Food quality safety and investments

Table of

ConTenTs

1. India Food Processing Industry Overview1.1 Agricultural and Allied Products Outlook

1.1.1 Production Trend

1.1.2 By Segment

1.2 Industry Size & Future Outlook

1.2.1 By Segment

1.3 State-Wise Contribution

1.4 Trade Scenario

1.5 FDI in Food Processing

2. Sector Policies & Initiatives2.1 Make in India Initiatives

2.2 Infrastructure Policies

2.3 Investment Policies

2.4 Food Safety

2.5 Skill Development Initiatives & Awareness

2.6 Technology Development

3. Top 10 States - Strategic Outlook3.1 Andhra Pradesh

3.2 Maharashtra

3.3 Uttar Pradesh

3.4 Karnataka

3.5 West Bengal

3.6 Bihar

3.7 Tamil Nadu

3.8 Madhya Pradesh

3.9 Gujarat

3.10 Punjab

4. Recommendations to Stimulate Growth

Food Quality , Safety and Investments - Propellants for Processing Sector 7

1.1 Agricultural and Allied Products outlook

1.1.1 Production Trend

Agriculture has been a crucial sector for the Indian economy; more than half of the rural population still depends on agriculture for its livelihood. Leading industries, like cotton textiles, jute and sugar industries, rely on the agriculture sector for supply of raw material. However, its contribution to the nation’s GDP has fallen down to 13.7% (2012-13) from 30% (1990-91) as the industrial and service sectors have overtaken the agriculture sector during the past two decades.

Over 60% of India’s land area is arable, making it the second largest country in terms of total arable land. Agricultural products that are traded include rice, wheat, potato, tomato, onion, mangoes, sugar-cane, beans, cotton, etc. Also, India is the largest producer, consumer and exporter of spices and spice products. Agricultural export accounts for 10% of India’s total exports. Agricultural production in India has been witnessing slow growth, of around 2% since 2010-11, as it largely depends on monsoon and due to change in climatic conditions, there is a shortage of rainfall across the country. The agricultural and allied products production in 2014-15 is estimated to be around 1400 Million Tonnes. The Indian agriculture sector is anticipated to gain momentum in the near future backed by the strong government support to increase investments in agricultural infrastructure such as irrigation facilities, warehousing and cold storage.

The regulatory authority of agriculture sector in India is “Department of Agriculture and Cooperation” under

the “Ministry of Agriculture”. It manages several other bodies, such as the National Dairy Development Board (NDDB), to develop other allied agricultural sectors.

1.1.2 By segment

Agriculture sector can be segmented into several segments such as fruits, vegetables, crops, dairy products, meat and fish. India produces around 275 Million Tonnes of food grains annually and is also a largest producer of milk and a second-largest producer of sugar in the world. Additionally, India is the sixth-largest exporter of sugar, accounting for 2.76% of the global exports.

In 2014-15, crop production accounted for an estimated share of 70% of the total agricultural production in

India Food Processing Industry Overview1

Figure 1‑1 Agriculture and Allied Products Production (Billion Tonnes), 2010‑11 to 2014‑15

Source: Ministry of Agriculture, RNCOS

Note: e = RNCOS Estimation

2010-11 2011-12 2012-13 2013-14 2014-15e

1.261.33 1.32 1.37 1.42

Food Quality , Safety and Investments - Propellants for Processing Sector8

the country. It majorly constitutes rice, wheat, cereals,

pulses, food grains, oilseeds, sugarcane, cotton, jute

and mesta. Fruits and vegetables together accounted

for about 19% of the total production, followed by

dairy products with only 10% share. Meat and fish

production accounted for a very small share in the total

agricultural and allied products production.

1.2 Industry size & Future outlook

Food processing is a process of value addition to the agricultural or horticultural produce by various methods like grading, sorting, preserving, packaging, etc. Processing is a technique of transforming a raw agricultural product into eatable food or beverage. The Indian food processing industry plays a vital role in India’s economic growth and it has been growing faster than the agricultural and manufacturing sector. The Indian food processing industry accounts for about 32% of the total India’s Food Market.

India is the world’s second-largest producer of food after China and has the potential to outpace China in the coming future. In 2014-15, the estimated size of Indian food processing industry was INR 7.95 Trillion, and it is expected to grow at CAGR 9.5% during the period 2014-15 to 2019-20, reaching around INR 12.5 Trillion. The primary factors that drive the growth of the industry are rising disposable income, high growth of organized retail and private label penetration, increased demand for functional foods and beverages, changes in lifestyle, increasing number of nuclear families and

Table 1‑1: Agricultural and Allied Products Production (000’ Tonnes), 2010‑11 to 2014‑15

Production (000’ Tonnes) 2010-11 2011-12 2012-13 2013-14 2014-15e CAGR (%)

Fruits 74,878 76,424 81,285 88,977 97,500 7%

Vegetables 146,554 156,325 162,187 162,897 164,000 3%

Rice 95,980 105,300 105,240 106,540 108,000 3%

Wheat 86,870 94,880 93,510 95,910 98,000 3%

Coarse Cereals 43,680 42,010 40,040 43,050 46,000 1%

Pulses 18,240 17,090 18,340 19,270 20,500 3%

Oilseeds 32,480 30,010 30,940 32,880 35,000 2%

Sugarcane 342,380 361,040 341,200 350,020 360,000 1%

Cotton 33,000 35,200 34,220 36,590 39,000 4%

Jute & Mesta 10,620 11,400 10,930 11,580 12,300 4%

Milk 121,848 127,904 132,431 137,685 144,000 4%

Meat 4,869 5,514 5,948 6,400 6,900 9%

Fish 8,231 8,666 9,040 9,579 10,195 5%

Source: Ministry of Agriculture, RNCOSNote: e = RNCOS Estimation

Figure 1‑2 Agricultural and Allied Products Production by Segment (%), 2014‑15

Source: RNCOS Estimation

Crops

Vegetables

Milk

Fruits Meat & Fish

70%

12%

10%

7% 1%


working women. Moreover, technology advancement and government support has further catalyzed the growth of Indian food processing Industry.

Despite the huge size of the Indian food processing industry it is still in its infancy stage, as only 12% of the total India’s agriculture produce is processed. There is a strong need for the government to take effective measures to increase level of processing of the agriculture production.

1.2.1 By segment

The Indian food processing industry can be broadly segmented into distinct categories: grain mill & starch products, vegetable & animal oil and fats, dairy products, beverages, prepared animal feed and other food products. Tremendous growth opportunities exist in every segment of Indian food processing industry backed by the increasing demand, government support and favorable economic conditions.

Grain mill & starch products are considered to be the prominent segment as they account for the majority of food processing value of output. The major grains that are processed in the country are rice, wheat, maize, barley and millets like jowar, bajra and ragi. Further, only

15% of the total wheat production is processed into wheat products. The second-largest share of the Indian food processing industry is captured by the vegetables & animal oil and fats, which are processed into cooking oils, margarine, shortening and compound fat.

In 2012-13, dairy products accounted for about 11% of the total registered food processing’s value of output with INR 825 Million and most of the processing is done by the unorganized sector. The share of organized dairy processing sector is as low as 15%. Some of the milk products processed in the country are milk, butter, cheese, ice creams, milk powders, malted milk food, condensed milk and infant foods. Major players in the dairy processing are Nestle and Britannia. The remaining share of Indian food processing value of output is accounted for by beverages, prepared animal feeds and other food products.

