The document discusses business opportunities in India's food processing sector. It notes that India has the largest food production globally and is among the top investment destinations. The food processing industry is estimated at $130 billion currently but there is significant potential for growth. The government has implemented several initiatives like the Pradhan Mantri Kisan Sampada Yojana and schemes for mega food parks and cold chain infrastructure to develop the sector further. However, challenges remain around infrastructure bottlenecks and deficiencies in the regulatory environment.

1. 1
Business opportunities in
food processing sector

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Fastest growing economy in the world
4th largest economy in terms of purchasing
power parity
1.32 billion consumers with increasing
demand for branded food
Among top 3 investment destinations
of the world
Availability of world class ports, logistics
& supply chain infrastructure
Rich demographic dividend with high focus
on skill development, availability of skilled
personnel
Strategic geographic location & proximity
to food importing nations favorable for
export of processed food.
Scope of food processing industry in India
Proactive Government policies and attractive fiscal incentives

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 India’s current food processing industry is estimated at USD 130 Billion
 With rising middle class having a considerable disposable income, the domestic market offers 1.25
billion opportunities for the sector.
 If the surplus production of cereals, fruits, vegetables, milk, fish, meat and poultry, etc. are processed
and marketed both inside and outside the country, there will be greater opportunities for the growth of
the sector.
 Due to rapid urbanization, food habits are changing rapidly towards value-added foods.

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 The change is accentuated by the fact that over 65% of India’s population is 35 or under, who are
inclined to have processed food.
 The recent quantum jump in the ease of doing business ranking of the World Bank (from 130 to
100) indicates the conducive business climate in the country and expected to attract foreign
investment into this sector.
 As per an estimate, around 40 percent of total food production is wasted due to the inadequate
facilities for transportation, storage, processing and marketing.
 If these deficiencies are addressed, there is a huge scope for the development of the sector.

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 The Ministry of food processing was set up in July 1988
 For the purpose of achieving growth of agro-processing industry in the country
 To give an impetus to development of food processing sector in the country.
 The ministry is concerned with formulation and implementation of the policies and plans for the food
processing industries within the overall national priorities and objectives.
 The ministry acts as,
 A catalyst for bringing in greater investment into this sector,
 Guiding and helping the industry, and
 Creating a conducive environment for healthy growth of the food processing industry.

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 The ministry continue to perform its assigned task and act as,
 A prime force for creating strong and effective food processing sector with a view to create
increased job opportunities in rural areas,
 enabling the farmers to reap benefit from modern technology,
 Create surplus for exports and stimulating demand for processed food.
 In the post liberalization era the role of the ministry has undergone substantial change.
MOFPI
Identified areas
For growth
 Meat, poultry , fisheries and dairy
 Fruits, vegetables, wine and beer
 Infrastructure subgroup on taxation and
finance
 R&D, HRD, labs and standards

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INDIA’s RANK IN WORLD
In production of Milk, Bananas,
Guavas, Papayas, Ginger, Okra,
Pulses & buffalo meat
1
In employment & Number
of factories in operation in
food processing sector
1
In Green peas, Potatoes, Tea,
Tomato, sesame
2 In total food production
globally
2

8. Food Processing Industries in India
Segment Components Level of Processing
Dairy Whole milk powder, skimmed milk powder, condensed milk, ice
cream, butter and ghee, cheese.
35%
Meat and Poultry Frozen and packed(mainly in fresh form), egg powder 20% buffalo meat, 6%
poultry
Fisheries Frozen and canned products mainly in fresh form. 8%
Fruits and Vegetables
Processing
Beverage, juice, concentrates, pulps, slices, frozen and dehydrated
products, potato wafers/chips and similar products.
2%
Consumer Foods Packaged food, aerated soft drinks, package drinking water and
alcoholic beverages
NA
Grains and Cereal Flour, bakeries, starch glucose, cornflakes, beers, etc NA
Source: MoFPI
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Infrastructure
Opportunities
 Cold chain logistics for perishables
 Mega Food Parks/ Agro processing clusters
 IQF facilities for frozen F&VP and ready to eat
 Modern pack houses for fruits and vegetables
Opportunities

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Technology and Equipment Suppliers
New technology in F&V processing, cold storage, reefers, IQF, pack houses, packaging
Technology for new value added products
Energy efficient technologies , Food testing labs
Processing Opportunities
New products – Fortified products, health food, traditional Indian food, convenience
food
New Packaging technology for enhanced shelf life, retaining Taste and texture, easy to
handle and space efficient

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Government Initiatives
The government has initiated the following measures for the
development of the food processing sector.

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In August 2017, the CCEA gave its nod for the PMKSY.
It is an umbrella scheme that incorporates various ongoing schemes like,
• Mega Food Parks
• Integrated Cold Chain
• Value Addition Infrastructure
• Food Safety and Quality Assurance Infrastructure
• Infrastructure for Agro-processing Clusters
• Creation of Backward and Forward Linkages and
• Creation and Expansion of Food Processing and Preservation Capacities.
Pradhan Mantri Kisan Sampada Yojana (PMKSY)

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Mega Food Parks Scheme
▪ It aims at providing a mechanism to link agricultural production to the market by bringing together
farmers, processors and retailers to maximize value addition, minimizing wastage, increasing
farmers’ income and creating employment opportunities particularly in the rural sector.

