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Food Processing Industries :LJ[VY�7YVÄSL
Agenda
Why India?
01Make in IndiaInitiative
02
7YVÄSL!Food processing industry
03
Investment Opportunities
04
Business & 9LN\SH[VY`�Environment in India
05
Why India?
01
Advantage India
World’s largest democracy with 1.3 billion people
Access to technology as a result of the IT
revolution
Enabling busines environment with greater global
participation
Progressive ZPTWSPÄJH[PVU�HUK�rationalization of
direct and indirect tax structures
Land of abundant natural resources
and diverse climatic conditions
Impetus to Infrastructure Development
Large and growing domestic consumer market
Competitively priced
skilled labour
India - A favoured investment destination
largest economy in the world
by nominal GDP (2015)
largest economy in the world
by Purchasing Power Parity (PPP)
on baseline
WYVÄ[HIPSP[`�PUKL_
One of the fastest growing economies in the world
Source: World Bank
2011-12 2012-13 2013-14 2014-15
Sector contribution to GDP
18% 18% 18% 17%
33% 32% 31% 30%
49% 50% 51% 53%
:LJ[VY�^PZL�-+0�PUÅV^Z
2L`�L_WVY[�KLZ[PUH[PVUZ(2014-15)
��JVU[YPI\[PVU�[V�[V[HS�L_WVY[Z
13.7% 10.6% 3.9% 3.6%
Key import sources
(2014-15)% contribution to total imports
13.5% 6.3% 5.8% 4.9%
HTVUNZ[�^VYSK»Z�[VW�TVZ[�NYLLUÄLSK�FDI destination (Jan-June, 2015)
<:+�����IPSSPVU�VM�-+0�PUÅV^Z�IL[^LLU�April 2000 and September 2015
Source: Financial Times - FDI Markets
;YHKL�7YVÄSL��<:+�IPSSPVU�:V\YJL!�,_WVY[���0TWVY[�KH[HIHUR��4PUPZ[Y`�VM�*VTTLYJL��*0(�>VYSK�-HJ[IVVR
0UKPH�PZ�VUL�VM�[OL�THQVY�.����LJVUVTPLZ���[O�SHYNLZ[�L_WVY[LY�HUK�
11th largest importer in the world.
2004-05 2008-09 2014-15
*(.9�,_WVY[Z�16%
*(.9�0TWVY[Z�17%
Import
,_WVY[Services
1 - 17%
Services
2 - 9%
*VUZ[Y\J[PVU�+L]LSVWTLU[3 - 7%
Telecommunications
4 - 5%
Pharmaceuticals
5 - 5%
(\[VTVIPSLZ6 - 4%
*OLTPJHSZ7 - 7%
*VTW\[LYZ8 - 46%
Others
Source: DIPP, GoI
2014 2020
2.043
7YVQLJ[LK�*(.9�VM����between 2014 and
2020 GDP anticipated
to reach
<:+���[YPSSPVU�I`�����
GDP at current prices
�<:+�[YPSSPVU�100%
50%
0%
5
0
.YV^[O�LUHISLYZ
Growing domestic consumer base
1991
Rising disposable income and urbanization
<YIHU�WVW\SH[PVU��TPSSPVU��HUK�WLY�JHWP[H�KPZWVZHISL�PUJVTL��<:+�Source: Census of India, 2011, PwC analysis
2001 2008 2030
<YIHU�WVW\SH[PVU��TPSSPVU�Per capita disposable income
3HYNL��`V\UN�O\THU�JHWP[HS�IHZL
More than 800 million people under the age of 34 years
Source: Census of India, 2011, PwC analysis
2016 2021 2026
60 and above55-5950-5445-4940-4435-3934 and below
Democratic set up and strong economic reforms� Strong democracy� Progressive economic reforms� Investor friendly government initiatives
Visionary Initiatives� Make in India � Skill India� Digital India� Smart Cities Mission
Make in IndiaInitiative
02
4HRL�PU�0UKPH�PUP[PH[P]L���;V�WYVWLS�Z\Z[HPUHISL�NYV^[O