1.3 state‑Wise Contribution

In 2014-15, the value of Indian agricultural and allied activities output was INR 19,264 Billion, which is 1.5% higher than that of 2013-14. Uttar Pradesh contributed the maximum share in the value of agricultural output

Figure 1‑3 Food Processing Industry (INR Tillion), 2014‑15 to 2019‑20

Source: RNCOS

12.511.3

10.29.4

8.68.0

2014-15e2015-16e

2016-17f2017-18f

2018-19f2019-20f

Figure 1‑4 Food Processing Industry by Segment (%), 2012‑13 (P)

Source: Ministry of Food Processing IndustryNote: The segmentation is based on the value of output by registered food processing unitsP: Provisional Results

Grain Mill &Starch Products

Vegetable &Animal Oils & Fats

Dairy Products

Beverages

Prepared Animal Feeds

Others 24%

22%

11%7%3%

33%


with INR 2,620 Billion, followed by Andhra Pradesh (10%), Maharashtra (9%) and Madhya Pradesh (8%). The top 9 states account for about 71% of the total value of agricultural output and 29% of the output comes from rest of India.

According to the latest survey of Industries, the total number of registered food processing industry (FPI) units in India during the year 2012-13 was 37,175.

Among the industry, the highest number of registered factories are located in Andhra Pradesh, accounting for about 15% of the total registered food processing industry units in the country. Tamil Nadu is the second highest state with 5,161 FPI units and constituting 14% of the total registered FPI units, followed by Telangana (10%), Maharashtra (8%), and Punjab (8%). The top 7 states account for about 66% of the total registered FPI units in the country.

1.4 Trade scenario

The export value in the food processing sector has been witnessing an escalating trend with CAGR of around 33% during the period 2010-11 to 2014-15. The value of APEDA product exports during 2014-15 was INR 1,313 Billion. With the surging investment in food processing, various government initiatives, demand for processed foods, meliorated income levels, and bilateral trade agreements, the exports of APEDA products is likely be fueled further in years to come. In 2014-15, the top country claiming highest share in the APEDA products export was Bangladesh followed by Indonesia and UAE with shares worth 12.4%, 6.3% and 5.7% respectively. In 2014-15, the major items

Figure 1‑5

Figure 1‑6

Value of Agricultural and Allied Activities Output by States (%), 2014‑15

Registered Food Processing Industry Units by States and UTs, (%), 2012‑13

Source: RNCOS EstimationNote: Based on historical data by Ministry of Agriculture, Government of India

Uttar Pradesh

Andhra Pradesh

Maharashtra

Madhya Pradesh

RajasthanWest BengalTamil NaduPunjab

Gujarat

Others 14%

10%

9%

8%8%8%5%

5%

5%

29%

Andhra Pradesh

Tamil Nadu

Telangana

MaharashtraPunjabUttar Pradesh

Karnataka

Others15%

14%

10%

8%8%6%5%

34%

Source: Annual Survey of Industries, 2012-13

Figure 1‑7 Export & Import of APEDA Products (INR Billion), 2010‑11 to 2014‑15

Source: Directorate General of Commercial Intelligence and Statistics (DGCIS)

2010-11 2011-12 2012-13 2013-14 2014-15

287222227180146

13131369

1183

835

424

Imports Exports


exported to the top 3 destinations included buffalo meat, basmati rice and non-basmati rice.

On the other hand, in 2014-15, import of APEDA products reached INR 287 Billion, growing at a CAGR of nearly 18% during the period 2010-11 to 2014-15. The top country claiming the highest share in the APEDA products import was Canada followed by Myanmar and US. In 2014-15, major items imported from the top 3 destinations included pulses, fresh fruits and alcoholic beverages.

India is focused on food sector with National Mission on Food Processing. Such initiatives are expected to bridge the gap between food demand-supply. The very fact itself will reduce India’s dependence on imports in the years to come.

1.5 FDI in Food Processing

The government of India has permitted 100% FDI in food processing industry on automatic route except for the items reserved for micro, small and medium enterprises (MSME). The food processing industry accounts for around a 2.5% share in the total FDI inflows in India. There is an increasing trend in the FDI inflows in Indian food processing industry as in 2014-15, the total FDI inflows in the food processing industry was INR 31.6 Billion and it has grown at CAGR 39% during the period 2010-11 to 2014-15.

However, during the year 2013-14, the FDI inflows in food processing industry witness a record break value,

which was 11 times higher than the corresponding value of 2012-13. The primary factor for the tremendous growth was the announcement of investment plan of American food and beverages giants Coca-Cola and PepsiCo in India. Coca-Cola is expected to invest US$ 5 Billion in India by 2020, while its rival PepsiCo is expected to spend US$ 5.5 Billion in India by 2020.

A number of active measures have been taken up by the government to upgrade the food processing units in terms infrastructure, human resource, and research and development. Further, to boost FDI in the country the government has relaxed the EXIM policies as well; for example, duty free import of capital goods, raw materials and intermediates and exemption of export income from Corporate Tax, etc.

Figure 1‑8 FDI in Food Processing Industry (INR Billion), 2010‑11 to 2014‑15

Source: Department of Industrial Policy and Promotion (DIPP)

2010-11 2011-12 2012-13 2013-14 2014-15

31.7

251.1

21.98.38.6


2.1 Make in India Initiatives

nABARD Loan for Food Processing

In the Budget 2015-16, a fund of INR 20 Billion (US$ 301.3 Million) was assigned under National Bank for Agriculture and Rural Development (NABARD) to provide cheaper credit to food processing industry. Under this scheme, the entrepreneurs setting up food processing businesses in designated food parks would get loans at subsidized interest rates. The food processing activities such as cleaning, grading, waxing, controlled ripening, labeling, packing and packaging, warehousing, canning, freezing, freeze drying and more are eligible under the scheme.

The ministry has notified 148 food parks in which concessional credit can be availed by food processing units. As of December 2015, a loan of INR 5.2 Billion has been sanctioned to 12 Mega Food Projects.

Sector Policies & Initiatives2

Reserve Bank of India Loan for Food‑ & Agro‑Based Processors

The Reserve Bank of India grants loan to food & agro-based processing units and cold chains, under Agriculture activities for Priority Sector Lending (PSL), with overall sanctioned limit of INR 1 Billion per borrower. The scheme ensures greater flow of credit to entrepreneurs for setting up of food processing units and attracts investment in the sector.

exemption from service Tax

In the budget 2015-16, the government of India has exempted service tax on the services of pre-conditioning, pre-cooling, ripening, waxing, retail packing and labeling of fruits and vegetables. This initiative aims to promote food processing sector and controlling price rise of perishable items.

The government also exempted service tax on transportation of ‘food stuff’ by rail, vessels or road, which particularly includes food grains (rice and pulses, flours, milk and salt). Transportation of agricultural produce is separately exempted.

exemption from excise Duty

In 2015-16 budget, the government has announced omission of 5% additional excise duty on “waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavored”.


2.2 Infrastructure Policies

Mega Food Park

The Mega Food Park scheme was implemented by the Ministry of Food Processing Industries (MoFPI) during the 11th five year plan to enhance the growth of food processing industry in the country through establishing a robust food processing infrastructure bolstered by a competent supply chain. The scheme aims to bring agricultural farmers, processors, retailers and distributors together at one place to maximizing value addition, minimizing wastages, increasing farmers’ income and creating employment opportunities, particularly in rural sector. The food is processed, packed, labeled and distributed from these mega food parks to retailers.

The scheme provides a one-time capital grant of 50% of the project cost (excluding land cost) subject to a maximum of INR 500 Million in general areas and 75% of the project cost (excluding land cost) subject to a ceiling of INR 500 Million in difficult and hilly areas i.e. North East Region including Sikkim, J&K, Himachal Pradesh, Uttarakhand and ITDP notified areas of the states.

The Government of India has approved the setting up of 5 Mega Food Parks in the states of Bihar, Maharashtra, Himachal Pradesh and Chhattisgarh. Currently, 39 Mega Food Parks have been granted assistance. The government plans to set up 42 such mega food parks across the country in near future.

scheme of Cold Chain, Value Addition and Preservation Infrastructure

The Scheme of Cold Chain, Value Addition and Preservation Infrastructure was implemented by the Ministry of Food Processing Industries (MoFPI) in 2008 to provide coherent and complete cold chain, value addition and preservation infrastructure facilities, for perishables, from the farm gate to the consumer, without any delay or break. It includes pre-cooling facilities at production sites, refrigerated vans, mobile cooling units as well as value addition centers which includes infrastructural facilities like Processing/Multi-line Processing/ Collection Centres, etc. for horticulture, organic produce, marine, dairy, meat and poultry etc.

