Diversify to Differentiate Think India, Think Next! India: India's Attractiveness and Opportunities – Food Processing Industry

Aug 04, 2021

Start Date : Wednesday, Aug 04, 2021

End Date : Wednesday, Aug 04, 2021

Time (IST) : 10:00 PM - 11:00 PM

Time (UTC) : 10:30 AM - 11:30 AM

Services Offered : Business Services,

Speaker(s) : Amit Kumar, Dr. Tarun Bajaj, Suresh Chitturi Rayudu, Bhupinder Singh, Marc Lessem

Industry : AutomobilesBanking and Finance

In this webinar, the on-ground realities, opportunities, and prospects of the food processing industry in India are discussed.

What are the growth opportunities available in India?

India is the 5th largest economy with a growing population of 1.3 billion. As it rapidly urbanizes with a growing middle class, it provides the following opportunities:

  • India aims to focus on infrastructure growth with a dedicated fund worth USD 2.7 billion and USD 21 billion worth of planned investments
  • India aims to improve manufacturing with production linked incentives worth USD 26.3 billion
  • India has over 600 million active internet users
  • With a literacy rate of 77%, India has the largest and youngest educated workforce
  • India has reduced bureaucracy and streamlined processes to improve ease of doing business
  • Companies in the US can base India as a hub to outreach South Asian Markets

Why invest in the food processing sector of India?

“We need to recognize that investment in the food processing sector will lead to expansion of allied services associated with the sector. By some estimates, in the US - a very mature food processing market, every job in the food and beverage industry leads to three additional jobs and other economic activities. This is the scenario that we should and must replicate in India.” - Hon. Amit Kumar | Consul General of India Chicago

With a CAGR of 15%, the food processing industry in India is set to grow worth USD 540 billion by 2025. India aims to move towards value-added processing and increase demand for high-value goods. It can do so by improving food processing technology and rising demand for high-value goods. The opportunities available are:

  • While India is 1st in the world for milk and spice production, 2nd for fish, fruits, and vegetables, 3rd for egg production, it processes less than 1/10th of the raw materials. This provides a significant investment opportunity in the food processing industry
  • The food processing sector allows investment via automatic route with over USD 10 billion FDI invested to date
  • India is the largest producer of pulses in the world, yet it is protein deficient Introducing upcoming food habits around pulses can boost the need for pulse processing
  • Food products have a 65% share in India’s retail market that is the 6th largest in the world. There is a growing demand for primarily processed foods than super processed ones
  • India provides an opportunity to US investees to obtain the raw produce, process the product, and export it to global markets under their private brands

What are the key incentives for the food processing industry in India?

“With Atmanirbhar Bharat, we are of course looking to bolster our manufacturing capacity so that we are more self-reliant in many ways, but this does not mean in any way that we are shifting away from our global engagement. Instead, our objective is to strengthen our capacities so that we can be more active players in the global supply chains in various sectors.” - Hon. Amit Kumar | Consul General of India Chicago

Following incentives are schemed to uplift the food processing sector:

  • Pradhan Mantri Kisan Sampada Yojana (PMKSY): incentives worth 30-35% of project costs for infrastructure support across cold chains, food parks, etc.
  • Production linked incentives for marine, organic, and processed foods where incentives are provided on incremental net sales ranging from 4-10% over five years
  • Incentives for thrust sectors: Incentives worth 10-15% for MSMEs in states that are promoting the food processing sector
  • Capital subsidy: USD 1M worth subsidy for states with food processing as a focus
  • Corporate tax rate: 15% for new manufacturing setups
  • Other incentives: electricity duty and stamp duty water waivers

How has India’s food processing industry matured over the years?

“The focus is on bringing the capacity to the customers' requirement not only for India but also for exports.” - Bhupinder Singh, CEO & MD | Vista Processed Foods

The processing industry serves as the link between India’s three major economic sectors - agriculture, industry, and retail. India’s bet on its schemes and focus on processing has led to its gradual growth as follows:

  • Usage of technology has improved potato yields for farmers from 2-3 tons per hour to 25 tons per hour. Now we export french fries than importing them
  • Focus on slaughterhouses and poultry farming has led to increased processing of birds from 2000/hour to 12000/hour
  • Better financial support concerning the availability of capital from banks who generally expect a payback period of 5-6 years for a business plan that spans 20-25 years is required
  • Growing global acceptance of Indian flavors and spices across borders will help us ship more products is promoted well
  • India is one of the few countries to introduce end-to-end farm to consumer web traceability of products it exports

“The role of investors will be to invest in improving the technology so that we have volume, quantity, and economies of scale.” - Dr. Tarun Bajaj, Director APEDA | Ministry of Commerce and Industry, Government of India

How has the pandemic affected the food processing industry?

As India manages to balance activity for public health and economic growth, it has:

  • Ensured the second wave did not impact the economic activity by focusing on systems and processes
  • Positive GST collections
  • Bilateral trade was at the same level as 2019
  • Though poultry and meat industries were affected due to COVID myths, the online processed chicken brands saw 400-500% growth
  • Slight increase in prices, although still competitive, due to increased processing costs to meet COVID norms
  • Due to the growth of online delivery, e-commerce and cloud kitchens saw the launch of new products by brands
  • The top food safety concern this year by consumers was the contamination from food handlers that led to increased demand for packaged foods
  • There was no disruption in the supply chain of food products as interstate transportation of food products were allowed with sanitation checks

What is the PLI (Production Linked Incentive) Scheme?

PLI scheme has an important segment - investment. One has to invest in becoming eligible for getting the PLI scheme.” - Dr. Tarun Bajaj, Director APEDA | Ministry of Commerce and Industry, Government of India

PLI scheme aims to develop exports and domestic infrastructure while also strengthening our existing capabilities. Its key aspects include:

  • It can be availed once improved production in both the domestic sector and the international export sector is achieved
  • It will help meet the demands of the growing Indian population whose purchasing power is increasing
  • It has chosen high import sectors that will help boost domestic production and processing to make India self-sufficient

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