tata Kissaan Sansaar are all examples of marketing initiatives in the public and private sector partnerships. Apart from these, product interactions and futures markets have emerged as Multi-Commodity Exchange Limited (MCX) and National Commodity and Derivative Exchange Ltd (NCDEX). Encouragement for the Private Sector Enterprises: To promote the investments from private sector companies, to improve the infrastructure to a minimum level, a constructive and controlled atmosphere has to be formed in order to catch the attention of big corporate enterprises.

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In order to make this happen, the government needs to liberalize the credit policies provided for the companies to improve their marketing strategies. It also needs to make necessary changes to the market regulatory framework in order to prompt the private companies to build market yards and facilities to the promotion of food products. Increase the competency of the farmers and make them competitive with the private firms. The government also needs to encourage the participation of private sector companies in formulating marketing strategies. The government also needs to bring provisions to increase the price given to the farmers and also to reduce the risks. Another possible processed food produce is meat and meat products. India stands first in global cattle population, 50 % of buffalo population and one seventh of total goat population is in india. Buffalo meat is excess in the country. There is huge capacity to establish recent butchery amenities and cold storage firms in meat and meat prodcuts processing subdivision. Indias present stage of exports of meat and meat based products is approximately Rs 36,000 mn. In last 6 years overseas funds in this section stood at Rs 34,000 mn. which is greater than 50% of the total fundings made in this segment. The introduction of structured retailing in the food processing sector in the recent past and the formation of high quality space in the retail sector have improved the demand to maintain quality in production and also to boost the investments of the private sector companies in improving the infrastructure. Initiative taken by the Reliance Company: The scope of the food processing sector in India can be known by looking at the investments made by Reliance Company in the food processing sector. The company is establishing many retail outlets throughout the country in the name of Reliance Food and is also planning to venture into agri-horticulture. The company is venturing into processed food sector by creating a win-win situation for the farmers and also for the customers. The retail enterprises have to work along with the farmers, distribution agents and other retailers to improve their buying power. This can be possible by having a good distribution system and IT infrastructure. 2.6 Prospective in Indian Market: Indian market is opening up for the structured retailing in food processing sector recently. Initially there were some hiccups in the retail marketing but recently a structured business model is being generated with the involvement of government and private sectors. A considerable number of new enterprises are expected to bring in a huge change in this sector. Already established fast food giants like Kentucky Fried Chicken, Mc Donald's restaurant, Domino's pizza, Pizza Hut and other companies are revising their marketing strategies and targeting their products and changing their product port folio to grab market share and also to cater to varied classes of the society, varied customers and different lifestyles. The plan is an effort by most of the retail giants to boost sales and

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profitability with a wide range of product port folio that concentrates on catering to the needs of the customers and also to meet the minimum standards at a basic level. In addition to the FDI in food processing sector, an investment of USD 63 mn by cooking oil and sugar industries has shown the vast potential of investments in Indian market. These foreign direct investments in food sector have been more than the FDIs in hotel and tourism sector. As per the current Food Processing Ministry information, the overall Foreign Direct Investments in the food processing sector have touched USD 3,626 mn in March 2009. In 2008-09, the industry got approvals which amounted for USD 54 mn. which is approximately double the figure of USD 26 mn. in 2007-08. Overseas financiers are eager to invest in India which is evident from the over whelming interest shown by the investors from United Kingdom for setting up combined quality control testing centers for agricultural goods and products and also to set up cold storage centres in India. Source: Minister of State for Food Processing Industries, Subhodh Kaanth Sahaai. The USDA statement declares originally customer ready foodstuffs might have to be modified to comprise Indian flavor and customary element. Adding together to customary taste, there are additional societal issues which have an effect on utilization in India. Hindus contribute for about 80% of Indian people, and whereas only 25% or 30% are stern vegetarian, beef butchery is forbidden in all but two states (Kerala and West Bengal) and utilization of additional meats is partial. by the way, India is the only nation where the US based Mac Donalds sell its burgers with no beef products and even gives pure vegetarian burgers. Remarkably, there have been a lot of changes in the food processing sector with the investments from the private sector companies to market the food processing sector. These private sector companies are building a unique model in the Indian context for the development of food processing sector. The entry of large scale multinational enterprises has attracted huge investments in this sector and it has also created a positive effect in the small and medium scale enterprise sector in the food processing segment. This process of organizing the food processing sector will have a positive impact on the farmers and the customers. 2.7 India's Potential market for Untapped Food Processing Industry: India is the second major manufacturer of food in the world after China. India has the possibility of becoming the largest with the help of its food and agricultural segment. According to Forbes, the share of India in the food processing sector is USD 49.8 billion within the total market of USD 121.8 billion. In India, the food processing sector is one among the largest sectors which contributes to the Indian economy. In India, the food processing sector is fifth among all the sectors in terms of manufacturing, spending, exports and development scope. India is one among international chief food manufacturers but contributes for less than 2.3 per cent of global food trade. This shows huge capacity for both financiers and exporters. Food product exports in 2008 stood at USD 24.3 bn. where as the global total

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was USD 1468 bn. The food industry in India had a sales revenue of Rs 236,000 crores yearly as at the beginning of year 2008. The sector needs about Rs 86,000 crores in investment in the next 5 years to 2015 to generate essential infrastructure, increase manufacturing facilities and latest technology to go with the global quality and standards. The department of the Agricultural Affairs of the USDA and Foreign Agricultural Services in New Delhi states that one among the Indias greatest achievements has been attaining a weak self sufficiency in production of food and that the nation generates a wide range of agricultural product at value that are equal to or less than the global rates in most conditions. The Indian appetite is familiar to customary foods, typically wheat and rice based food, somewhat than potato and corn based western appetite. In promotion viewpoint, this is measured an vital issue for overseas marketers. The estimation made by the Confederation of Indian Industry (CII) predicts that the Indian food processing segment can attract USD 54 bn. as investments in the coming decade. It also predicted that the Indian food processing sector has the potential of generating 12 million worker days of employment. The Government of India has devised and executed many plans and schemes to offer monetary support for establishing and improving food processing firms, development of infrastructure, and lending support to develop human resource management and also research and development in the food processing sector. These plans are aimed at the growth of the food processing sector in India. Although the food processing sector is vast in its size and economy, it is still at a budding phase in terms of expansion. Research conducted by CII states that only 3% of the total food produced through agriculture is processed. When the utilization is considered, dairy sector is in the top position with 37% of its total produce being processed and within this 37%, only 16 per cent is being processed through the organized sector. Indian middle class section will be the solution to success or failure of the Indian processed food products. Of the nations whole inhabitants of one bn, the middle class section accounts for about 360-380 mn. although a greater part of people in this section have non working house wives or can have the funds for hired household help and thus arrange foods of their flavor in their individual kitchens, the side view of the middle class section is varying gradually and hired household help is turning out to be costlier. This is favorable to an increase in demand for ready made Indian type foods. The food processing sector in India consists of a) fruit and vegetables b) meat and poultry c) milk and milk products d) alcoholic beverages e) fisheries f) plantation g) grain processing and various other customer product segments like a) confectionery b) chocolates and cocoa c) soya-based goods d) mineral water e) high protein foods etc. the Ministry of food processing sectors in India takes care of the distributors, suppliers, producers, export and import companies in the food processing sector and also works for the welfare of the sectors like food processing sector, dairy products processing, beverage sector etc. The responsibility of Ministry of Food Processing sector in India also covers the dairy plants, packaging and bottling firms, process equipment etc.