The scheme provides assistance of 50% the total cost of plant and machinery and technical civil works in General areas and 75% for NE region, including Sikkim and difficult areas (J&K, Himachal Pradesh and Uttarakhand) subject to a maximum of INR 100 Million.

Government has approved 138 cold chain projects during 2009-2015, including 30 new cold chain projects approved by the ministry in May, 2015. As of December 2015, 70 cold chain projects were operational and remaining are still under construction.

Vision 2015 Action Plan

Vision Document 2015 was prepared by the Ministry of Food Processing Industries to promote food processing industries, enhance level of processing and exploit the potential of domestic and international market


for processed food products. The action plan expects to treble the size of investment in the processed food sector by increasing the level of processing of perishables from 6% to 20%, value addition from 20% to 35%, and share in global food trade from 1.5% to 3% by 2015. To achieve these targets, an investment of INR 1000 Billion was required by the year 2015. Out of which, the government had invested INR 100 Billion.

Modernisation/setting up of Abattoirs

Modernisation/Setting up of Abattoirs scheme was implemented by the Ministry of Food Processing Industries (MoFPI) to improve the overall hygiene by establishing modern abattoirs (meat shops) and modernizing or up scaling the infrastructure of existing abattoirs. Modernizing abattoirs will improve the competitiveness in the supply of wholesome meat as well as the development of new retail chains. The scheme is implemented with the involvement of local bodies (municipal corporations and panchayats)/ public sector undertakings/co-operatives/boards under government and has flexibility for involvement of private investors on PPP basis.

The scheme envisages a grant of 50% of the cost of plant and machinery and technical civil work and other eligible items subject to a maximum of INR 150 Million in general areas and 75% of the cost of plant and machinery and technical civil work and other eligible items subject to a maximum of INR 150 Million in difficult areas (NE states including Sikkim, Jammu & Kashmir, Himachal Pradesh, Uttarakhand and Integrated Tribal Development [ITDP] notified areas of the States) per abattoir.

As of December 2015, 40 projects have been approved and out of these, 5 abattoirs have become operational.

setting up of Packaging Centres

The government of India has introduced the scheme for the establishment and development of packaging centers in food processing industry. The objective of

the scheme is to provide well established packaging facilities to improve the life of the food products and make them internationally available.

The scheme envisages a grant of 25% of the project cost in general areas and 33.33% assistance in difficult areas subject to maximum INR 20 Million for the establishment of packaging centre.

Capital Investment subsidy for Construction/expansion/Modernization of Cold storage for Horticulture Products (a sub scheme under MIDH)

This scheme grants subsidy for setting up of cold storage (of capacity above 5000 MT and up to 10000 MT) and their modernization. It envisages assistance @ 40% of capital cost of project limited INR 3 Million per project in general area and 50% limited to INR 3.75 Million per project in case of NE, hilly & scheduled area.

Mission for Integrated Development of Horticulture (MIDH)

The open-ended scheme of National Horticulture Mission/Horticulture Mission for North East & Himalayan States (a sub scheme of MIDH) provides assistance for setting up of cold storage (long-term storage and distribution hubs) up to 5000 MT capacity. The assistance is extended as subsidies to credit-linked projects @ 35% of capital cost of project in general area and 50% in case of hilly & scheduled area.

small Farmer Agri‑Business Consortium (sFAC) Assistance to Cold storage under Integrated scheme for Agricultural Marketing (IsAM)

SFAC was established as a nodal agency by Dept. of Agriculture, Govt. of India in 1994, to coordinate with various state governments, civil society partners, private sector, financial institutions, resource persons and other stakeholders to help in the conduct of baseline studies, promote Farmer Producer Organizations


(FPOs) across the country and link producer groups (both existing ones and newly formed institutions) to marketing opportunities. It also provides capital support in the form of Venture Capital Assistance and Project Development Facility to the small farmers.

Cold storage, which is a part of a permissible integrated value chain project, is eligible for subsidy under Integrated Scheme for Agricultural Marketing (ISAM). However, the cold storage component should not exceed 75% of Total Financial Outlay (TFO).

The scheme grants assistance to projects as @ 25% of capital cost and maximum ceiling to INR 22.5 Million in general area and 33.33% and maximum ceiling up to INR 40 Million in case of NE, hilly & scheduled area.

Agricultural and Processed Food Products export Development Authority (APeDA) Assistance for Cold Chain under Agriculture export Promotion Plan scheme for XII Plan

The APEDA as a part of strategy develop the industries relating to the scheduled products (eg, fruits, vegetables and their products, meat and meat products, poultry and poultry products, alcoholic and non-alcoholic beverages, etc) for export and provides assistance for setting up a cold chain.

The scheme provides assistance as 40% subsidy subject to a limit of INR 7.5 Million for cold chain projects with mechanized handling system.

Horticulture Mission for north eastern Region and Himalayan states (HMneH) Assistance for Food Processing UnitUnder Horticulture Mission For North Eastern Region and Himalayan States (HMNEH), a sub-scheme of MIDH, food processing units for horticulture products are eligible for credit-linked, back-ended capital investment assistance of 50% of project cost (ceiling amount of project cost is INR 80 Million) in the states of J&K, Himachal and Uttarakhand.

2.3 Investment Policies

Foreign Direct Investment

FDI is allowed for all the processed food products up to 100% via automatic route except for items reserved for MSMEs. The permissible FDI limit for MSMEs via automatic route is 24%. For any foreign investment more than 24%, the government route can be opted, also the enterprise will have to be licensed under Industrial License and Industries (Development & Regulation) Act, 1951.

Nearly 30% of the FDI in the country is made by the European Union (EU) countries such as Netherlands, Germany, Italy and France. Some of the successful ventures from EU countries include Perfetti, Cadbury, Godrej-Pilsbury, Nutricia International, Manjini Comaco, etc.

Credit‑Linked Capital subsidy scheme (CLCss) Assistance for Plant & Machinery

The Ministry of Small Micro and Medium Enterprise (MSME) implemented a Credit Linked Capital Subsidy Scheme (CLCSS) for promotion and technology up gradation of Small Scale Industries (including food processing industry). The scheme provides subsidy at the rate of 15% of the investment in plant


and machinery to micro and small manufacturing enterprises (MSEs). Maximum amount of subsidy is INR 1.5 Million and maximum ceiling of investment in plant and machinery is INR 10 Million.

small Farmer Agri‑Business Consortium (sFAC) Assistance for Venture Capital

Small Farmer Agri-Business Consortium (SFAC) provides venture capital assistance to agri-business projects in the form of equity. The SFAC provides assistance as 26% of promoter’s equity or amount of INR 5 Million (whichever is lower) in general area and 40% of the promoter’s equity or amount of INR 5 Million (whichever is lower) in Hilly and NE regions.

sIDBI Venture Capital Ltd assistance for Venture Capital to MsMe

SIDBI, through its Smaridi Fund scheme provides assistance to the MSME (including food processing MSMEs) with a corpus of INR 4,500 Million, which is invested by the Department for International Development (DIFD) UK and SIDBI. The assistance is provided in form of equity ranging between INR 50 Million and INR 250 Million.

2.4 Food safety

Food safety Act 2006

The Food Safety and Standard Act (FSSA) was formulated by the Ministry of Food Processing Industry in 2006. The act aims to establish a single reference point for all matters relating to food safety and standards, by moving from multi-level, multi-departmental control to a single line of command. To this effect, the act establishes an independent statutory authority – the Food Safety and Standards Authority of India (FSSAI).