Major national initiative, designed to facilitate investment, foster
innovation, enhance skill development, protect intellectual property and build best-in-class
manufacturing infrastructure
The objective of Make in India initiative is to promote India as the
most preferred global manufacturing destination
Strong impact created by the initiative
Major investment announcements under Make in India in the Food Processing sector� 0U�(WYPS������7LWZPJV�JVTTPZZPVULK�THU\MHJ[\YPUN�\UP[�H[�:YP�
JP[ �̀� 0;*�OHZ�PUKPJH[LK�PU]LZ[TLU[�VM�HYV\UK�<:+�9Z���� �*YVYL��<:+�
����4PSSPVU��PU�>LZ[�)LUNHS�MVY�JVUZ[Y\J[PUN�[^V�PU[LNYH[LK�MVVK�WYVJLZZPUN�\UP[Z�
� (I\�+OHIP�IHZLK�3\S\�.YV\W�WSHUZ�[V�PU]LZ[�9Z�������*YVYL��<:+�����4PSSPVU��MVY�H�MY\P[�HUK�]LNL[HISL�WYVJLZZPUN�\UP[�HUK�PU[LNYH[-LK�TLH[�WYVJLZZPUN�\UP[��
� 2LSSVNN�0UKPH�PZ�THRPUN�SHYNL�PU]LZ[TLU[�PU�THU\MHJ[\YPUN�HUK�PZ�WSHUUPUN�[V�ZL[�\W�9 +�MHJPSP[`�ULHY�4\TIHP�
� 9L_HT�OHZ�ZLJ\YLK�SHUK�PU�:YP�*P[`�[V�I\PSK�H�IL]LYHNL�JHU�WSHU[�^P[O�HU�PUP[PHS�PU]LZ[TLU[�VM�9Z�����JYVYL��<:+����TPSSPVU�
� 4J+VUHSK»Z�0UKPH�WSHUZ�[V�KV\ISL�[OL�U\TILY�VM�V\[SL[Z�^P[O�H�9Z�����JYVYL��<:+�����4PSSPVU���PU]LZ[TLU[��*VTWHU`�PZ�SVVRPUN�[V�HKK�HUV[OLY�����YLZ[H\YHU[Z�I`������
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V]LY�WYL]PV\Z�`LHY
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�:V\YJL!�>VYSK�0U]LZ[TLU[�9LWVY[�������<5*;(+��50[P�(`VN���45,���4\S[PUH[PVUHS�,U[LYWYPZL(Note: Assumed rate of Rupee-Dollar is as follows: 1USD = Rs.65)
7YVÄSL!Food processing sector
03
September 2015 Source: APEDA, MoFPI, MPEDA, IBEF, Research & Markets – Global Food Container Market 2015-2019, PwC & FICCI
Global Scenario
The food processing industry is one of the largest manufacturing industries in the world.
• 2nd largest producer of Fruit and Vegetables • 2nd largest producer of Rice, Wheat and other Cereals • Largest Milk producing country; largest population of Cattle – 210 million • 5th largest Egg producer • 3rd Largest in Fisheries and 2nd in aquaculture • 52% of total land is cultivable as against global average of 11% • 2nd largest arable land – 161 million hectares. • Largest area under irrigation – 65.26 million hectares
Contribution of Indian Food Processing industry globally
The global food market is expected to reach USD 5.77 trillion by 2017, growing at a CAGR of 5.02%. India is home to over 37,000 registered Food Processing units
September 2015
Source: IBEF, Techsci, www.India Stat.com , MoFPI, DGCI&S
Indian Scenario
Food Processing industry in India is one of the largest industries in terms of production , consumption, export and expected growth.
60,378
58752 67508
82063
84522
2008-09 2009-10 2010-11 2011-12 2012-13
GDP , Food Processing industries in Rs Crore
By FY 2020: Indian Food & Retail market is projected
to touch USD 482 billion.