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The major capable sub segments in food processing sector also consists of soft drink bottling firms, manufacturers of confectionery products, marine, aqua culture, grain products milling and manufacturing, processing of meat and poultry products, production of alcoholic products, processing of milk and dairy products, other house hold commodities like tomato, ginger, garlic paste, products related to fast food, break fast products and ready to eat food items, food flavors, masalas and additives etc. 2.8 Initiatives of Indian Government: The Indian Government has recognized the Indian Food Processing segment as a top priority segment. The Indian Government has granted a lot of financial assistance and subsidies to support the sector and provide value addition to the products. According to a research done by Confederation of Indian Industry (CII) and McKinsey, the revenue generated by the food processing sector in India is almost USD 97.3 bn. and the value added products contribute USD 46.8 bn. to it.The Government of India has also permitted plans for partnerships with multinational companies, joint ventures and has given industrial licenses to the food processing enterprises. The contribution of the export oriented units (EOUs) for the investments in the food processing sector stands at USD 57.3 bn. among which the foreign direct investments account for more than USD 24.7 bn. A notable drive can be possible in this sector by intensifying relations between farmers and food processing units. The intermediaries in the supply chain and the costs of the products can be brought down by increasing the relation between farmers and supply chain and also between farmers and enterprises. The Indian Governments National Agriculture Policy encourages the contribution of the private companies by contract farming and giving lands for lease and thus ensure raw material supply for the companies and sales of agricultural products, and improve the technology and investments in this sector. The Indian Government is also planning to invest around USD 46.83 mn. to establish about ten mega food parks all over the country. In addition, the government is also giving 100% foreign direct investments (FDIs) and income and service tax exemptions to the segment. As per the statistics of Indian Credit Rating Agency (ICRA), the food processing sector contributes for around 39% of the total Indian food market. Multinational Ventures: According to Indian Credit Rating Agency (ICRA), global fast food companies are refining their plans to enter the Indian market. Many companies like Dixy, Papa Johns, Cinnabon, Barnie, and Burger King etc. are opening their stores all over the metros in India. And many other UK and US companies are looking out for venturing into Indian market through joint ventures. Already established fast food giants like Kentucky Fried Chicken, Mc Donald's restaurant, Domino's pizza, Pizza Hut and other companies are revising their marketing strategies and targeting their products and changing their product port folio to grab market share and also to cater to varied classes of the society, varied customers and different lifestyles. The plan is an effort by most of the retail giants to boost sales and

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profitability with a wide range of product port folio that concentrates on catering to the needs of the customers and also to meet the minimum standards at a basic level. With the increasing competition in the Indian market, the companies are finding it difficult to face the competition through stand alone stores and are hence targeting the canteens of various offices, corporate companies, educational institutions and other potential centres for business. The demand for the processed food across the world is also increased by the super market giants like Wal-Mart, Metro, Tesco plc. and Carre four which are the sources of demand for the processed food and hence it is a major support for the domestic companies to venture or expand their business in this sector. The revenues generated by the food processing sector can be around USD 50 bn. in the coming year as stated by Food Processing Minister Mr. Shubodh Kaanth Sahaai. 2.9 Milk and Diary Products The milk and dairy sector requires to be mentioned because of its potential and contribution to the Indian economy. India's milk and dairy products outcome and the sectors growth are expected to surpass the global market growth. The total output of the worlds milk and dairy products is estimated to increase by 3.8 per cent in 2011 and the Indian milk and dairy products output is estimated to increase by 6.2 per cent. And it is expected that India will be contributing for more than 50% of the 4.3% growth of the sector in Asia. As the major sole dairy generating nation in the international market, the output generated by India is carrying on to increase strongly in the range of 4-5 percentage, chiefly in reply to domestic demand expansion and continuous growing output. Out of the 428 mn. tons milk generated in Asia, India contributes for more than 50% of the output. Given the current increasing global costs, India is starting to venture into some export businesses, especially for skimmed milk powder, and India is estimated to export 1.1 mn. tons of the total output of dairy products constituting milk and milk products which stands at 113.6 mn. ton. In 2009, India had generated 136.5 mn. tons of dairy based products. Amul is expected to be the major liquid milk brand in the international market after the governments initiative to merge Gujarat's milk co operatives, which aims at getting all milk brands of various districts into Amul. Till now, Amul's promoter GCMMF asserts itself to be the Asia's major milk brand. According to an analysis by GCMMF, the output of the Amul Company will boost by 4.7-5.9 mn. litres a day to 5.8-6.7 mn. litres per day, when the milk brands of various districts are staged out. The output of Amul Company milk will raise more by 560,000 liters if the output of liquid milk packaged in paper box packs is also summed to pouch milk sales.

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In the meantime, the structured retailing industry of food processing in India is estimated to increase by 43 per cent in the coming five years and develop into USD 4.8 bn. sector by 2015 which is currently standing at USD 898 mn. as stated by the ministry of food processing industry. The exports of Indian seafood industry increased 17% and stands at USD 2.73 bn. in 2008-09, aided by the growing international demand from the countries like Europe, China and countries from West Asia. The Indian sea food exports have crossed USD 2.5 bn. for the first time in this instance. In the year 2007-2008, the sea food exports were 2.38 bn. 2.10 Investments in Food Processing Sector: The Indian food processing industry requires fundings of approximately USD 35-47 bn. to cater to the varying demands of food industry in India, as per the Food Processing Industry predictions. The lay out for the food processing sector has been raised from USD 26.7 mn. in 2007-08 to USD 54.6 mn. in 2008-2009. The investments from foreign companies which are called as foreign direct investments (FDI) are estimated to be USD 4.3 bn. in the Indian food sector. The foreign direct investment approvals have been doubled since the last couple of years. In addition to the FDI in food processing sector, an investment of USD 63 mn by cooking oil and sugar industries has shown the vast potential of investments in Indian market. These foreign direct investments in food sector have been more than the FDIs in hotel and tourism sector. The organised segment of poultry sector contributes about 70 per cent of the whole production and the remaining 30 per cent is contributed by the unorganised segment. The broiler segment is well established in southern India which contributes for about 65 to 75 per cent of the whole output. The layer sector is also more predominant in the southern states which contribute for about 70 per cent of the Indian production of eggs. Out of the 75 per cent of the total egg produce in India, 25 per cent is consumed by the customers residing in the urban and semi urban localities. Currently, there are around 1000 hatcheries which are doing business in India. As per the current Food Processing Ministry information, the overall Foreign Direct Investments in the food processing sector have touched USD 3,626 mn in March 2009. In 2008-09, the industry got approvals which amounted for USD 54 mn. which is approximately double the figure of USD 26 mn. in 2007-08. Overseas financiers are eager to invest in India which is evident from the over whelming interest shown by the investors from United Kingdom for setting up combined quality control testing centers for agricultural goods and products and also to set up cold storage centres in India. Source: Minister of State for Food Processing Industries, Subhodh Kaanth Sahaai.