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• Cluster-based approach on Hub and Spoke model
• Minimum land requirement: 50 Acres
• Financial Assistance @ 50% of project cost in general
and 75% of project cost in difficult areas upto max Rs
50 crore ( Rs 5 billion)
• 42 Mega Food Parks are being set up in the country
with an investment of US $ 750 million
• 8 Mega Food Parks already operational.
• 1250 plots available in these Mega Food Park projects
Mega Food Parks Scheme

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• The objective of the scheme is to provide integrated cold chain and preservation infrastructure
facilities, without any break, from the farm gate to the consumer.
• It covers pre-cooling facilities at production sites, reefer vans, mobile cooling units as well as value
addition centers.
Cold Chain Infrastructure Investment
• 236 Integrated Cold Chain Projects are being set up (100 already completed) with an investment
of US $936 Million
• Grant @ 50% / 75% in general / difficult areas; Max. Rs10 Crs (Rs 1 billion)
Scheme of Cold Chain, Value Addition and
Preservation Infrastructure

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100 completed projects created cold chain capacity of:
• 77 million MT of cold storage/CA/ deep freeze.
• 229.25 MT/ hr IQF
• 10.68 million litre per day milk processing/
storage
• 1380 Reefer vehicles

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Opportunities in food retail
Government has announced 100% FDI in trading including e-commerce of food products produced and
manufactured in India.
Immense opportunities for all leading food processors and food retailers to set up shop in India.
• The Indian food and grocery market is the world’s
sixth largest, with retail contributing 70 per cent of
the sales.
• India placed second in retail potential in the 2016
Global Retail Development Index (GRDI)*
• Potential to attract as much as US $ 33 billion of
investment over the next 10 years.
• The online food ordering business in India is in its
nascent stage, but witnessing exponential growth

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Policy support and incentives
• 100% FDI through automatic route in food processing.
• 100% FDI under government approved route for trading, including through e-commerce, in respect of food
products manufactured / produced in India.
• Supportive regulatory framework- domestic food safety standards harmonized with international standards
• Direct Tax incentives on investment in food processing and cold chain infrastructure
• Project imports attract concessional rate of customs duty
• Introduction of Goods and Service Tax from July 2017
• Single point, destination based tax
• Create a common market and reduce compliance costs
• Assist in ease of doing business

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▪ Make In India: As part of the Make In India campaign, food processing sector was identified
as one of the 25 focus areas.
▪ Accordingly, the policy ecosystem has been revamped to attract financial, technological and
human resources into the sector.
▪ Allowing 100% FDI through automatic route into this sector is also a significant step in this
direction.
▪ Food Processing Fund: A special fund in the NABARD worth INR 2,000 crore, designated as
the Food Processing Fund, was set up in the FY 2014-15 for providing affordable credit to
food processing units in Mega & Designated Food Parks.

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▪ The Indian government has formulated an extensive promotion policy and taken a number of
initiatives to increase production productivity in food processing machinery manufacturing in India.
▪ Following are the reforms:
▪ Allowed 100 per cent FDI in food processing comprising sub-sectors like warehousing, storage and
transportation for cold chains, trading comprising e-commerce, with respect to food products
manufactured and / or produced in India
▪ Subsidies in cold storage, dairy business, MSME on procurement of plant and machineries.
▪ Income tax deduction in the specified businesses

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Challenges and Potential

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Supply and Demand Side Bottlenecks
• Small and dispersed marketable surplus due to fragmented holdings, low farm productivity due to lack of
mechanization, high seasonality, perishability and lack of proper intermediation (supply chain) result in lack of
availability of raw material. This in turn, impedes food processing and its exports.
• Demand of processed food is mainly restricted to urban areas of India.
Infrastructure Bottlenecks
• More than 30% of the produce from farm gate is lost due to inadequate cold chain infrastructure.
• The NITI Aayog cited a study that estimated annual post-harvest losses close to Rs 90,000 crore.
• Lack of all weather roads and connectivity make supply erratic.
Informalization in Food Processing Industry
• The food processing industry has a high concentration of unorganized segments, representing almost 75% across all
product categories. Thus, causes the inefficiencies in the existing production system.

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Deficiencies in the Regulatory Environment:
• There are numerous laws, under the jurisdiction of different ministries and departments, which govern food
safety and packaging.
• The multiplicity of legislation and administrative delays leads to contradictions in food safety specifications
and guidelines.
Low-Value Exports: Further, most processing in India can be classified as primary processing, which has lower
value-addition compared to secondary processing.
• Due to this, despite India being one of the largest producers of agricultural commodities in the world,
agricultural exports as a share of GDP are fairly low in India relative to the rest of the world.
• The same proportion is around 4% for Brazil, 7% for Argentina, 9% for Thailand, while for India it is just
2%