The salient features of the act are:

y Food Safety and Standard Authority will be aided by scientific panels and central advisory committee

to lay down standards for food safety. These standards will include specifications for ingredients, contaminants, pesticide residue, biological hazards and labels.

y The law will be enforced through State Commissioners of Food Safety and local level officers.

y Everyone in the food sector is required to get a license or registration which would be issued by local authorities.

y Every distributor is required to identify any food article to its manufacturer, and every seller is required to identify any food article to its distributor. Anyone in the sector should be able to initiate recall procedure if he finds that the food sold has violated specified standards.

Quality Assurance, Codex standards and Research & Development and Promotional Activities

Ministry of Food Processing Industries implemented a scheme for quality assurance, codex standards, research & development and promotional activities to enhance competitive edge for the enterprises producing processed foods and providing services by prescribing domestic as well as international standards for food safety and quality control. Further, the scheme aims to emphasize on R&D for the development of innovative products, cost effective processes and efficient technologies for food processing sectors


The scheme comprises of following components:

y Setting up/upgradation of food testing laboratories (maximum grant INR. 25 Million per project)

y Implementation of HACCP / ISO / GMP / GHP / Safety Management System in food processing units (maximum grant INR 1.5 Million/INR 2 Million per project in general area / difficult area)

y Research & development in food processing sector

y Promotional activities including advertisement & publicity

2.5 skill Development Initiatives & Awareness

Human Development scheme in Food Processing sector

Human resource development (HRD) in the food processing sector was implemented by the Ministry of Food Processing Industries (MoFPI) in association with Sector Skill Council, i.e., Food Industry Capacity & Skill Initiatives (FICSI). This scheme is being implemented through State Governments under the National Mission on Food Processing (NMFP). The main objective of this scheme is to enhance the supply of trained manpower or personnel at all the levels of food processing sector.

The scheme has the following four components:

y Creation of infrastructure facilities for degree/diploma courses in food processing sector

y Entrepreneurship Development Programme (EDP)

y Food Processing Training Centres (FPTC)

y Training at recognized institutions at State/National level

As of September 2015, skill development programme has been launched in 30 centres across 11 states of the country and 12182 persons have been enrolled for training. Further, 124 training centers have been affiliated in 25 States.

setting up of national Institute of Food Technology, entrepreneurship and Management (nIFTeM)

National Institute of Food Technology, Entrepreneurship and Management (NIFTEM) is a deemed university under Denovo category and an autonomous institution under Ministry of Food Processing Industries, Government of India. NIFTEM is considered as an International Center of Excellence in the field of Food Sciences & Food Technology. The objectives of the institution are to offer high-quality educational and research programme with management orientation specific to the food industry, propagate knowledge on the processed food sector and provide business incubation facility.

In 2011, government-approved revision of the estimated cost for setting up of NIFTEM from INR 2446 Million to INR 4799 Million. NIFTEM conducts skill development trainings and outreach programmes for students, farmers and entrepreneurs.

As of December, NIFTEM had conducted 104 skill development trainings and outreach programmes had trained 8469 persons. It has skilled 44 persons under the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) scheme.

setting up of The Indian Institute of Crop Processing Technology (IICPT)

Indian Institute of Crop Processing Technology (IICPT) is an independent research & development and educational institution under the Ministry of Food Processing Industries, Government of India. The main activities of IICPT are teaching, research and expansion


in areas of food processing to serve the needs of stakeholders in the country.

As of December 2015, the institute has developed and commercialized 28 technologies (idli dry mix to Supreme Power Food Products, SSR Products and others), 25 gadgets and has filed 15 patents. Further during the year 2015, it has conducted 293 skill development programmes for over 4122 beneficiaries. Out of these, 17 have established their own industries and 51 have secured industry-based jobs.

Promotion of Innovation, entrepreneurship and Agro Industry

The Promotion of Innovation, Entrepreneurship and Agro Industry scheme was launched by the Ministry of Micro, Small and Medium Enterprises (MSME) for enterprises that are primarily engaged in activities pertaining to wholesale/retail trade; repair of personal and household goods; manufacture of food products and beverages; manufacture of wearing apparel; dressing and dyeing of Fur; manufacture of textiles; hotels and restaurants; sale, maintenance and repair of motor vehicles and motorcycles; retail sale of automotive fuel; manufacture of furniture; education; and other businesses / services to provide required skill set and expertise for establishing a business, promote entrepreneur culture in the country, facilitate innovative business solutions and promoting and strengthening the MSME sector.

Pradhan Mantri Kaushal Vikas Yojana (PMKVY)

Pradhan Mantri Kaushal Vikas Yojana (PMKVY) was introduced by the new Ministry of Skill Development & Entrepreneurship (MSDE) to encourage skill development for youth by rewarding them in monetary terms for successful completion of approved training programs.

The main objective of the scheme are:

y Encourage standardization in the certification

process and instigate a process of creating a registry of skills

y Enable and mobilize a large number of Indian youth to take up skill training and become employable and earn their livelihood. Increase productivity of the existing workforce and align the training and certification to the needs of the country

y Provide monetary awards for skill certification to boost employability and productivity of youth by incentivizing them for skill trainings

y Reward candidates undergoing skill training by authorized institutions at an average monetary reward of INR 8,000 (rupees eight thousand) per candidate

2.6 Technology Development

scheme for Technology Upgradation/establishment/Modernization for Food Processing Industries

The Scheme for Technology Upgradation/ Establishment/ Modernization for Food Processing Industries was implemented by the Ministry of Food Processing Industries (MoFPI) to upgrade processing capabilities. The scheme covers all the segments, ie, fruits & vegetable, milk product, meat, poultry, fishery, oil seeds and such other agri-horticultural sectors, leading to value addition and shelf life enhancement including food flavors and colors, oleoresins, spices, coconut, mushroom, hops.

The scheme grant to the unit will be provided @ 25% of the cost plant & machinery and technical civil works subject to maximum of INR 5 Million in general areas and @ 33% or up to INR 7.5 Million in difficult areas (Jammu & Kashmir, Himachal Pradesh, Uttarakhand, Sikkim, North Eastern, Andaman & Nicobar Islands, Lakshadweep and integrated Tribal Development Project (ITDP)). Only new plant and machinery will be eligible.


3.1 Andhra Pradesh

Andhra Pradesh holds a superior position in the country’s agribusiness industry with major contribution in agriculture, horticulture, dairy, poultry, fisheries and marine production. State’s agriculture sector contributed close to 23.3% to state’s GSDP (constant prices) in FY 2014. Around 60% of the state’s population is employed in agriculture and related activities, which makes food processing one of the major thrust areas for the state. Realizing the huge potential in the sector, government has been quite supportive to the sector.

Under Mega Food Parks Scheme of Ministry of Food Processing Industries (MoFPI), Andhra Pradesh has been sanctioned 3 Mega Food Parks in Chittoor, Godavari, and Krishna districts. Also, MoFPI has sanctioned seven cold chain projects in the state

Top 10 States - Strategic Outlook3

Figure 3‑1 Andhra Pradesh ‑ Agriculture and Allied Products Production (Million Tonnes), 2011‑12 & 2012‑13

Source: National Horticulture Board, Directorate of Economics and Statistics, Department of Agriculture and Cooperation, National Dairy Development Board, Department of Animal Husbandry, Dairying & Fisheries

2.4

18.7

2.7

18.4

12.112.0

9.8

12.812.414.2

Fruits Vegetable Food Grains

Milk Meat & Fishes

2011-12 2012-13

Table 3‑1: Andhra Pradesh ‑ opportunities in Food Processing

S. No. Food Produce

Production (Million Tonnes), 2012-13 Processed Food Items

1 Milk 12.8

Cheese, Ice Cream, Pasteurized and Flavored Milk, Butter, Paneer, Ghee,Butter Milk, Curd, Cottage Cheese, Packaged Cream, Condensed Milk, Confectionary Products (Chocolates, Biscuit Creams), Milk-based sweets (RTE Gulab Jamuns)

2 Rice 11.5Rice Flour, Rice Bran Oil, Parboiled Rice, Rice Flakes, Wafers, Pasta, Idli Mix, Snacks (Quaker), Cereal Bars (Sweet)

3 Tomato 5.2 Puree, Ketchup, Sauce, Jam, Paste, Dried Powder, etc

4 Maize 4.9 Corn Flakes, Snacks, Popcorn, Starch, Oil, Corn Syrup, Corn Flour, Corn Soup, etc

5 Citrus Fruits 3.8Juice, Jam, Jellies, Squash, Candies, Pulp, Confectionary Products (Candies, Chocolates, Biscuit Creams)

Source: National Horticulture Board, Directorate of Economics and Statistics, Department of Agriculture and Cooperation, National Dairy Development BoardNote: Figures Rounded Off to One Decimal Place


under its ‘Scheme for Cold Chain, Value Addition and Preservation Infrastructure.

