Introduction | India At A Glance |  Automobile | Food and AGRO | Roads | Metals | Power

Size

• India has a huge output of agricultural produce, with the 2nd largest arable land area in the world.
  • The largest producer of milk, pulses, sugarcane and tea in the world.
  • The 2nd largest producer of wheat, rice, fruits and vegetables in the world.
• Primary food processing constitutes around 60% of processed foods.
  • Processing of perishables is only about 6% of the Total output.
  • Only 2% of fruits and vegetables is processed compared to up to 80% in many developing countries.

Structure

• The Indian food processing industry has limited private sector participation and few plants with scale economies.
• Major international companies such as Nestle, Cargill, Unilever, PepsiCo and Cadbury are already present in India.

Policy

• 100% FDI is permitted under the automatic route for the Agro-processing industry
• The policy framework is being made more investment friendly with several steps taken and more underway, such as:
  • De-Licensing, establishment of food parks and exemption from Excise Duty.
  • Establishment of quality standards and a regulatory authority.
  • Plans to permit contract farming and amend Acts that restrict Marketing of agricultural produce to specified market yards(Agricultural Produce Marketing Committee Act or APMC Act)
  • Proposed enactment of a Unified Food Law

Outlook

• The domestic processed-food market is expected to triple in the next 10 years from about $100 billion in FY 04 to $310 billion in FY 15
• India aims to increase it's share of world trade in this sector from 1.7% currently ($7.5 billion) to 3% by 2015($20 billion)

Potential

• Factors that are likely to fuel rapid growth in demand for processed food are:
  • Changing lifestyles and growth in disposable income.
  • Rising double-income families and proportion of women in the workforce.
  • Decreasing prices of processed foods, making them more affordable thereby accessing a much larger market.
  • Rapid growth in organised retail(>20% p.a.) with a variety of retail formats being developed.
• Estimated investment of about $22 billion in the next 10 years
• Major investiment opportunities lie in processing milk, sugar, fruit, vegetables and marine products.An estimated 30% of new capacity can be for the export market.