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2.11 Future Prospects: According to the Ministry of Food Processing Industry, the overall food production is expected to increase two fold in the coming decade and there is a scope for huge investments in the food processing sector and food processing technologies, competencies and machinery, particularly in fields of packaging, processing of Dairy products and Food, other specialty food products Processing, frozen products and refrigerated food products and Thermo Processing. In the food processing industry, Fruits and Vegetables, marine industry, dairy products, Meat products and Indian poultry sector, canned food products, beverages like alcohol and cold drinks and aerated drinks are vital segments of the Indian food processing sector. High protein food and health supplements are also quickly growing sector of this food processing sector, which is experiencing huge recognition among the people who are health conscious. In India, there is an urgent requirement to formulate a correct plan for the improvement of meat and poultry produce. This will surely bring opportunities to a lot of the rural population and generates employment opportunities in various parts of India. In India, there is an urgent requirement to formulate a correct plan for the improvement of meat and poultry produce. This will surely bring opportunities to a lot of the rural population and generates employment opportunities in various parts of India. After attaining the Blue Revolution, the Green Revolution and the White Revolution, it raises a query that Pink revolution can be achieved? Surely this will need huge funds in equipment, especially in cold storages, and latest meat processing firms. Since the meat sector largely depends on the cold storage facility and hence investments are required in this filed for the survival and growth of the meat sector. India stands first in the global buffalo population, with 63.7 per cent i.e. 112.4 mn. of the global buffalo population and one-seventh of the global goat population. India also stands first in the production of milk which accounts for more than 125 mn. tonnes per year. India also stands fifth in the production of eggs which accounts for more than 2.9 mn. tonnes, and stands at ninth position in the field of poultry sector. In spite of being number one in the fields of meat and meat products, poultry and milk manufacturing, the exports from India are very less due to the quality constraints. Among the meat and meat products sector, the poultry industry is the more rapidly expanding segments increasing at a rate of 12 per cent a year. Straight down incorporation of poultry manufacturing and marketing strategies has reduced the production costs, promotional margins and customer prices of poultry meat. In India, there are 11 integrated units for the processing of poultry, that have an important contribution to the meat and meat products industry. After attaining the Blue Revolution, the Green Revolution and the White Revolution, it raises a query that Pink revolution can be achieved? Surely this will need huge funds in equipment, especially in cold storages, and latest meat processing firms. Since the meat sector largely depends on the cold storage facility and hence investments are required in this filed for the survival and growth of the meat sector. In a move to get rid of restrictions in the path of fundings in the food processing sector, the Ministry of Food Processing Industries in India (MoFPI) is ready to move for forming an encouraging economic situation to stimulate working capital and mutual funds investments in the food processing supply chain. This is a result of the suggestions of a

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Rabo Bank research conducted by the Ministry to open funds for the industry to an amount of USD 57.3 bn. in the food processing segment in the next decade. Because this segment gives huge expansion prospective, a great number of multi national enterprises (MNCs) are entering India to get the benefits of this chance. The companies like Unilever, Parle, Coke and Nestle are a few of the large and booming international companies in India that are facing conflict from the already recognized domestic companies. As per a latest article published by RNCOS, the Food Processing sector in India (2008), "In next 3 years, the Indian food processing industry is anticipated to grow to 3 times its current size making India a key and consequential player in the food and agriculture trade. Despite being recognized as a promising growth area, the current share of Indian food processing market in the world food trade is only 2 percent." The Indian food processing sector in India and the bakery food products sector have shown a prospect for the Indian stock markets. Supply of key companies in this slow developing segment has been doing well on great commercial outcomes, favorable economic situations and favorable weather conditions. Though narrow margns will result in bigger stock for these enterprises to stay in the market for the coming two years and even long term run of the companies is also good since rural markets are opening up and increasing customers in Indian market will help the sales of the companies. Key Players in Indian market: The key players in the Indian food processing industry are Parle Foods, Reliance group, Naamdhaari, ITC Inc., Godrej Foods, Nestle corp., Ruchee Soyaa Company, Tata group of industries, RPG group, Subheeksha, and Dabur etc. 2.12 Retail sector benefits to the food processing sector: As per the article of The Times of India on March 12, 2008, main companies in the retail segment are trying hard to abolish or make amendments to the Agricultural Produce Marketing Commission Act to increase the pace of expansion of the Indian food processing industry since they are expecting huge returns from this sector. According to the research done by Global consultants, Dun & Bradstreet in the 2008 projected that India misutilises about USD 21 bn. amount of farm based products, which includes dairy products, every year due to insufficient processing and in effective storage facilities. A study conducted by FICCI states that in spite of being the second largest food manufacturer only after China, the share of India in the USD 8.4 bn. worldwide food processing business is less than 2 % which has a large potential for expansion. The study conducted by FICCI recognizes the Agricultural Produce Marketing Commission Act as being the main obstacle hampering the expansion since it does not

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permit the processing companies to stock the fruits or vegetables and other food items for more than one month. This hinders the companies that process seasonal products like mango or litchi. States like Bihar have abolished this act and are expanding in the sector and hence other states have also followed this and are asking the government to scrap the system of giving license to each product manufactured by the same company. The study also recommends a 10 year tax holiday, regulatory process, excise relief, and incentives for the food processing sector. Unique reforms have been recommended for financiers who venture into all stages of food processing sector in an incorporated way and for those giving more than one facility. An exemption of excise is also being recommended in the machinery and refrigerated vehicles to draw funds and help in reducing the costs. In a move to get rid of restrictions in the path of fundings in the food processing sector, the Ministry of Food Processing Industries in India (MoFPI) is ready to move for forming an encouraging economic situation to stimulate working capital and mutual funds investments in the food processing supply chain. This is a result of the suggestions of a Rabo Bank research conducted by the Ministry to open funds for the industry to an amount of USD 57.3 bn. in the food processing segment in the next decade. Because this segment gives huge expansion prospective, a great number of multi national enterprises (MNCs) are entering India to get the benefits of this chance. The companies like Unilever, Parle, Coke and Nestle are a few of the large and booming international companies in India that are facing conflict from the already recognized domestic companies. The available information from the ministry of food processing industry states that the Indian food processing exports in 2007 at USD 14.6 bn. in comparison with the global total of USD 962 bn. At the beginning of 2008, the food sector in India had a revenue of Rs 453,000 crores. This shows a huge capacity for both financiers and enterprises. In India, only 3% of the food manufactured is processed yearly. 2.13 SWOT analysis of Food Processing Industry: Strengths Rich accessibility of raw materials. India is 7th largest country in terms of its area and is a source of a variety of raw materials useful for food processing industry. Indian population majorly consists of rural population whose main source of income is agriculture and cattle breeding. Hence the raw materials for the food processing industry are very abundant in India. The Indian government has given Priority sector status for food processing industries in India.

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The central Government of India has implemented policies and reforms that are useful for the food processing sector in India. The central government of India has also removed the restrictions in industrial licensing policy which now allows the industries to expand with the aid of foreign technology and foreign direct investments. The government has given priority status to the food processing sector. Huge system of production facilities throughout the country. The Indian industrial reforms allow an industry to setup its manufacturing unit in any part of the country. This allows a company to setup its venture where the raw materials, labor and other necessary resources are available in plenty and also at a much cheaper rate. Thus the companies can increase their profitability and revenues. Huge potential in the Indian market. According to ministry of food processing in India, only 2% of the total production in food processing is being processed. The processed food is reaching only the urban markets which means more than 50% of the domestic market is still untapped. Hence the potential for food processing sector in India is very large. Weaknesses Less accessibility of necessary infrastructural facilities. Though India has abundant supply of raw materials, they are not being used in a useful manner because of lack of proper infrastructure facilities. Many food processing industries in India are still using the traditional methods of manufacturing due to poor infrastructure which is reducing their efficiency, effectiveness and productivity. The lack of working capital is also a reason for many companies to use traditional methods in manufacturing. Deficiency of required quality control and testing processes according to the global standards. Many food processing industries in India do not have a proper quality control system in place to check the quality of the products. This reduces the demand for the Indian food processing products in the international market. Since most of the food processing industries are small scale industries, they cannot afford to implement strict quality controls to check the quality of the products. Inefficient supply chain due to a large number of intermediaries. The small scale industry supply chain in India is dominated by intermediaries who make the supply chain inefficient. These intermediaries reduce the profitability of the industries and also make the industries to have less control on the supply chain. The intermediaries make the supply chain inefficient by taking a share of the profits and also by taking the control over the transactions made by the industries. Huge requirement of working capital. The food processing sector requires very high working capital to run the industries. The food processing techniques are very complex and require good infrastructure and high technology machines in the manufacturing process. Hence this requires a high working capital to be invested in this sector. Scarcely developed relationship between Research and Development 22