Food processing industry is gaining prominence in the state with more facilities coming up and continuous policies and initiatives of the state government to boost the processing sector. The opportunity lies in those processed food items whose raw material base is as strong as the growth in food processing units.

The processed food items and specially RTE/RTC foods have been gaining prominence across India as the younger generation is more inclined towards easy-to-cook food items. Also, together with other initiatives, the Andhra Pradesh government is expecting INR 50 Billion investments in the food processing industry by 2020 as it plans to set up integrated food processing parks in all districts. Hence, In light of the ongoing and proposed investments in the state, Andhra Pradesh food processing industry is expected to boom.

3.2 Maharashtra

Maharashtra is a state of biological diversity with 9 agro-climatic zones, which makes it suitable for various types of production. It is one of the major horticulture states with more than 1.3 Million hectares of land under

horticulture. It is also the largest producer of seedless grapes, banana, mandarin, onion and tomatoes. The exports from the state for fresh vegetables and fruits accounts for close to 30% share and for processed food products up to 50%. Hence, the position of Maharashtra on the food production chart is quite substantial and projects a high potential in food processing industry in the coming years.

Table 3‑2: Maharashtra ‑ opportunities in Food Processing

S. No. Food Produce


1 Milk 8.7


2 Cereals 4.4 Snacks & Namkeens

3 Onion 4.7 Onion Flakes, Powder, Paste, etc

4 Banana 3.6 Juice, Chips, Puree, RTS juice, Jam, Jelly, Wine, Banana Cheese, Flour, etc

5 Pomegranate 0.4 Juice, Jam, Jelly, Frozen Arils, etc.


Figure 3‑2 Maharashtra ‑ Agriculture and Allied Products Production (Million Tonnes), 2011‑12 & 2012‑13



Milk Meat & Fishes

2011-12 2012-13

1.2 1.2

10.4 11.0

12.5

8.58.8

10.511.1

8.7


Under its Mega Food Parks Scheme, MoFPI has given final Approval to the Mega Food Park project in Aurangabad and Satara. There are approximately 30 projects approved by MoFPI under its Cold Chain, Value Addition and Preservation Scheme. Also, under the scheme for Setting up of New/ Modernization of Existing Abattoirs of MoFPI, Maharashtra has been sanctioned 2 abattoirs projects so far.

The huge production base, abundance of natural resources, supportive steps by state’s government and changing lifestyle are few of the reasons backing magnificent growth in state’s food processing. Also, increase in number of companies in the sector of value-added food products has created vast opportunity for SME’s to cater to this burgeoning demand of value added food products.

As the state is a major producer of fruits like oranges, mangoes, grapes, bananas, cashew, pomegranates and other citrus family fruits like sweet lime, Japan is keen to invest in the state, especially in food processing sector. The investment climate in the state is strong and exhibits a major scope for foreign direct investment in the sector. Hence, in light of the ongoing and proposed investments in the state, burgeoning demand for value added food products and changing demographics, state’s food processing industry is expected to boom.

3.3 Uttar Pradesh

Uttar Pradesh is the second-largest economy in India after Maharashtra, with agriculture as its leading occupation. Wheat is the principal food crop and sugarcane is the main commercial crop. Uttar Pradesh is the leading agricultural state in the country and is poised to emerge as a most sought after destination for the food processing industry. With large stretches of agrarian fertile plains, a vast network of rivers and filled with natural resources, state is economically one of the more dynamic states in the country. The developed agricultural industry is one of the supporting pillars for the emerging food processing industry in the state.

UP State Industrial Development Corporation (UPSIDC) is the nodal state agency to develop industrial areas and provide primary infrastructure. It has developed 159 Industrial Areas and 23 Residential Areas encompassing 41948 acres of land with a wide range of infrastructure facilities. Under the Scheme for Cold Chain, Value Addition and Preservation Infrastructure, MoFPI has approved six cold chain projects out of which the projects at Unnao, Agra and Noida have already started its commercial operations. The ongoing industrial and commercial developments are set to give big boost to the overall food processing industry of the state.

Uttar Pradesh is one of the leading states in the production of food grains, especially wheat and rice. The increasing production base and availability of the crucial natural resources has brought up Uttar Pradesh in the ranking of most productive states.

With approximately 1600 cold storages, total storage capacity close to 5.8 Million Tonnes and APMC Act, which now provides for Direct Marketing, Contract Farming and Markets in Private/Coop Sectors, the

Figure 3‑3 Uttar Pradesh ‑ Agriculture and Allied Products Production (Million Tonnes), 2011‑12 & 2012‑13



Milk Meat & Fishes

2011-12 2012-13

1.0

6.9

19.423.3

1.1

50.3

22.618.6

5.8

50.8


future outlook for the food processing industry is even brighter.

3.4 Karnataka

Karnataka portrays specific supply strengths, giving the state a comparative advantage over other counterparts in becoming leading food processing hub of the country. With 10 agro-climatic zones and landscape highly suitable for agriculture, Karnataka is one of the most agriculturally diverse states in India. It contributes 70% of India’s coffee and is a major producer of spices, flowers, fruits and vegetables. The strong agricultural base together with the presence of more than five national level research institutes in agriculture & horticulture sectors makes it an attractive destination for companies coming up in the food processing sector.

MoFPI has sanctioned one Mega Food Park project under its Mega Food Parks Scheme in Tumkur in Karnataka. Apart from MoFPI’s Mega Food Parks Scheme, the state govt. also has a Food Parks Scheme under which food parks are being established in 6 districts including Bangalore (Rural), Tumkur, Shimoga, Davangere, Bijapur and Belgaum. The state government is also planning to set up a spice park at Byadagi in Haveri district. Moreover, MoFPI has so far sanctioned five cold chain projects in the state

under its ‘Scheme for Cold Chain, Value Addition and Preservation Infrastructure.’

Together with its natural tendency for highly varied agriculture production, policy-makers efforts to promote development of supporting agri-infrastructure, especially through initiatives like crop cluster development, food parks, agri-economic zones and agri-SEZs among others, are few reasons boasting of high potential in state’s food processing industry.

Figure 3‑4 Karnataka ‑ Agriculture and Allied Products Production (Million Tonnes), 2011‑12 & 2012‑13


Table 3‑3: Uttar Pradesh ‑ opportunities in Food Processing

S. No. Food Produce



2 Wheat 30.3Flour, Suji, RTC (Upma), Bakery & Confectionary Products (Bread, Biscuits/Cookies, Noodles, Pasta, Rusk, Vermicelli, etc.)

3 Potato 14.4 Chips, Snacks (Potato Bites), Seasonings

4 Mango 4.4Pulp, Concentrate, Juice, Squash, Tandra/ bar, Pickle, Jam, Jelly, Candy, Dehydrated Slices, Mango frozen, etc.

5 Banana 0.1 Juice, Chips, Puree, RTS juice, Jam, Jelly, Wine, Banana Cheese, Flour, etc.



Milk Meat & Fishes

2011-12 2012-13

0.7 0.7

5.7

12.1

5.5

7.76.4

10.9

7.56.6


3.5 West Bengal

The state of West Bengal has always been gifted with a huge amount of natural resources, which is significant to produce vast range of agricultural as well as horticultural products. West Bengal is the largest producer of vegetables in the country and seventh largest producer of fruits. Horticultural crops cover close to 20% of net cultivable area in the state. The state’s dominancy in various agricultural items projects a huge opportunity for food processing industry and supportive government initiatives add further momentum to it.

