Food processing sector is an important segment of the economy, constituting a share of around 9–10 per cent of gross domestic product (GDP) in agriculture and manufacturing sector. Currently growing at more than 10 per cent per annum, it is expected to touch US$ 194 billion by 2015 from a value of US$ 121 billion in 2012, according to Mr Swapan Dutta, Deputy Director General, Indian Council of Agricultural Research (ICAR).
Packaged food industry is the fifth largest sector in India. The industry is currently pegged at US$ 39.7 billion in India and is expected to reach US$ 65.41 billion by 2020, owing to the rise in middle class income, changing urban lifestyle and modern retail trade. Residents in urban areas are the largest consumers of processed food, consuming 78 per cent of all packaged food in 2011.
Indian agricultural and processed food exports during April–December 2013 stood at US$ 16,578.91 million as compared to US$ 15,206.22 million during the same period last year, according to data released by the Agricultural and Processed Food Products Export Development Authority (APEDA). The share of food processing export in total exports from India is around 12 per cent.
Food processing industries in India attracted foreign direct investments (FDI) worth US$ 5,360.89 million during the period April 2000–January 2014, according to the latest data published by Department of Industrial Policy and Promotion (DIPP).
The Indian non-alcoholic beverages market is currently growing at 15 per cent year-on-year (Y-O-Y). “As more people are trading up to packaged drinks, consumption of non-alcoholic beverages in India is expected to increase by 16.5–19 per cent over the next three years,” according to a report by the Indian Council for Research on International Economic Relations (ICRIER) and the Indian Beverage Association (IBA).
Within the beverages market, packaged juice has charted a high growth trajectory. As of March 2013, the Indian packaged juices market is valued at Rs 1100 crore (US$ 183.89 million) and is projected to grow at a compound annual growth rate (CAGR) of 15 per cent over the next three years. Dabur India Ltd is the established leader with a market share of 54 per cent with its brands Real and Real Activ. PepsiCo India is the second largest player with a 25–30 per cent share through its Tropicana juice brand.
Milk and tea could also witness rapid growth, as foreign firms have started looking at India as a huge dairy market. It has been projected that India’s packaged milk segment would grow from US$ 7.76 billion to US$ 32.9 billion and register an annual growth of eight per cent by 2030. The top ten companies in India account for 65 per cent of the hot beverage market.
The Government of India has allowed FDI up to 100 per cent in food processing sector through automatic route. For promotion and development of the food processing sector, it has allocated a sum of Rs 5,990 crore (US$ 1 billion) under various schemes of the food processing industries ministry during the 12th Five Year Plan.
The MOFPI and ‘Invest India’ have entered into an agreement for the setting up of an Investors’ “Help Desk” for offering online support to investors, both domestic and international, with regard to their queries, and guide them particularly at the initial stage of setting up their units. The Ministry has launched a Centrally Sponsored Scheme namely, National Mission on Food Processing (NMFP) during the 12th Plan. A sum of Rs 204.85 crore (US$ 34.23 million) has been released to States/ Union Territories (UT) under the scheme during FY 13 and FY 14 (up to January 31).
The Ministry is implementing a scheme for Human Resource Development (HRD) in the food processing sector on developing technologists, managers, entrepreneurs and manpower for quality management in the sector. The annual manpower requirement in the industry is estimated at about 5.3 lakh persons.
With the objective of providing incentive to create integrated cold chain and preservation infrastructure facilities in the country, the Ministry is implementing the Scheme of Integrated Cold Chain, Value Addition and Preservation Infrastructure.
The revival of the agriculture sector is expected to open up a plethora of opportunities for players having strong linkages in the agri value chain. The food processing industry is expected to be one of the biggest beneficiaries of this process. Significant investment opportunities are yet to be tapped in the areas of supply chain management (SCM), cold storages, financing, retailing and exports.
The MOFPI has formulated a Vision 2015 Action Plan that includes trebling the size of the food processing industry, raising the level of processing of perishables from 6 per cent to 20 per cent, increasing value addition from 20 per cent to 35 per cent, and enhancing India's share in global food trade from 1.5 percent to 3 percent.
Exchange rate used: INR 1 = US$ 0.01671 as on March 28, 2014
References: Ministry of Food Processing Industries (MoFPI), Agricultural and Processed Food Products Export Development Authority, Media reports, Department of Industrial Policy and Promotion (DIPP), Union Budget 2014-15, Press Information Bureau (PIB)
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.