departments and the food processing industry. In the Indian food processing sector, a very little investment is done on the research and development which makes it difficult to have new methods and techniques in the sector. The government and private research and development labs have a weak linkage with the food processing industries and hence the research done in the sector has very little scope. Seasonality of raw material. Most of the raw materials required for the food processing sector are seasonal and this makes the availability of the raw materials in un season more difficult. The temperatures and climate of India make it seasonal for the availability of some raw materials. Opportunities Huge raw material sources which offer a large potential for food processing activities. India is a vast country with plenty of availability of raw materials and hence the scope of food processing industry in India is very large. The policies and reforms introduced by the government for the benefit of food processing sector is also an opportunity for the food processing sector. Establishment of Special Economic Zones and food parks to boost the development of the food processing projects. The Indian government is establishing special economy zones throughout the country to setup food processing industries by providing tax benefits and also other benefits. These special economy zones are setup to encourage the small scale industries and also to boost their exports to other countries. Increasing income levels and varying expenditure patterns. Indian economy is growing at a rapid pace and the income levels of the people are also increasing which is a good sign for establishing industries in India. With the increasing income levels and standards of living, people are more health conscious and prefer processed food. Encouraging demographic pattern and varying life styles. The increasing population and increasing standards of living are good opportunities for the food processing sector. The changing mind set of the people to consume processed food is a real boost for the food processing sector in India. The improving life styles of people are making them to go for processed food. Combination of expansion in modern technologies like electronics, material science, and bio-technology etc. provide huge potential for fast development and growth. Indian government is focusing on improving the infrastructure of the food processing industry by conducting research in the bio technology and other fields related to food processing sector. The quality standards of the sector are also being improved to make the products more saleable. The advancement in the infrastructure will increase the effectiveness, efficiency and productivity of the food processing sector. Opening of international markets.

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After globalization the global markets have opened up and hence the scope of foreign direct investments and exports are huge. The Indian trade policies are also favorable for the foreign direct investments in the food processing sector. Thus the international markets are providing good scope for the food processing sector in India. Threats Accessibility and cultural constraints regarding processed food. Though the income levels of people are increasing, the majority of the population in India belongs to rural areas which reduces the market of processed food since rural area population cannot afford processed food. Moreover the Indian culture encourages fresh food from farm and hence do not support the concept of processed food and frozen food. Huge inventory maintenance costs. Most of the raw materials in food processing industry are perishable and hence a lot of investment has to be done in maintaining the inventory. Hence the inventory carrying cost in food processing industry is very high. High rate of taxation. Though the government has reduced the tax on food processing sector, it is still high compared to the other small scale industries. The domestic sales and also the exports of the food processing industry are heavily taxed in comparison to the other small scale businesses. High packaging cost. Since the products of the food processing sector are perishable, utmost care needs to be taken in the packaging of the products. The products need to be packed in special packages which make the packaging costs high in this sector.

2.14 Food processing sector in India: India stands in the top position in the cattle and animal number. In India, the meat and meat processing sector is yet to arise. Some of the major companies in the meat and meat products processing sector like Venkateshwaraa Hatcheries, Al Kabir, Allaanasons, Godrej Agrovet etc., which have latest high-tech slaughter and processing units, have transformed the whole picture, making the sector to expand at approximately 16 per cent. There is an enormous capacity for increasing exports, particularly in buffalo meat and poultry meat, poultry eggs and dairy products. In India, there is an urgent requirement to formulate a correct plan for the improvement of meat and poultry produce. This will surely bring opportunities to a lot of the rural population and generates employment opportunities in various parts of India. After attaining the Blue Revolution, the Green Revolution and the White Revolution, it raises a query that Pink revolution can be achieved? Surely this will need huge funds in equipment, especially in cold storages, and latest meat processing firms. Since the meat sector largely depends on the cold storage facility and hence investments are required in this filed for the survival and growth of the meat sector.

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India stands first in the global buffalo population, with 63.7 per cent i.e. 112.4 mn. of the global buffalo population and one-seventh of the global goat population. India also stands first in the production of milk which accounts for more than 125 mn. tonnes per year. India also stands fifth in the production of eggs which accounts for more than 2.9 mn. tonnes, and stands at ninth position in the field of poultry sector. In spite of being number one in the fields of meat and meat products, poultry and milk manufacturing, the exports from India are very less due to the quality constraints. Among the meat and meat products sector, the poultry industry is the more rapidly expanding segments increasing at a rate of 12 per cent a year. Straight down incorporation of poultry manufacturing and marketing strategies has reduced the production costs, promotional margins and customer prices of poultry meat. In India, there are 11 integrated units for the processing of poultry, that have an important contribution to the meat and meat products industry. The exports of meat of sheep, buffalo and goat in terms of size is very less. Exports of buffalo meat export are not much significant because of low quality. The exports from India are confined to nations majorly in the Middle East, with a lot of Indian population who resides in these areas who demand it. The exports of poultry products are also not significant. As per the data of APEDA, the exports of buffalo meat were 547281.39 tonnes (worth Rs 3682.50 crores) in 2005-06, 448888.73 tonnes (worht Rs 2875.92 crores) in 2006-07 and 692847.42 tonnes (worth Rs 3985.83 crores) in 2007-08, 829187.62 tonnes (worth Rs.5829.62 crores) in 2008-09. The exports of sheep and goat meat were 29847.93 tonnes (worth Rs 281.52 crores) in 2005-06, 10483.52 tonnes (worth Rs 98.48 crores) in 2006-07 and 8788.39 tonnes (worth Rs 97.68 crores) in 2007-08, 7382.94 tonnes (worth Rs.87.29 crores) in 2008-09. The exports of processed meat were 1045.38 tonnes (worth Rs 9.87 crores) in 2005-06, 2948.6 tonnes (worth Rs 12.84 crores) in 2006-07 and 492.86 tonnes (worth Rs 5.38 crores) in 2007-08. The poultry products exports were 738291.93 tonnes (worth Rs 584.29 crores) in 2006-07, 488172.39 tonnes (worth Rs 382.94 crores) in 2007-08 and 392847 tonnes (worth Rs 392.83 crores) in 2008-09. 2.15 Contribution of meat and meat products to Exports: India generates approximately 3.6 mn. tonnes of buffalo meat yearly, out of which 37% is exported to other nations. According to the current statistics of 2009, India experienced an expansion of 9.8 per cent of buffalo population in the last five years. The exports of buffalo meat have increased significantly. The prospective for quick expansion is large, especially if an exact plan of action which is guided by time frame among the different branches of the government of India and the meat export sector is built up. Because the increase in the buffalo meat for consumption in India is less (which is less than 4 per cent), the prospective for export figures boosts considerably. The exports of Indian poultry products are mostly restricted to eggs and egg powder that are increasing because of the cost effectiveness and infrastructure benefits. The exports of poultry meat are insignificant because of increasing costs, insufficient facilities for meat processing and infrastructure drawbacks. In the recent past, most of the integrators from