The Agro food parks are being developed in the state with the intention of providing support to small & medium entrepreneurs in setting up facilities like cold storages, warehouses, quality control labs, effluent treatment plants etc. A Mega Food Park (MFP) has been approved by MoFPI at Jangipur, implemented by the M/s Jangipur Bengal Mega Food Park Ltd and shall include core processing facilities, factory buildings for micro and small enterprises (MSES), enabling basic infrastructure and non-core infrastructure as per the guidelines of scheme for mega food parks (MFPS). With similar kind of facilities coming up the food processing in the state has become a lucrative investment option.

West Bengal accounts for over 11% of total production of fruits & vegetables in the country and is the leading producer of cauliflower, brinjal, cabbage and pineapple, and the second largest producer of potato and litchi.

In response to the ongoing developments in the sector of food production and food processing, the industry is

Table 3‑4: Karnataka ‑ opportunities in Food Processing

S. No. Food Produce


1 Milk 5.7Cheese, Ice Cream, Pasteurized and Flavored Milk, Butter, Paneer, Ghee,Butter Milk, Curd, Cottage Cheese, Packaged Cream, Condensed Milk, Confectionary Products (Chocolates, Biscuit Creams), Milk-based sweets (RTE Gulab Jamuns)






Figure 3‑5 West Bengal ‑ Agriculture and Allied Products Production (Million Tonnes), 2011‑12 & 2012‑13



Milk Meat & Fishes

2011-12 2012-13

2.12.94.9

2.1

16.0

4.7

23.4

3.1

16.6

25.0


expected to grow with a magnificent growth rate in the near future. The major investment opportunities for the SME’s lies in the food items listed above as they enjoy a high resource base and also are being preferred by the younger generation as a substitute for staple diet.

3.6 Bihar

Bihar is one of the states which are largely agrarian and rural with almost 90% of the total population engaged in agricultural activities. Though the share of agriculture in the GSDP has been decreasing over the years and it remains only one-fifth of the GSDP presently, agriculture still remains the backbone of the state economy and consequently food processing sector has made good progress in recent years.

In order to boost the level of food processing, MoFPI has awarded Final Approval to Pristine Mega Food Park Pvt. Ltd. (project SPV) for setting up Mega Food Park project in Khagaria and in Principle Approval to JVL Mega Food Park Pvt. Ltd. in Rohtas, MUMS Mega Food Park Pvt. Ltd. in Buxar for setting up Mega Food Park project. Also, Under the Scheme for Cold Chain, Value Addition and Preservation Infrastructure, MoFPI has approved two cold chain projects in the state.

Rice, milk and potato are the major food items produced in the state. As now, state and central government is inclined towards unveiling the potential of state’s food processing industry, the derived food items from these resources exhibit the maximum potential.

Figure 3‑6 Bihar ‑ Agriculture and Allied Products Production (Million Tonnes), 2011‑12 & 2012‑13


Table 3‑5: West Bengal ‑ opportunities in Food Processing

S. No. Food Produce




3 Milk 4.9






Milk Meat & Fishes

2011-12 2012-13

0.6

4.5

6.8

0.6

14.1

6.6

15.6

3.9

16.3 15.9


The processed food items and specially RTE/RTC foods have been gaining prominence across India as the younger generation is more inclined towards easy-to-cook food items. In response to the ongoing developments in the sector of food production and food processing, Bihar’s food processing industry is set to grow with a better growth rate in the coming years.

3.7 Tamil nadu

Tamil Nadu is a growing south Indian state with GSDP increasing at a CAGR of around 15% between FY2005 and FY2012. The services sector contributes 45% to the state’s income followed by manufacturing and agriculture at 34% and 21% respectively. Tamil Nadu is the largest producer of bananas and also leads in the production of coffee, tea and sugarcane.

In the recent years, state and central government has taken various initiatives to boost the sector growth. For instance, Ministry of Food Processing Industries (MoFPI) has awarded “In-principle” approval to NDR Infrastructure Pvt. Ltd. in Thiruvallur district and 3F Industries Ltd. in Krishnagiri district for setting up Mega Food Park projects. It has so far sanctioned three cold chain projects in the state under its ‘Scheme for Cold Chain, Value Addition and Preservation Infrastructure.’

Rice, banana and coconut are the major food items produced in the state. As now, state and central government is inclined towards unveiling the potential of state’s food processing industry, the derived food items from these resources exhibit the maximum potential.

Table 3‑6: Bihar ‑ opportunities in Food Processing

S. No. Food Produce



2 Milk 6.8Cheese, Ice Cream, Pasteurized and Flavored Milk, Butter, Paneer, Ghee,Butter Milk, Curd, Cottage Cheese, Packaged Cream, Condensed Milk, Confectionary Products (Chocolates, Biscuit Creams), Milk-based sweets (RTE Gulab Jamuns)


4 Maize 2.5 Corn Flakes, Snacks, Popcorn, Starch, Oil, Corn Syrup, Corn Flour, Corn Soup, etc




Figure 3‑7 Tamil Nadu ‑ Agriculture and Allied Products Production (Million Tonnes), 2011‑12 & 2012‑13


Milk Meat & Fishes

2011-12 2012-13

1.1 1.1

7.4

8.7

10.2

5.6

7.0 7.0

9.18.5


3.8 Madhya Pradesh

The economy of the state mainly depends on agriculture with more than 70% of the population involved in agricultural activities. During the year FY2013, growth of primary sector in Madhya Pradesh was about 18% as compared to 3.08 % at all India level. There are about 550 small scale food processing units in the state with an estimated investment of about INR 71.0 Billion and about 73 small scale beverage units with an estimated investment of INR 13.6 Billion.

In order to give a boost to the growing food processing industry in the state, a mega food park (MFP) has been approved by MoFPI in Khargone district which is under implementation. Recently it has also accorded “In-Principle” Approval to set up a mega food park project in Dewas district. Several agro food parks are being developed in the state to promote small and medium scale units in the state. At present, there are 7 approved food park in the state.

With improving infrastructure and growth in the industrial setup, the production and demand of processed food items is expected to attain high boom in the coming years.

Major agriculture and horticulture production includes Wheat, Soybean, Onion, Rice, Potato among others. The

value added products derived from these resources exhibit bigger and better market opportunities for upcoming industrial players.

Ongoing industrial developments, high agricultural and horticulture production, increasing investments, upcoming SME’s in the sector, has lead to a remarkable uplift in the processed food manufacturing in the state.

Table 3‑7: Tamil nadu ‑ opportunities in Food Processing

S. No. Food Produce




3 Coconut 4.8coconut milk, dried coconut or copra, desiccated coconut, coconut oil, coconut water, Nate-de-coco, coconut flour, vinegar, jaggery

4 Milk 7.0




Figure 3‑8 Madhya Pradesh ‑ Agriculture and Allied Products Production (Million Tonnes), 2011‑12 & 2012‑13


Milk Meat & Fishes

2011-12 2012-13

0.1

5.7

12.9

23.7

8.8

0.1

20.4

8.210.1

3.4


Similar scenarios are expected to keep boosting the industry growth in coming years as well.

3.9 Gujarat

Gujarat, located in western part of India, is the 6th largest state in terms of area and 9th largest in terms of population in the country. All the resources like fruits, vegetables, food grains, milk, etc., are in abundance in the state. Also, state has a major impact of PM Modi’s industrial polices and Make-in-India move. Of the total investments worth over INR 829.40 Billion attracted by food processing sector as of December 2014, Gujarat attracted the highest share at 20%1 amounting to over INR 165.7 Billion.

Major agriculture and horticulture production includes milk, banana and, mango among others. The value-added products derived from these resources exhibit bigger and better market opportunities for upcoming industrial players.