By FY 2013-14: India’s export of processed Food and related
products increased to USD 37.79 billion.
By FY 2022: Food Processing sector has the potential of
attracting USD 33 billion of investment in coming years and generate employment of
9 million person days.
September 2015
Sector contribution to Indian economy
Food Processing industry forms an important segment of the Indian economy in terms of contribution to GDP, employment and investment,
and will be a major driver in country’s growth in near future.
Source: MoFPI, ASI 2012-13
Indian Food processing industry accounts for 14 % of manufacturing GDP
Indian Food Processing industry accounts for 6 % of total industrial investments
Indian Food Processing industry accounts for 13
% of total exports
14% 13 % 6 %
Food Processing industry was the largest contributor of employment provision; it provided industrial employment to
~11.95% employed population
September 2015
14787
20427
31762
36212 37798
2009-10 2010-11 2011-12 2012-13 2013-14
Indian export trends
Value of exports has steadily increased with an average annual growth rate of 20.53 % for five years ending 2013-14. Values of processed food export was of the
order USD 37.79 billion and is project to reach around USD 100 billion by 2020
• Greater private sector participation with modern facilities and increasing focus on packaging and quality has led to increase in exports. • Indian subcontinent is strategically placed in the Indian ocean from where it enjoys geographical proximity to ASEAN, African and Middle East countries
Growth drivers for rising Food exports: CAGR – 20.53 %
Major export products from India: Marine products, Basmati Rice, Meat & Meat preparations, Rice other than Basmati, Cashews, Fresh Vegetables, Fresh Fruits.
*: All agricultural produce when exported undergo an element of processing. Hence all edible agricultural commodities exported are included in the export data.
Source: APEDA, MoFPI Annual Report
share of Processed Food exports in India’s total exports
12.1 %
September 2015
India
Major export destinations for India
Iran
Vietnam
USA
Saudi Arabia
Bangladesh
Malaysia
Indonesia
India Source: IBEF USDA Foreign Agriculture Services
Indian Ocean
Pacific Ocean
North Pacific Ocean
South Pacific Ocean
North Atlantic Ocean
South Atlantic Ocean
Arctic Ocean
India export growth over the past decade has been the highest with an average annual rate of more than 21 %
September 2015
USA tops the list in terms of investing in the Food Processing Sector.
70.17
102.71
278.89
188.67
170.21
401.46
3982.88
0 1000 2000 3000 4000 5000
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
FDI in USD million
Source: D&B, DIPP, Ministry of Commerce , IBEF, Official Website of Coca Cola & PepsiCo, Livemint E-Paper (July 15, 2015)
Company Indian subsidiary
Type of business
Starbucks Corporation
TATA Global Beverage Beverage
Kagome & Mitsui
Ruchi Soya Industries
Tomato Products
McCormick Kohinoor Foods Limited
Basmati & Food
Products
McCormick Eastern Condiments Seasonings
Dan Cake Phadnis Group Cake & Biscuits
Molson Coors Cobra India Brewing
Hershey Godrej Chocolates
Foreign Joint Venture partnerships in India
FDI inflow was higher in 2013-14 owning to two big
investment announcement by Coca Cola & PepsiCo in the consumer foods segment.
