Market Food

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India At A Glance

Total estimated investment opportunity of US $20 bn. by 2015

OVERVIEW

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

OPPORTUNITY

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.