3.10 Punjab

Punjab is the land of food grains and is one of the leading producers of food grains in the country especially wheat. Food processing sector is the focus

Table 3‑8: Madhya Pradesh ‑ opportunities in Food Processing

S. No. Food Produce



2 Soybean 7.8 Cheese, Sauce, Oil, Milk, Margarine, Animal Feed





1. The Associated Chambers of Commerce and Industry of India (ASSOCHAM)


Figure 3‑9 Gujarat ‑ Agriculture and Allied Products Production (Million Tonnes), 2011‑12 & 2012‑13

area of investment in Punjab due to government’s special support to the food processing sector and abundance of agricultural crops. The state government operates an agricultural mega project policy to facilitate investment in the food and agro processing sector. In line with the thinking of the Government of India, the state government has formed a separate department


Milk Meat & Fishes

2011-12 2012-13

0.8

8.4

11.3

7.1

10.3

0.8

8.99.810.1

7.5


of Food Processing Industries to look after the schemes of National Mission on Food Processing.

In order to improve the food processing scenario in Punjab, agro food parks are being developed in the state to enable small- and medium-scale units to attain viability by defraying cost of major facilities such as cold storage, ware-housing facilities, etc. Currently, 3 mega food parks have been approved by MoFPI in the state, which are being implemented by International Mega Food Park Limited in Fazilka, The Sukhjit Starch & Chemicals Limited in Kapurthala and Punjab Agro Industries Corporation in Ludhiana.

Major food items produced in the state include wheat, rice and milk, among others. The value-added products derived from these resources exhibit bigger and better market opportunities for upcoming industrial players.

Table 3‑9: Gujarat ‑ opportunities in Food ProcessingS.

No.Food

ProduceProduction (Million

Tonnes), 2012-13 Processed Food Items

1 Milk 10.3Cheese, Ice Cream, Pasteurized and Flavored Milk, Butter, Paneer, Ghee,Butter Milk, Curd, Cottage Cheese, Packaged Cream, Condensed Milk, Confectionary Products (Chocolates, Biscuit Creams), Milk-based sweets(RTE Gulab Jamuns)

2 Banana 4.5 Juice, Chips, Puree, RTS juice, Jam, Jelly, Wine, Banana Cheese, Flour, etc


4 Papaya 1.2 Juice, jelly, Confectionary Products (Candies, Chocolates, Biscuit Creams)




Figure 3‑10 Punjab ‑ Agriculture and Allied Products Production (Million Tonnes), 2011‑12 & 2012‑13


Milk Meat & Fishes

2011-12 2012-13

1.43.7

28.4

9.6

0.3 0.31.5

3.9

28.5

9.7


Table 3‑10: Punjab ‑ opportunities in Food Processing

S. No. Food Produce




3 Milk 9.7Cheese, Ice Cream, Pasteurized and Flavored Milk, Butter, Paneer, Ghee,Butter Milk, Curd, Cottage Cheese, Packaged Cream, Condensed Milk, Confectionary Products (Chocolates, Biscuit Creams), Milk-based sweets(RTE Gulab Jamuns)


5Total Citrus

1.0Juice, Jam, Jellies, Squash, Candies, Pulp, Confectionary Products (Candies, Chocolates, Biscuit Creams)



Investment in Infrastructure

Inadequate infrastructure acts as the biggest hindrance to the Indian food processing industry and has been affecting its growth since past several years. Bad road conditions; poor connectivity; inadequate air and sea port capacities; and lack of development of modes of transports, like railways, and alternates, like inland water transport and domestic aviation, have been causing delays in the food processing operations. Due to this, costs per transaction in the Indian food processing sector increases and ultimately leads to increase in prices. Therefore, there is an urgent need for entirely new logistic networks, linking roads, railways, airports, and warehouses, cold chain storage to curtail the post-harvest losses, particularly of perishables, testing laboratories, food parks, etc. and new electricity grids to power them. The Indian government, by collaborating with leading Indian engineering and consulting companies through a public-private partnership model (PPP), should develop world class infrastructure in the untapped areas of the country. This will not only benefit the food processing industry but will also result into the development of the particular areas.

Re‑engineer Mega Food Parks scheme

The Ministry of Food Processing Industries had launched ‘The Mega Food Parks Scheme’ (MFPS) under the 11th Five Year Plan and was implemented in 2008. Since its inception, 42 mega parks were given in-principle approvals. However, only five projects have started operations, including the North East Mega Food

Recommendations to Stimulate Growth4

Park in Assam; India Food Park in Tumkur, Karnataka; International Mega Food Park in Fazilka, Punjab; Srini Food Park in Chittoor, Andhra Pradesh; and Patanjali Food and Herbal Park in Uttarakhand. The remaining 37 projects are either still lined up for final approval or got cancelled due to several reasons. The government should take effective measures to reengineer MFPS scheme and allow speedy approvals to achieve the objective of MFPS scheme. Also, there should be a relaxation on the eligibility criteria of a minimum land of 50 acres.

Investment in Training and skill Development

The government has been constantly making efforts to develop skills among rural and urban population. However, with a lot of development happening in the food processing sector, emerging skill shortages between the demand and supply of specific skills can potentially obstruct the competitiveness of the industry. If this trend continues, the SMEs would be badly affected as the investment in training and


human resource development is minimal at their level. The number of institutes providing proper training suitable to the industry is also not adequate. There is a strong need for government intervention to establish institutions that provide skill development training and expertise in food processing sector. The government support in terms of subsidies or incentives can also solve the problem of shortage of skill set to some extent.

easy Availability of Credit

The unavailability of credit is one of the major bottlenecks of the Indian food processing industry, however the government has taken several initiatives/schemes in this regard, but still there exists some loopholes. The government/RBI should come up with a scheme for the small farmers or industry players with less documentation and timely approvals of the loans. They should also relax the eligibility criteria for granting of loans. Since, food processing is a sub category of agriculture; the rate of interest charged by the banks should also be similar to that of agriculture (around 7%). Also, the term of loan should be extended to 15 years.

Additionally, the credit assistance scheme provided by the NABARD needs to relax its collateral requirement from the borrowers as it is even higher than that of commercial banks’ requirement. FPI units would hardly get benefited from this policy. Additionally, NABARD provide credit assistance only to the 148 designated

food parks, it should broaden its eligibility criteria and should provide assistance to the privately and government owned food parks as well.

Consistent state and Central Policy

There exist a lot of inconsistencies and inefficiencies in the Indian food processing industry as there is an involvement of multiple ministries and administering authorities at both the central and state level. Different states have different policies and taxes which lead to complex structure and ultimately affect the growth of the industry. There should be a consistency in state and central policies or same policies for all states as well as the relaxation of state barriers.

effective Implementation of GsT

Implementation of GST is expected to significantly stimulate the Indian food processing industry in the coming future. The GST, intended from April 1, 2016, would amalgamate India’s multi-layered indirect tax system into a single unified system, unleashing India from its bureaucratic web and improving the ease of doing business. This will lead to a notable reduction in transportation costs for the food processing industry players as they will not have to pay central sales tax at 2% of sales. Also, firms that have established their own warehouses will get benefitted from lower logistics costs resulting in the shutdown/consolidation of some warehouses. This will ultimately result into reduction of final prices.


establishment of semi‑Food Processing Industry Units

To meet the domestic as well international demand for processed food products, government should establish semi processing units near agriculture produced area. Also, small size food parks can be developed at various center points of districts areas with the facilities of packaging, semi processing, advanced equipments and machineries. This will not only reduce the time to transport agricultural produce from farm to the processing unit but it will also condense the cost of food processing and wastage of agricultural production and ultimately stabilizes the prices.