FDI growth trends
September 2015
Date Target company Acquiring company Type of business Deal value
(USD million)
2015 United Spirits Diageo Liquor 862.64
2014 Lactalis Group Tirumala Milk Products Milk Production 298.61
2014 Nashik Vintners Pvt Ltd Investor Group Wines & Brandy 39.27
Source: India Brand Equity Foundation Report
Major M&A activity in India
Major Private Equity funding in India
Date Company Investor company Type of business Deal value
(USD million)
2014 Bikaji Foods Linthouse Funds LLC
Manufacture wholesale snacks 14.9
2013 VKL Seasonings India Value Fund Seasonings 44.19
2013 Kohinoor Foods Al Dahra Hoardings Rice 21.17
Select major foreign investments in India
September 2015
Industry testimonials
PepsiCo on Sri city plant inauguration. “For more than 25 years , PepsiCo has been investing in the Indian economy and its people. As we move forward into our next 25 years, that commitment is stronger than ever”. - Indira Nooyi , Chairman & CEO,
PepsiCo
Dominos Pizza “ We are quickly approaching 1000 stores in India, that is now by store count our biggest market outside of the US.” - Patrick Doyle, CEO, Dominos Pizza Inc
Industry view
Godrej Agrovet limited, a subsidiary of Godrej industries limited “ The business is doing well and we think there is tremendous scope of growth. The value added milk business is growing very rapidly in our country. We certainly hope so and we certainly feel that there is tremendous opportunity.” - Mr. Adi Godrej, Chairman, Godrej Group
September 2015
Favourable demographics – India accounts for approximately 17.5 % of global population and is set to be world’s most populous country by 2028, India offers a large and growing domestic market.
Shift in consumption habits – With rising income of working middle class, consumption pattern of population has also changed with increasing expenditure on Dairy, Poultry and Consumer Foods thereby driving growth in these sectors.
Increasing disposable income – Consuming class households are likely to reach 137 million in 2025 with a collective disposable income of USD 1.5 trillion which would increase the demand for food products.
Government policy support – Government has identified Food Processing sector as a priority sector and has introduced several fiscal & procedural incentives to promote private sector participation.
Rising export opportunities – Spike in global demand as emerging markets grow at fast pace also proximity to key export destinations like Middle East and ASEAN.
Source: CII –RABO Equity Report , MoFPI
Emergence of retail sector – Rising penetration and growth of organised retail would further propel the growth of food products. (Global retail market ,2012 – USD 518 billion)
Growth drivers
September 2015
Key sub sectors
Fruits & Vegetables - Beverages, Juices, Concentrates, Pulps, Slices, Frozen & Dehydrated products, Chips etc.
Milk & Dairy - Whole Milk powder, Skimmed milk powder, Condensed milk, Ice cream, Butter and Ghee
Meat & Poultry - Frozen and packed food mainly in fresh form, Egg powder
Marine Products - Frozen & Canned products mainly in fresh form
Grain Processing - Flour, Bakeries, Biscuits, Starch, Glucose, Cornflakes, Malted foods,
Consumer Foods - Chocolates, Confectionery, Soft/Aerated beverages
September 2015 Source: MoFPI, APEDA, Ministry of Commerce Note: Assumed rate for rupee dollar is as follows: 1 USD = Rs. 65
Fruits & Vegetables
Fruit & Vegetable production in India
India is world’s 2nd largest producer of Fruits and Vegetables
India accounts for ~12.6 % and ~14 % share in world production of fruits
and vegetables respectively.
Export trends - India exported fruits and vegetables worth ~USD 1150 million which
comprised of fruits worth ~USD 426 million and vegetables worth ~USD 723 million . (2014-15)
Sector overview
Growth potential – APEDA estimates that processing level in this sector can grow
to 25% by 2025.
0
500000
1000000
1500000
2000000
2500000
2012-13 2013-14 2014-15
In T
ons
Fruits Vegetables
September 2015
Source: MoFPI & APEDA, CII & Mckinsey, AC Neilson and India Food Guide, Edelweiss
108 112 116 122
128 132
138 146
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
Dairy & Dairy products
India is world’s largest producer of milk and dairy products with 16.43 % of total milk
production in the world.
Milk production has witnessed steady growth between 2007-08 and 2014-15 from
107.94 MT to 146.31 MT in 2014-15
Export trends - India is a major exporter of dairy products; it exported dairy exports worth
USD 546.1 million during 2013-14. Saudi Arabia, Bangladesh, UAE, Egypt are
the top export destination
Sector overview
Growth potential – The total dairy market is projected to grow at a CAGR of 10-11% and
would touch USD 82 billion by 2016.