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the South India are investigating the chances of increasing the exports of poultry meat to the Middle East and South-East Asian markets. In India, there are no limitations on the poultry and poultry products exports. The Indian government offers some logistic grants (Rs 4-18 a kg) to boost the exports. And also, there are a lot of concerns that have to be identified in order to boost and make sure that the expansion for the existing markets, as stated by the industry sources. For the improvement of exports of meat products from India, the food processing sector has requested for some instant actions like monetary help for improvement of abattoirs and processing plants for the exports. Addition of buffalo meat as per the Transport Assistance Scheme of APEDA for emerging markets in Africa and CIS in which the transport cost from India for containers and vehicles is a lot greater than that of the rival nations. Reinstatement of DEPB costs for frozen buffalo meat products, exclusion from service tax levied on shipping of meat and meat products which are processed for the purpose of exports from India. This is currently appropriate for the sectors like fruits and vegetables, poultry products and milk for domestic consumption. 2.16 Industrial Growth: Since 1995, there has been a steady growth rate of 4 per cent yearly in the manufacturing of meat and meat products. At present, the level of processing the buffalo meat is predicted at 31 per cent, poultry products at 6 per cent and fish and marine products at 8 per cent. But only a mere 2 per cent of the total production of meat is transformed into value added goods and products like meat balls, sausages, bacon, ham, and kebabs, etc. The meat production is administered under the local policies and slaughtering is administered by the state laws. Meat processing is licensed by the Meat Food Products Order, 1973. In the year 2008, there was a total population of 626 mn. of buffalo and cattle that consisted of 346 mn. cattle and 125 mn. buffaloes. India manufactures approximately 635 mn. broilers and about 64 bn. eggs yearly. Meat production is generally done by using meat sources like cattle, buffaloes, sheep, goat, pigs and poultry etc. The processing rate of cattle on a total is 32 per cent, and 56 per cent for buffaloes, 99 per cent for pigs, 30 per cent for sheep and 52 per cent for goats. India on a whole has 4,800 slaughter houses, 18 latest abattoirs and 257 units that process meat which are licensed according to the meat and meat products order. Among the meat and meat products sector, the poultry industry is the more rapidly expanding segments increasing at a rate of 12 per cent a year. Straight down incorporation of poultry manufacturing and marketing strategies has reduced the production costs, promotional margins and customer prices of poultry meat. In India, there are 11 integrated units for the processing of poultry, that have an important contribution to the meat and meat products industry.

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Exports of Food processing sectors (Quantity in MT, Value in Rs Mn) 2007-08 Quantity 243356 3915 19876 464 267 267878 Value 11444 331 1301 96 13 13185 2008-09 Quantity 306971 8885 264608 552 107 581123 Value 16156 794 1541 126 16 18633 CAGR Quantity 8.0 31.4 137.0 6.0 -26.2 29.5 Value 12.2 33.9 5.8 9.3 6.5 12.2

Buffalo meat Sheep/Goat meat Poultry Production Animal Casings Processed Meat Total

Source: Ministry of Food Processing Industries, Annual Report 2009-10. The exports of meat have been rising at approximately 30 per cent a year considering the quantity that is manufactured and it majorly consists of meat generated from goat, poultry, sheep and buffalo. But the exports of meat products that have value addition are negligible. In the Indian market, the increasing number of fast food firms is having an important effect on the meat and meat products processing sector. 2.17 Indian Poultry Sector and Its Future: It is imagined that the poultry industry in India is about 5,000 years old. And from the last 40 years, this sector has seen a lot of development and growth in India. The organised segment of poultry sector contributes about 70 per cent of the whole production and the remaining 30 per cent is contributed by the unorganised segment. The broiler segment is well established in southern India which contributes for about 65 to 75 per cent of the whole output. The layer sector is also more predominant in the southern states which contribute for about 70 per cent of the Indian production of eggs. Out of the 75 per cent of the total egg produce in India, 25 per cent is consumed by the customers residing in the urban and semi urban localities. Currently, there are around 1000 hatcheries which are doing business in India. Per capita consumption in India: As per the recommendation of National Institute of Nutrition, 180 eggs and 11 kg of meat is recommended for India as per capita consumption. Currently, 1. 2. 3. 4. 5. 6. Per capita availability of meat in India is 1.6 kg. Per capita availability of egg 42 eggs. Average consumption of eggs in big cities is 170 eggs. Average consumption of eggs in smaller cities is 40 eggs. Average consumption of developed rural areas is 20 eggs. Average consumption of undeveloped rural areas is only 5 eggs.

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About 20 per cent of the population of India is vegetarian. But with the increase in the middle class population and shifting of the population to cities has changed the tastes of the Indian population. About 3 mn. farmers and 15 mn. agrarian farmers are working in the Indian poultry sector that cultivate ingredients for the poultry sector to use them as food for the poultry and thus contribute approximately Rs 53,000 crores to the Indian economy. India stands at 5th position in the manufacturing of eggs and stands at 9th position in the manufacturing of poultry meat. India stood at seventeenth position in the global production of poultry. The poultry production in India is termed to be the most cost effective in the world. Major broiler Companies in India are listed below:

Venkaateshwara Group, Maharashtra. Shugunaa Poultry Farms Ltd, Tamil Nadu. Pioneer Group, Tamil Nadu. Godrej Agro vet Ltd, Maharashtra. Sky Lark group, Delhi. Jaafa comp feeds Haryana.

These firms contribute for almost 40 per cent of broiler sector production and investments. Pioneer group launched the idea of contract farming way back in 1980 and the idea of incorporation was launched by Sugunaa group in 1990s. The process of poultry farming became famous and feasible task by the mid 60s and the actual drive to improvement came in 1971 with the incorporation of Venkaateshwara Hatcheries Private Limited. The development of poultry sector was done by the central Poultry Breeding Farms in 1959 and various agencies like ICAR (CARI) accounted for the Research and development in this sector. Latest improvements in the poultry sector:
1. 2.

3. 4.

5. 6. 7. 8. 9.

NABARD has dedicated to get rural progress through poultry sector. Indian government has proposed to get investments worth Rs 2295 crores for the development of poultry sector in the 11th five year plan. and Rs 45,000 crores for the whole country. Indian government has reinstated exports of egg. International Finance Corporation which is a Washington based company has bought share in Sugunaa farms. Sugunaa farms laid the path for expansion of poultry business in North India through innovative concepts. Venkaateshwaraa Hatcheries is using various events to promote its brand. The government is giving poultry feed at discount rates for the farmers. Poultry tourism has been encouraged by the Kerala livestock development board in Munnaar. Poultry wastes are estimated to bring carbon credit in Andhra Pradesh with the proposal of a 3.5 mw power plant. Godrej Agro vet Ltd launched a wide range products in the processed form in the name of Godrej Real Good Chicken.

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2.18 Fruits and Vegetables Sector in India: The current ability of fruits and vegetables sector in India has improved from 2.3 mn. tonnes in the year 1993 to 4.8 mn. tonnes in the year 2009. The fruits and vegetables sector is processed for just about 2.2 per cent of the whole production in India. The main processed products in the fruit and vegetable sector are jams, juices, fruit pulps, beverages, processed and packaged fruits and vegetables, milk shakes, pickles, and other produces of fruits and vegetables. Some latest product range launched in this sector consists of veg curries in retortable packs, packaged mushroom and mushroom products, concentrates of juices, and dry fruits. The processing of fruits and vegetable sector is a largely decentralized sector, and a major amount of firms are in the micro sector or house hold sector or small scale segment, with very less outputs of about 250 tonnes a year. From the year 2000, the food processing sector has witnessed major expansion in ready made drinks, packaged fruit juices, dry and frozen products, vegetable pickles, mushrooms and vegetables are processed to enable them to be exported. Exports Of Fruit & Vegetables (Quantity in MT, Value in Rs Mn) 2004-05 Quantity 209157.8 76735.18 38758.97 61332.39 385984.3 2008-09 Value Quantity 5371.5 351034.3 2413.4 90988.6 1203.4 67193.29 2017.4 80760.5 11005.7 589976.7 CAGR Value Quantity 7657.5 18.8 3008.6 5.8 1205.8 20.1 2755.3 9.6 14627.2 15.2 Value 12.5 7.6 0.1 10.9 9.9

Dried & Preserved Vegetables Mango Pulp Pickles & Chutney Other Processed Fruits & Vegetables Total