Growth of MsMe Units

Government has been very supportive towards the development of MSME sector by giving special incentives and subsidies. Various incentives like capital assistance, bank loans, plant & machinery, among others. Few special incentives and relaxations such as procurement of raw materials at subsidized rates, entrepreneur training to the rural entrepreneurs will give further push to the industry. A venture capital fund should also be established by the MoFPI in order to boost production capacity of the MSME sector.

encourage Contract Farming

The food processing industry in India involves a long and time-consuming supply chain which results into wastage of agricultural production. The idea of contract farming can eliminate the problem of wastage and can enhance the production of processed foods. By contract farming, companies can create direct farm linkages to get appropriate quality, quantity and varieties of inputs from farmers by supporting them throughout the production process, land preparation and technical advice. In this way, both the parties in the contract are better off. Farmers have a guaranteed market outlet, mitigated uncertainty regarding prices, supplied with loans in kind, through the provision of farming inputs such as seeds and fertilizers. Companies benefit from having a guaranteed supply of agricultural products that meet their specifications regarding quality, quantity and timing of delivery.

Promoting Cluster‑Based Agricultural Practices

Cluster Farming aims at real profit by merging several smallholder farms into a solid entrepreneurial group, which is known as a cluster. The small farms cultivate specific food grains, vegetables, fruits and other


horticulture crops as a consolidated production. This agricultural practice can improve agricultural growth rate as well as farm income. Therefore government should rigorously promote cluster based agricultural practice especially in those areas where there is less farm mechanization.

Development of organic Agriculture

The Indian organic agriculture is highly fragmented and there is no proper organization or a body for managing its value chain. Additionally, there is an absence of proper marketing and distribution networks both in the domestic as well as export market. The Indian government has taken limited initiatives for the growth of organic agriculture in the country. There is a scope for government support in terms of subsidies or incentives for the growth and promotion of organic agriculture.

Additionally, lack of organic market awareness is the biggest roadblock for Indian organic agriculture industry. The farmers, as well as the end consumers, do not have proper information about organic farming and products. Government should conduct awareness programmes in rural as well as in urban areas to make farmers as well as end consumers aware about the

organic agriculture, also steps should be taken to motivate larger section of farming community to opt for organic farming.

Research & Development

In the phase of innovation and development, companies must emphasize on investing in research and development to keep updated with current trends in technology and development of the product. The target customer has become excessively particular in demand and a price comes secondary to the benefits associated with the product. Therefore, continuous research on defining new product lines and restructuring the existing offerings is crucial to match the changing needs of the consumers.

Focus on nutritional Products

The food processing industry players should adopt new methods of processing that ensures nutrient value of any food remains unaltered while processing. The industry should focus on processing products that are rich in vitamins and minerals and that have long life span as well. The processing of nutritional products will curb the problem of malnutrition in the country.

ASSOCHAM

THE KNOWLEDGE ARCHITECT OF CORPORATE INDIA

EvOLuTION OF vALuE CREATOR

ASSOCHAM initiated its endeavour of value creation for Indian industry in 1920. Having in its fold more than 400 Chambers and Trade Associations, and serving more than 4,50,000 members from all over India. It has witnessed upswings as well as upheavals of Indian Economy, and contributed significantly by playing a catalytic role in shaping up the Trade, Commerce and Industrial environment of the country.

Today, ASSOCHAM has emerged as the fountainhead of Knowledge for Indian industry, which is all set to redefine the dynamics of growth and development in the technology driven cyber age of ‘Knowledge Based Economy’.

ASSOCHAM is seen as a forceful, proactive, forward looking institution equipping itself to meet the aspirations of corporate India in the new world of business. ASSOCHAM is working towards creating a conducive environment of India business to compete globally.

ASSOCHAM derives its strength from its Promoter Chambers and other Industry/Regional Chambers/

Associations spread all over the country.

vISION

Empower Indian enterprise by inculcating knowledge that will be the catalyst of growth in the barrierless technology driven global market and help them upscale, align and emerge as formidable player in respective

business segments.

MISSION

As a representative organ of Corporate India, ASSOCHAM articulates the genuine, legitimate needs and interests of its members. Its mission is to impact the policy and legislative environment so as to foster balanced economic, industrial and social development. We believe education, IT, BT, Health, Corporate

Social responsibility and environment to be the critical success factors.

MEMbERS – OuR STRENGTH

ASSOCHAM represents the interests of more than 4,50,000 direct and indirect members across the country. Through its heterogeneous membership, ASSOCHAM combines the entrepreneurial spirit and business acumen of owners with management skills and expertise of professionals to set itself apart as a Chamber with a difference.

Currently, ASSOCHAM has more than 100 National Councils covering the entire gamut of economic activities in India. It has been especially acknowledged as a significant voice of Indian industry in the field of Corporate Social Responsibility, Environment & Safety, HR & Labour Affairs, Corporate Governance, Information Technology, Biotechnology, Telecom, Banking & Finance, Company Law, Corporate Finance, Economic and International Affairs, Mergers & Acquisitions, Tourism, Civil Aviation, Infrastructure, Energy & Power, Education, Legal Reforms, Real Estate and Rural Development, Competency Building & Skill Development to mention a few.

INSIGHT INTO ‘NEW buSINESS MODELS’

ASSOCHAM has been a significant contributory factor in the emergence of new-age Indian Corporates, characterized by a new mindset and global ambition for dominating the international business. The Chamber has addressed itself to the key areas like India as Investment Destination, Achieving International Competitiveness, Promoting International Trade, Corporate Strategies for Enhancing Stakeholders Value, Government Policies in sustaining India’s Development, Infrastructure Development for enhancing India’s Competitiveness, Building Indian MNCs, Role of Financial Sector the Catalyst for India’s Transformation.

ASSOCHAM derives its strengths from the following Promoter Chambers: Bombay Chamber of Commerce & Industry, Mumbai; Cochin Chambers of Commerce & Industry, Cochin: Indian Merchant’s Chamber, Mumbai; The Madras Chamber of Commerce and Industry, Chennai; PHD Chamber of Commerce and Industry, New Delhi.

Together, we can make a significant difference to the burden that our nation carries and bring in a bright, new tomorrow for our nation.

The Associated Chambers of Commerce and Industry of IndiaASSOCHAM Corporate Office:

5, Sardar Patel Marg, Chanakyapuri, New Delhi-110 021

Tel: 011-46550555 (Hunting Line) • Fax: 011-23017008, 23017009

Email: [email protected] • Website: www.assocham.org

5, Sardar Patel Marg, Chanakyapuri, New Delhi - 110 021Phone: +91-11-46550555 (Hunting Line) • Fax: +91-11-23017008, 23017009

E-mail: [email protected] • Website: www.assocham.org

ASSOCHAM REGIONAL OFFICES

ASSOCHAM Southern Regional OfficeD-13, D-14, D Block, Brigade MM,1st Floor, 7th Block, Jayanagar,K R Road, Bangalore-560070Phone: 080-40943251-53Fax: 080-41256629Email: [email protected] [email protected], [email protected]

ASSOCHAM Western Regional Office608, 6th Floor, SAKAR IIIOpposite Old High Court, Income TaxAhmedabad-380 014 (Gujarat)Phone: +91-79-2754 1728/ 29, 2754 1867Fax: +91-79-30006352E-mail: [email protected] [email protected]

ASSOCHAM Eastern Regional OfficeBB-113, Rajdanga Main Road Kolkata-700107Phone: 91-33-4005 3845/41Fax: 91-33-4000 1149E-mail: [email protected]

ASSOCHAM Regional Office Ranchi503/D, Mandir Marg-C, Ashok Nagar, Ranchi-834 002Phone: 09835040255, 06512242443 (Telefax)E-mail: [email protected]

ASSOCHAM CORPORATE OFFICE

The Associated Chambers of Commerce and Industry of India

ASSOCHAM OVERSEAS OFFICES

A - 142, Second Floor, Sector 63, Noida - 201301, INDIA : +91 - 120 - 4224700/ 01/ 02/ 03, Ext: 203/ 208: +91 - 120 - 4224707: [email protected] : www.rncos.com

5, Sardar Patel Marg, Chanakyapuri, New Delhi-110 021 : 011-46550555 (Hunting Line): 011-23017008, 23017009: [email protected] : www.assocham.org