Milk production ( In Million Tons )
September 2015 Source: www.India Stat.com , APEDA
5556.24 6024.46302.4 6645 6973.07 7343.8
3.73
8.43
4.615.44
4.94 5.32
0123456789
0
1000
2000
3000
4000
5000
6000
7000
8000
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
4280 4566 4869 5514.3
5948.17 6235
6.76 6.68 6.64
13.25
7.87
4.82
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
0
1000
2000
3000
4000
5000
6000
7000
2008-092009-102010-112011-122012-132013-14
Meat & Poultry
India is 5th largest meat producer globally
Sector is mainly export driven with around 70 % of buffalo meat exported to Vietnam, Malaysia, Thailand,
Egypt and Saudi Arabia
India exported 1.49 million ton of buffalo meat worth USD 4304 million.(2014-15)
Sector overview
Total Poultry market size is estimated at USD 9.93 billion and has been growing at 7-8 %
Eggs and Broilers are leading the Growth in this segment with a growth rate of
16% and 20% respectively
Marginal export to European nations, almost all Indian poultry and egg production is
consumed within the country
Meat production ( In “000” ton)
Egg production ( In 10 million numbers )
September 2015
Source: MoFPI & MPEDA
7,12
7
7,61
6
7,85
3
8,23
1
8,66
6
9,04
0
9,57
7
10,0
72
0
2000
4000
6000
8000
10000
12000
Marine products
Total fish production during 2014-15 was estimated at 10.07 million ton
The sector contributes around 1.1% to overall GDP and around 5.15 per cent of Agri GDP
Marine exports aggregated to 0.98 million ton valued at USD 5007.70 million
Sector overview
Value addition of marine products and emphasis on export of products through setting up new units, capacity enhancement and diversifying current activities would be
the key to growth.
Fish production (In “000” tons)
September 2015
Source: Corporate Catalyst India Private Limited, www.IndiaStat.com
934
967
992
891
960
1053
1052
1063
142
148
146
147
182
171
183
193
758
786
807
808
869
949
935
958
0 200 400 600 800 1000 1200
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
Wheat Pulse Rice
Grain processing
India produced around 251 MT during 2014-15. On an average it produces more than 200
million tons of different food grain every year
India is the 2nd largest rice producer in the world with around 20 % global share
Primary milling of Rice, Wheat and Pulses are most important activities in food
grain processing
Sector overview
There are 10,000 Pulse mills in country with milling capacity of 14 million tons, milling
approximately 75 % of annual pulse production
Wheat, Pulse & Rice production (in lakh ton)
September 2015
Source: ASSOCHAM, Techsci Research, Yes Bank, APEDA
Organic farming is practiced in 12 states
in about 4.72 million hectares. In 2013-14, organic food production was approximately
1.24 million tons.
Growing awareness towards health
consciousness and rising disposable income of consumers would drive the growth in this sector.
Current demand is usually from Tier 1 cities
India exported 165262 MT of organic products belonging to 135 commodities
valuing at US$ 312 million (approximately INR 1900 crore).
Organic Food market is expected to grow at a significant CAGR of 19 %.
Organic Pulses and Food grains are t he main product in this sector.
Organic Food market will
touch USD 1 billion by 2020
Production Drivers
Exports Potential
Organic Food products
September 2015 Source: CARE Ratings: Changing consumer preference driving growth of ready to eat snack food products , IBEF
19
Packaged Foods has grown at a compounded annual growth rate (CAGR) of around 13% since 1998 till 2014 and expected to grow at a CAGR of 22% during 2014-2019.
Among the highest growing segment in India. Rising urbanization, expansion in hospitality segment and product innovation & marketing techniques shall be be the key to its growth.
Bakery products, Snacks, Beverages, Chocolates,
processed Fruits and Vegetables, branded
Flour, Dairy products, Tea/Coffee, Soft Drinks.