Source: Ministry of Food Processing Industries, Annual Report 2008-09 The Indian food processing sector has to transform its choices in support of processed fruits and vegetables. Utilization of fruits and vegetables which are processed are less in comparison with the primary processed food and unprocessed fruits and vegetables. The demand for processed food is mostly evident in ciites because of the increasing spending capacities. For the improvement of exports of meat products from India, the food processing sector has requested for some instant actions like monetary help for improvement of abattoirs and processing plants for the exports. Addition of buffalo meat as per the Transport Assistance Scheme of APEDA for emerging markets in Africa and CIS in which the transport cost from India for containers and vehicles is a lot greater than that of the rival nations. Reinstatement of DEPB costs for frozen buffalo meat products, exclusion from service tax levied on shipping of meat and meat products which are

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processed for the purpose of exports from India. This is currently appropriate for the sectors like fruits and vegetables, poultry products and milk for domestic consumption. A notable drive can be possible in this sector by intensifying relations between farmers and food processing units. The intermediaries in the supply chain and the costs of the products can be brought down by increasing the relation between farmers and supply chain and also between farmers and enterprises. The Indian Governments National Agriculture Policy encourages the contribution of the private companies by contract farming and giving lands for lease and thus ensure raw material supply for the companies and sales of agricultural products, and improve the technology and investments in this sector. Modern activities like contract farming are implemented by large companies like Hindustan Lever Ltd and Pepsi Foods Ltd have transformed the farming process and introduced new technology and increased the productivity of the sector. Along with these activities, monetary benefits and tax exemptions have given momentum to the food processing sector in India. The fruit and vegetables sector was benefited by the 100 per cent tax exemption given by the Indian government in the year 2005.

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Research Methodology: The aim of the research is to know the scope of food processing sector in India. In order to achieve this aim, the research methodology consists of Primary as well as secondary research methodologies. The primary research consists of telephone interview and sending online questionnaires to the target sample. The target sample consists of the managers of the food processing enterprises in India, employees of food processing industry of India. The methods of conducting research viz. online questionnaires and telephone interviews are intended for the whole target sample, but telephone interviews are conducted with the employees with designations less than a manager and who do not have access to internet. Online questionnaires are given to managers and top level managers with more skills. Finally, it would be the choice of the interviewee to opt for telephone interview or online questionnaire. The secondary research consists of collecting the information through various journals, websites, and literature etc. The scope of secondary research is more in this topic because the information regarding the small scale businesses and industries can be retrieved from the government websites and various journals released by the government. Thus secondary research has a lot of role to play in gathering the information in the project. The information gathered is mostly qualitative data. Various methods to analyze the data will be used as required during the project. 3.1 Research Questions: The research questions are aimed at finding the scope of small businesses in India and it can be achieved by answering the following questions. What are the opportunities for small scale food processing enterprises in India? What are the business challenges faced by the small scale food processing businesses in India? What strategies are formulated by the small scale food processing enterprises to tap the opportunities and overcome the challenges? What are the various factors that need to be considered by the small scale food processing businesses to improve their performance? Why do most of small scale industries fail to survive in the market? What are the various policies and reforms introduced by the government to encourage the small scale businesses in India?

The research questions can be modified and new questions may be added to the research questions to widen the scope of the research.

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3.2 Structure Of Research:

Introduction

Literature Review

Research Methodology

Analysis Of Research

Conclusion

Contribution and Expected Outcome: The reason for selecting this topic is its wide scope of research since a developing country like India has a huge potential for growth and has a huge market. The food processing sector in India is encouraged by the government through its policies and reforms. This topic has a scope of addressing the problems in the management of the food processing enterprises and the various solutions to overcome the problems. The outcomes of the project will identify the various factors that affect the food processing sector in India. I would be able to know the various aspects of food processing sector and the various market conditions in India to setup and manage small scale food processing company in India. It also helps to formulate various strategies to overcome the competition and to gain competitive advantage over the competitors in the market. On the individual front it helps me to setup my own small business in the future and get a good command over the food processing inductry in India.

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3.4 Purpose of research: According to Locke, Spirduso and Silverman, (2000) the purpose statement indicates why you want do the study and what you intend to accomplish. The situation of this research topic is dependent on the approach used for the research (Creswell, 2002). As per Collis & Hussy, (2003) research methods support the objective of the research since it is the method by which the researcher tries to get the answers from teh participants and thus achieve the aim of the research. Zikmund, (2010) categorizes the research techniques used in various researches are exploratory, descriptive and casual. The exploratory research is performed to explain vague conditions or find out prospective business chances Zikmund, (2010). The descriptive research is performed to explain the matter, individuals, groups, enterprises, or conditions. It tries to conceptualise the given condition Zikmund, (2010). The casual research is performed to allow informal inherence in the research; it aims at briniging in cause and effect relation ship Zikmund, (2010). After going through various features of the various research techniques, i have used exploratory approach to find out the scope of food processing business in India. Research Philosophy As per (Saunders et al., 2007) research philosophy is The means in which you think is based on the means by which you perceive about the improvement of knowledge, and the means in which we perceive the knowledge determines the means by which we go use various research methods There are three kinds of research philosophies and they are positivism, interpretivism, and realism. Positivism: As per Denscombe, (2002) positivism is an method to social research that aims to apply the natural science method of conducting research to investigate the social phenomena and description of the social world Interpretivism: As per Easter bay Smith, Thorpe D & Lowett, (2009) interpretivism is a prcess which focuses to the lead the real meaning of the research phenomena and the additional data Realism: As per Saunders et al., (2007) realism is a process which relies on the idea of the freedom of human feelings and benifits. And now, by examining all the definitions of the research philosophies, i have used positivistic research philosophy to accomplish the aims and objectives of the research. The research is done by conducting interviews with the industry related participants to know their views and opinions regarding the food processing industry.

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Research approach: The mixture of both research approach and research philosophy will aid the researchers to gather the data related to the research. This data will be examined and analysed to achieve the aim of the research. There are two kinds of research approach. They are inductive research approach and deductive research approach. Inductive approach: Baker & Foy, (2008) stated that the inductive research approach is a research approach that starts with the gathering of information and gives the general conclusions to the research. Inductive approach consumes a lot of time to finish the research. But the main benefit of this approach is that the data is very precise. Deductive approach: As per Bryman & Bell, (2007) a deductive approach is used to bring the association betwen theories and resarch in which the later is condcted with refernce to hypotesis and opinions infered from the former. In general, this approach examines the current results which will be required for the positivistic philosophy method. The process of deductive approach is taken from the secondary research methods. The research aim can be taken from the research findings. Deductive approach is extremely simple to track and the outcomes will be accomplished in a less time period. Many of the researchers and authors use the deductive approach since it is not complex like inductive approach. In the current research, the mixture of inductive and deductive approaches is used. The information regarding the food processing industries in India is gathered from the a variety of secondary data sources and the views and opinions of the industry related people are taken to draw a conclusion regarding the outcome of the research. Research strategy: The research strategy mostly relies on the rationale of the research and the research problem (Gauri & Grhaug, 2004). There are two kinds of research strategies. They are Qualitative research strategy and Quantitative research strategy. Qualitative research: Zikmund, (2010) describes qualitative research as a study that concentrates on business objectives and technics that guide the resarcher to give wide interpretatins of the methods without relying on numerical measurment; its aim is to discover real inner opinions and new insites. Qualitative research method mostly relies on the understandiing of the reseaarchers reagrding unstrcutured infromaiton. Quantitative research: Zikmund, (2010) describes qualitative resaerch as a resaerch that adresses resaerch objcetives throough emperical asessments that include numeircal measrument and