The sale of snack food category have grown more than six-fold from Rs.8,000 crore in 2004 to more than Rs.50,000 crore
in 2014. Major pl ayers in this segment are: • Pepsico India • Haldiram Foods • ITC Foods • Balaji Wafers • Bikaji Foods
International Ltd
Consumer Foods
September 2015
6 Critical Success Factors
6. Enabling Government
Policies
1. Preferred Location
2. Availability Of Raw Material
5. Presence of Industrial & Transport
Infrastructure
4. Availability of Employable
Work Force
3. Presence of Technical
Institutes
Enabling policies: � Major government policies
for providing a boost to sector growth
Presence of Industrial & Transport infrastructure � Industrial Corridor � Major Seaports for export of processed food products. � Major Airports
Availability of employable work-force: � Presence of employable
work force at preferred investment destinations in India
Preferred investment destinations: � Preferred locations in
India based on total number of registered food processing units.
Presence of Technical Education Institutes: � Major state and central
agricultural institutes which also offers courses in food processing.
Availability of raw material: � Leading states in production
of Fruits & Vegetables, Milk, Meat, Pulses, Food grains etc.,
� Leading states with cold storage and Fish processing facilities.
Availability of Factors of Production (FoPs)
September 2015
Legend Major State Number of Units
Andhra Pradesh
9359
Tamil Nadu 5186
Maharashtra 3113
Punjab 2784
Uttar Pradesh
2116
Karnataka 1979
Gujrat 1924
Source: ASI , MoFPI
Preferred investment destinations in India
September 2015
Major producer of Milk
Major producer of Fruits & Vegetables
Major producer of Meat
Legend
Major producer of Wheat
Major producer of Pulse
Major producer of Rice
Source: MoFPI, APEDA, www.IndiaStat.com
Availability of raw material
September 2015
Legend Major State
No of Units
Cold Storage Capacity
In MT
Uttar Pradesh
2176 1,36,33,039
Punjab 606 20,04,778
Gujrat 560 20,30,873
Maharashtra
540 7,06,302
West Bengal
502 59,01,925
Andhra Pradesh
404 15,77,828
Bihar 303 14,06,395
Source: MoFPI, www.indiastat.com
(Status as on 31.03.2014)
Veraval
Mumbai
Kochi Port
Visakhapatnam
Mangalore
Kolkata
Goa
Major fish processing centre
Infrastructure – Cold storage & Fish processing centre
September 2015
Haryana Chaudhary Charan Singh Haryana Agricultural University
Haryana National Institute of Food Technology Entrepreneurship and Management
Rajasthan: Maharana Pratap University of Agriculture & Technology, Udaipur
Gujrat: Anand Agricultural University, Anand
Karnataka: 1) University of Agricultural Sciences, GKVK, Bangalore 2) University of Agricultural Sciences, Dharwad
Punjab: Guru Angad Dev Veterinary and Animal Sciences, Ludhiana
Tamil Nadu Agricultural University, Coimbatore
Tamil Nadu Indian Institute of Crop ProcessingTechnology , Thanjavur
Telangana: Acharya N G Ranga Agricultural University, Hyderabad
Manipur: Central Agricultural University, Imphal
Uttar Pradesh: 1)Aligarh Muslim University, Aligarh 2) Banaras Hindu University Varanasi
Uttaranchal: Govind Ballabh Pant University of Agriculture, Pantnagar,
Himachal Pradesh: Ch Sarwan Kumar Krishi Vishwavidyalaya, Palampur Dr Yashwant Singh Parmar University of Horticulture & Forestry, Solan
Source: MoFPI
Presence of Technical Educational institutes
September 2015
Figures based on data from Ministry of Labour & Employment, India Stat and 2011 Population Census
*Employable population calculated on basis of unemployed above 15 years age according to Usual Principal and Subsidiary Status (PS+SS) approach
Punjab: Employable population: 0.63 million
Maharashtra: Employable population: 1.34 million
Karnataka: Employable population: 0.61 million
Andhra Pradesh: Employable population: 0.93 million
Tamil Nadu: Employable population: 1.44 million
Uttar Pradesh: Employable population: 3.98 million
Gujrat: Employable population: 0.24 million
Availability of employable population
September 2015
Amritsar – Kolkata Industrial Corridor
Delhi – Mumbai Industrial Corridor
Bengaluru Mumbai Economic Corridor
Chennai - Bengaluru –Industrial Corridor
Vizag - Chenai Industrial Corridor
International Airports Major Ports
Dedicated Freight Corridor
National Investment & Manufacturing Zones
Proposed Industrial Corridors
Influence region of proposed industrial corridors in India
Presence of Industrial & Transport infrastructure
September 2015
.
Source: APEDA Agri Exchange, Year 2014-15
Total value of exports from Sea Ports: USD
12.24 billon
Total value of exports from Airports: USD
429.62 million
Kandla Port
Mundra Port
Pipavav Port
Jawaharlal Nehru Port
Mumbai Airport
Marmagoa Port
Mangalore Port
Kochi Port
Kochi AirPort
Delhi Airport
Haldia Port
Vishakapatnam Port
Kakinada Port Krishnapatnam Port
Kattupalli Port
Chennai Airport
Bangalore Airport
Trivandrum Airport
Presence of Airports & Seaports catering to exports
September 2015
• Deduction for expenditure incurred on investment is allowed if this investment is wholly and exclusively for the purpose of setting cold chain facility, warehouse facility for storage of agricultural produce.
• Deduction of Tax from Profit – New units in the business of processing, preservation and packaging of fruits and vegetables are permitted to claim deduction from Income Tax. ( 100 % Tax Exemption for first 5 Years of Operation)
Income Tax
• Exemption of Service tax is allowed for the following services: Construction of original works pertaining to post harvest storage infrastructure including cold storage.
• Mechanized food grain handling systems. • Loading and Unloading, packaging, storage or warehousing of agricultural produce. • Transportation of agricultural produce and goods.
Service Tax
• Project Imports benefits to following projects: installation of mechanized food grain handling systems, cold storage and industrial projects for preservation, storage, horticulture, dairy, poultry, marine produce and meat.
Customs Duty
• Accessibility of adequate and affordable credit – Soft Loan is extended up to 95 % of total project cost for entities promoted by state governments.
• 100 % FDI allowed under automatic route.
FDI & Credit Availability
Source: MoFPI , Annual Report
Enabling policy initiatives
Investment Opportunities
04
September 2015
Inputs Production & procurement Storage Processing Retail
services
Technological and financial
support to farmers.
Contract farming
arrangement
Post harvest Infrastructure & Transportation: Warehouses, Cold Storage
Process automation and up gradation of existing Food Processing
facilities
Setup of organized retail
chains
Potential Investment opportunities
Enhanced productivity for
farmer and exposure to
greater markets
Better price for farmers and
abundant supply of raw material for industries
Reduction in wastage of perishaable
products
Improved productivity, quality
& profitability. customer loyalty in competitive market
Enhances efficiency across value chain by
benefitting farmers,
processors and consumers.
Benefits across Value Chain
Investment opportunities across value chain
September 2015
Mega Food Park scheme intends to facilitate establishment of an Integrated value chain with food processing at the core and supported by
forward and backward linkages.
Investment opportunities in Mega Food parks
Investment opportunities in core processing facilities: • Storage facilities for raw materials and finished products • Food processing equipment's • Contemporary plug & play sheds • Packaging facilities • Cold storage facilities • Bulk material handling equipment • Grading & sorting facility • Basic enabling infrastructure – Roads, Water storage & distribution system, Waste disposal facility, Effluent treatment plant, Captive Power plants
September 2015
2
4.7
12.8
0
2
4
6
8
10
12
14
2009 2013E 2017F
Cold Chain industry in India in USD billion
CAGR 23.3 %
CAGR 28.3 %
Source: India Cold Chain Expo, Reed, MoFPI, Yes Bank
Investment opportunities in Cold Chain logistics
Indian Cold Chain industry is expected to reach a market size of ~USD 13 billon in 2017.