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anaylsis. In the Quantitative research method, the resaercher gahters the information from the different data gathering methods and anlayses it by varoius data anlaysis metohds. As per Philip (1998) researchers should consider ahead of the narrow-minded quantitative and qualitative difference when it comes to planning an appropriate method for the research. The researcher should choose the methodology whether it is quantitative or qualitative or both which suits the reaserch. In this research, the data collected is in the form of the views and opinions of the target sample which is qualitative and hence qualitative method is used in the research. The data is collected through questionnaires and interviews and the data is analysed to draw an appropriate conclusion. Research methodology: Primary data: Primary data is collected by the using the methods such as surveys, observations and interviews etc. Most of the researchers are highly reliable on this method because it is collected by the researcher with his own understanding for the research. Most of the time primary data is essential when the secondary data is not available for the research. Crowsher & Lankaster (2007) defines primary data as, Primary data can only be collected for the purpose of research and it cannot be readily exist. Research design: Saunders et al., (2005) defined questionnaires as a common term to comprise all methods of data gathering in which each individual is requested to react to the similar group of questions in a pre determined form. In this research, the data is primarily collected through questionnaires and interviews. The views and opinions of the target sample are collected and analysed to find out the scope of the food processing business in India. To gather the qualitative data, interview has been taken as data collection method. According to Zikhmound, (2006) an interview is a research method in which a set of participants is questioned in some format or the behavior of participants is examined and explained in some manner. In the interview process, the individuals answer the questions asked by interviewer and sometimes they read the questionnaires and answer them. Sampling of data: After sending the questionnaires through online and also by conducting telephone interviews, the responses of the participants have been recorded and these responses are considered to draw a conclusion on the scope of food processing business in India. According to Zikmund, (2007) data sampling Involves any procedure that draws conclusions based on measurements of a portion of the population. Data analysis: Zikmund, (2010) defines data analysis as application of reasoning to understand the data that have been gathered. The results of the research are analysed as simple

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conclusions. By having simple conclusions, it is easy to understand the report in a better manner. Ethical Consideration: As per Saunders et al., (2007) ethics are defined as the appropriateness of your behaviour in relation to the rights who become the subject of your, or affected by it. As per Denscombe, (2002) the acceptability of social research depends increasingly on the willingness of social researchers to accord respect to their subjects and to treat them with consideration. In conducting this research, the ethical rules of the University are followed. The information gathered is used for this project purposes only and the names of the participants are kept confidential as per the request of the participants. The privacy of the respondents is respected and no personal information is collected in the research. In this research the participants were not forced to give responses or to participate in the research. The Acceptance of the participants is taken before conducting the interview. Confidentiality is maintained throughout the research. Constraints and Limitations: This research is dependent on a small target sample and hence the findings may not be precise. Most of the researches have their limitations. As per Bryman & Bell, (2007) the major constraint for most of the researches are the lack of familiarity and no control over data control. In this research, the participants are selected randomly and the sample size is small. Time is also a constraint for this project since the participants may not give time to give their response and hence some important people in the industry could not be interviewed. 3.5 Research Findings: In this chapter, the findings of the research will be explained in the form of a report. A total of 32 participants have taken part in the research. Most of the participants were employees of private sector companies in a managerial position and the others were the employees of ministry of food processing industry. The participants were interviewed over telephone and the responses were drafted. The questionnaire did not have a structured set of questions since the questions were framed during the time of the interview as per the response of the participants. Online questionnaires were not sent to the participants since most of them did not have access to internet. The findings of the research are compared with the information collected through secondary research methods. The findings of the research are drafted as per the aims of the research. What are the opportunities for small scale food processing enterprises in India? The participants have responded in a positive way for this question and stated that the opportunities for the food processing enterprise in India are good. They gave a variety of reasons starting from Indian market to government policies to customers to technology etc. as the reasons for opportunities of food processing business in India. 72% of the participants stated that since India is a large country in terms of area and is a source of a large number of raw materials which are beneficial for the food processing business, the opportunity for the small scale food processing business is good. 68% of the participants 36

stated that the policies and reforms introduced by the government are favorable for the food processing business in India. They stated that the industrial licensing policies and considering the priority sector status given to the food processing sector are good opportunities for the foreign trade and foreign direct investments in the business. 83% of the participants stated that the availability of raw materials and labor at a cheaper price can be considered as an opportunity for the business. The untapped Indian market is considered as an opportunity by 54% of the participants. 81% of the participants stated that the changing customers tastes, income levels and standard of living pose a good opportunity for the business. These findings support the data published in the annual report 2008-09 of the Ministry of Food Processing Industries. According to the annual report, the main opportunities for the food processing business are considered to be the availability of raw materials, growing economy of India, establishment of special economy zones, increasing income levels and increasing spending capacities of the customers in India, technology, research and development and other investment opportunities in the country.

What are the business challenges faced by the small scale food processing businesses in India? The small scale food processing business in India are facing a lot of challenges which needs to be overcome in order to survive in the market. The participants identified a lot of challenges that the business can face in the Indian market. These challenges are faced by the public and private sector businesses in India. 83% of the participants stated that the lack of capital is the main challenge faced by the business. They stated that many small scale businesses lack the capital to run their business. This is because of poor planning and inefficient strategies. 64% of the participants stated that the lack of infrastructure is another challenge that the industry is facing. Many businesses lack the minimum infrastructure for the manufacturing process and thus will not be able to reach the desired productivity. The traditional form of manufacturing process is still adapted by many companies because of the lack of infrastructure which is making their products less competitive in the global market. 52% of the participants stated that the lack of research and development in this sector is the main challenge for the food processing business in India. The participants feel that though the government is taking necessary actions to enhance the role of research and development in this sector, these actions were not fruitful. 73% of the participants felt that the presence of intermediaries in the supply chain has reduced the profit margins of the industry and necessary action should be taken by the government to reduce the role of the intermediaries in the supply chain. 57% of the participants stated that the quality of the products is not matching the international standards and the quality control has to be blamed for this. The small scale companies cannot afford to implement quality control systems in their companies and hence their products do not match the international standards. 63% of the participants feel that the operating costs of the business is also a challenge for the food processing companies

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since the raw materials are perishable, it requires a lot of investment to maintain the inventory and storage. The Ministry of Small Scale industries has done research on the challenges faced by the small scale meat and meat processing industry and cited them in the journal released on 23rd March 2009. The Ministry of Small Scale industries has identified infrastructure, research and development, high working capital, competition from the large scale industries and high tax rates as the main challenges faced by the small scale food processing business in India. What strategies are formulated by the small scale food processing enterprises to tap the opportunities and overcome the challenges? The participants came up with new ideas with which the small scale enterprises are tapping the opportunities and overcoming the challenges. 63% of the participants stated that the companies were reducing the operational costs by establishing their units in special economy zones. Thus the companies are able to reduce the tax and also the various other costs involved in the manufacturing process. 54% of the participants stated that their companies are targeting the untapped rural market to increase their sales. 72% of the participants stated that their companies are getting in direct contact with the suppliers of the raw materials and thus avoiding the intermediaries to reduce the transportation costs and also to increase the profit margins. 65% of the participants stated that their companies are increasing their working capital by taking loans from the government. The government is offering loans to the small scale industries at lesser interest rates. 53% of the participants stated that their companies were participating in the exhibitions conducted for the small scale industries to promote their products and increase the sales. The small scale industries are facing a huge challenge from the large companies in the market and to overcome this challenge the companies are targeting the areas and customers which are untapped by the large scale industries. These strategies are proposed by the ministry of food processing industries in their eleventh five year plan. The strategies proposed by the ministry concentrated on improving the infrastructure, introduction of food parks, improving research and development process, establishment of national meat board and various other schemes to encourage small scale food processing industries. What are the various factors that need to be considered by the small scale food processing businesses to improve their performance? The performance of the small scale industries depends on the strategies formulated to tackle the competition and the market conditions. 56% of the participants stated that the planning of the small scale industries needs to be proper in order to survive in the long run. The investment plans, operational plans and the strategies to handle the business should be considered to improve the performance. 64% of the participants stated that the target market and the competition should be considered to improve the performance. The companies should know their target markets and the competitors to market their products

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and increase the sales. 60% of the participants stated that the policies, reforms and benefits provided by the government should be considered by the small scale companies since these policies and reforms help the companies to reduce their costs and to promote their products. 72% of the participants stated that the companies need to consider research and development to improve their performance. Through research and development, the companies can adapt new methods and technologies to reduce the costs and thus increase the performance. 55% of the participants stated that the companies need to consider improving the infrastructure to improve their performance and also to improve the quality. The ministry of food processing industries made some considerations to improve the performance of the small scale industries which included assisting in better project selection and developing the idea and implementing it. It has also brought in proposals for development of infrastructure and upgrade the existing technology. The ministry is also bringing in food standards to improve the quality and standards in the food processing industry. Why do most of small scale industries fail to survive in the market? The participants had various reasons for the failure of the small scale industries in the Indian market. The main reason stated by 83% of the participants is that the introduction of corporate companies in the field of food processing like Reliance, Dabur, and Nestle etc. has reduced the market share of the small scale companies and the survival of the small scale companies has been put at stake. 55% of the participants stated that the improper planning of the small scale industries is also a reason for the failure of the small scale industries. The small scale industries lack planning and strategy formulation which are important for a companys survival in the long run. The small scale industries fail to survive in the market because of the poor product management also. 52% of the participants stated that small scale industries fail in the market because of lack of product knowledge and knowledge about the target segment. The small scale industries do not focus on the research and development and thus their performance levels are also low. 78% of the participants stated that the failure of the small scale industries is because of the lack of funds and capital to run the business. Many small scale businesses fail to survive because of the insufficient capital. The owners cannot pump in the capital at the right time and hence the business closes down. 54% of the participants stated that the non availability of the skilled labor is the main reason for the failure of the small scale industries. The reasons stated in the eleventh five year plan released by the ministry of food processing industries also states that the reason for the failure of the small scale industries is because of lack of capital, lack of skilled labor, lack of product knowledge, inefficient strategy formulation etc. What are the various policies and reforms introduced by the government to encourage the small scale businesses in India?

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According to the eleventh five year plan of ministry of food processing industries, the government is coming up with the following initiatives to encourage the small scale businesses in India. They are:

Development of infrastructure. Modifications done to the food park scheme to convert the scheme into a mega food park scheme. Modernization of slaughterhouses and establishment of National Meat Board. Developments and modernization of the cold storages, Cold Chain, reefer vans, Value Addition and raw material preservation infrastructure. Establishment of Irradiation Centers to improve the quality of the products. Conducting Research and development programs to improve the quality and standards of skills, Products, quality and Technology. Improving the infrastructure by developing Human Resource departments, research and development departments, health and safety departments and quality assurance. Implementing quality standards and Food Safety and product Standards Act, 2006 in the small scale industries. Setting up of National Institute of Food Technology and Entrepreneurship Management to encourage the small scale industries.

These are the policies and initiatives undertaken by the government to encourage the small scale industries in India. These policies and initiatives are mentioned in the eleventh five year plan released by the ministry of food processing industries. Thus the government is taking the necessary steps to encourage the small scale industries. But only 32% of the participants were aware of these policies and initiatives taken by the government. The others were not aware of these policies and hence proper communication needs to be maintained in order to create awareness among the small scale industries regarding the government policies and initiatives. 4. Recommendations and Conclusion: As primarily stated, the reason behind the performance of a small scale food processing company is primarily in the positive approach towards the company, and in the amount to which the exact motive, sufficient for taking risks in the business. In the primitive era of Indian Industrialisation, the Indian financial system was controlled by a huge number of small scale companies, which vested their power not from a great amount of investments, but from the huge availability of workforce, and the plentiful benefits offered by the small scale companies. The small scale companies have to focus on the promotional programs to boost the sales of the goods. The strategies of current promotions include market research, market segregation, using information systems in marketing, promotional development and have the power to control, and other concerns pertaining to the marketing mix like product, price, promotion, and place. These strategies are not correctly formulated in most of the small scale companies in India as correctly stated by Bala Subrahmanya, M.H. (2005). One

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of the main benefits of proper marketing is that, if it is utilized correctly then more standards can be supplemented to the products. The customer then recognizes it as a better product than the competitor products. As a result, the sales and the profitability can be raised. But as discussed earlier, poor infrastructure, ignorance of competition in the market, lack of marketing strategies, inefficient distribution channels, and inefficient pricing of the products are likely to be the main reasons for the failure of small scale enterprises in the Indian market. The manufacturing of standard goods and products is generally termed to be suitable and cost-effective by the small scale enterprises in India (H.K. Shree 2004). The formulation and implementation of marketing strategies is one definite method through which small scale companies can expand and survive in the Indian market. But these marketing strategies and tactics cannot be taught and can be gained by vast training and market experience. But many of the small scale enterprises are poor at planning time and funds for the training and development. In my opinion the Indian government has to give support to these small scale enterprises to organize marketing programs and seminars through Manufacturing Associations of India in various stated and National Institute of Food Technology and Entrepreneurship Management (H.K. Shree 2004). And hence these small scale enterprises should come out this situation through proper planning of resources. And in order to move away from this prevailing situation and boost and promote dynamism in its activities, a small scale enterprise has to implement strategic marketing planning in its operations. This kind of strategic marketing planning will help the companies to know the answers for the following questions like: 1. Where are we standing in the current market? 2. Where do we want to position our company? 3. How to achieve the desired position? And hence at analysis stage itself these companies should make an effort to be focused in the market. They have to focus on knowing their target markets and customers, understand the market trends, and recognize the consumer needs and wants before evaluating the companys strengths and weaknesses, and also by recognizing the restrictions from the local market environment. After identifying these factors, a company can effectively formulate and implement marketing strategies. And once these probable target markets with growth potential and profitability are identified, the suitable marketing strategies can be formulated and implemented. Small scale enterprises have two main advantages in this regard and they are closeness to consumers and the flexibility in their operations. There are disadvantages associated with the small scale enterprises also and they are offering wide range of products and competing in a large market with large scale companies which can pose a serious threat to their survival. Chaganti (1998) states that small scale enterprises and companies can operate well in the market by creating a position for itself in the Indian market. The small scale enterprises should also concentrate on the various product factors like quality of the product, features of the product, the product styles, considering the brand names, and 41

various trademarks. Many big enterprises like Unilever, Dabur, Cadbury Plc, Parle, Nestle, Reliance etc. have built a brand name for themselves in the market. The process of branding a company aids the companies to build extraordinary importance in the consumers minds if the products are more competitive than the competitor products. The small scale enterprises have to utilize the various factors involved in the marketing mix and also other factors like price and quality range, ease, and service etc. to market their products and build a proper image for the products and the company itself. The presence of various layers and intermediaries in the distribution channels are also a major concern for the small scale enterprises. This can be reduced to some extent by identifying and assessing the proper distribution and marketing strategies and implementing them effectively. The Indian government should also support the small scale enterprises by providing good infrastructure and providing facilities like transportation, electricity, communication facilities and other resources required for these enterprises. If these facilities are not provided, then the small scale enterprises have to bear extra burden and costs in their operations. After constructing a powerful marketing base in the local market, the small scale companies should then focus on exporting the products to foreign countries. By exporting the products, the companies can gain foreign exchange which is important to import machinery and raw materials which could be cheaper. Thus the quality of the products can be increased the companies can be able to put their products in a better position in the market and be more competitive in the domestic and international markets.

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DECLARATION

I . , confirm that this work submitted for assessment is my own and is expressed in my own words. Any uses made within it of the works of other authors in any form (e.g. ideas, equations, figures, text, tables, programmes) are properly acknowledged at the point of their use. A full list of the references employed has been included. Signed: . Date: .

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