Cold Chain logistics – snapshot • Key growth drivers include growth in organized retail and food services industry, government’s initiatives, rising export demand for processed and frozen foods. • India’s Cold Chain industry is still evolving, not very well organized and currently operating below capacity. ( Cold Chain gap of 29 million tons) • India offers great market potential for cold chain logistics solution provider including refrigerant transport. • Growing focus towards multi purpose cold storages.
September 2015
Temperature Controlled Vehicles market in India
27400 36000
51800
0
50
100
150
200
250
300
350
0
10000
20000
30000
40000
50000
60000
2009 2013E 2017F
US $ Million No of Units
17
29
47
0 2 4 6 8 10 12 14
0
10
20
30
40
50
2009 2013E 2017F
US $ Billion Million Tonnes
Temperature Controlled Warehouse market in India
Source: India Cold Chain Expo, Reed, MoFPI, Yes Bank
Investment opportunities in Cold Chain logistics
Potential areas of investment: • Controlled atmosphere/modified atmosphere storage • Pre cooling at farm. • Modern pack houses • Ripening chambers • Reefer technology. • Refrigerated transport solutions • Energy efficiency solutions
September 2015 Source: GIRACT Consultancy, ASSOCHAM, DIPP Annual Report 2014-15
Investment opportunities in Food Processing machinery
Food processing machinery is expected to grow at 15-20 % fueled by strong international and domestic demand for food products, industry’s focus on modernization & automation, and energy efficient processes.
Packaging equipment Growth in consumer food sector and consumer awareness towards the aesthetic appeal of the packaging would propel the growth of packaging machinery. Significant investment opportunities lies in – canning, dairy and food processing, specialty processing, frozen food, thermo processing.
Water & Air Pollution control equipment This sector has excellent growth potential as there is growing awareness regarding water & air pollution and stringent environmental control standards in processing industries. Categories of water pollution control equipment include waste water, drinking water and effluent treatment plants, settling chambers, bag filters, electrostatic precipitators, wet scrubbers etc.
Business & 9LN\SH[VY`�Environment in India
05
Reform Focus
Manufacturing push
Infradevelopment
Job Creationand inclusive
growth
Kick start of investment
cycle
Fiscal prudence and accountability
Non-adversarial tax regime
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Foreign Investment Framework
Evolution of foreign investment regulations
Governed by Foreign Exchange Management Act, 1999
Progressive liberalization in the policies
Foreign Direct Investment (‘FDI’) in India
Automatic route (No prior approval requirement): such as railway and
road infrastructure
Approval route (Prior Government approval required before setup): such as multi brand retail trading
FDI investment route
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No requirement of any prior regulatory approval
Filing an intimation with RBI in prescribed format within 30 days of
investment
Filing particulars of issue of shares within 30 days of issue of shares to
foreign investors
Prior Approval Route
Required approval from Govt. of India – Considered by Ministry of Finance, Foreign Investment
Promotion Board & Department of ,JVUVTPJ�(ɈHPYZ
Filing an intimation with RBI in prescribed format within 30 days of
investment
Filing particulars of issue of shares within 30 days of issue of shares to
foreign investors
Business presence in India – Form of entities
Foreign Company
Operates as a foreign company Establishes local presence
Liaison 6ɉJL
Project 6ɉJL
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Joint Ventures
Limited Liability
Partnership
Wholly Owned
Subsidiary
Key considerations for choosing
investment vehicle
� Commercial considerations� Regulatory framework(prior approval requirements for Chinese companies)� Tax considerations� Cost of operations
Knowledge Partner
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