Automobile Industry

INTRODUCTION Automotive industry is the key driver of any growing economy. It plays a pivotal role in country's rapid economic and industrial development. It caters to the requirement of equipment for basic industries like steel, non-ferrous metals, fertilisers, refineries, petrochemicals, shipping, textiles, plastics, glass, rubber, capital equipments, logistics, paper, cement, sugar, etc. It facilitates the improvement in various infrastructure facilities like power, rail and road transport. Due to its deep forward and backward linkages with almost every segment of the economy, the industry has a strong and positive multiplier effect and thus propels progress of a nation. The automotive industry comprises of the automobile and the auto component sectors. It includes passenger cars; light, medium and heavy commercial vehicles; multi-utility vehicles such as jeeps, scooters, motor-cycles, three wheelers, tractors, etc; and auto components like engine parts, drive and transmission parts, suspension and braking parts , electricals, body and chassis parts; etc. In India, automotive is one of the largest industries showing impressive growth over the years and has been significantly making increasing contribution to overall industrial development in the country. Presently, India is the world's second largest manufacturer of two wheelers, fifth largest manufacturer of commercial vehicles as well as largest manufacturer of tractors. It is the fourth largest passenger car market in Asia as well as a home to the largest motor cycle manufacturer. The installed capacity of the automobile sector has been 9,540,000 vehicles, comprising 1,590,000 four wheelers (including passenger cars) and 7,950,000 two and three wheelers. The sector has shown great advances in terms of development, spread, absorption of newer technologies and flexibility in the wake of changing business scenario. The Indian automotive industry has made rapid strides since delicensing and opening up of the sector in 1991. It has witnessed the entry of several new manufacturers with the state-of-art technology, thus replacing the monopoly of few manufacturers. At present, there are 15 manufacturers of passenger cars and multi-utility vehicles, 9 manufacturers of commercial vehicles, 16 of two/ three wheelers and 14 of tractor, besides 5 manufacturers of engines. The norms for foreign investment and import of technology have also been liberalised over the years for manufacture of vehicles. At present, 100% foreign direct investment (FDI) is permissible under the automatic route in this sector, including passenger car segment. The import of technology for technology upgradation on royalty payment of 5% without any duration limit and lump sum payment of USD 2 million is also allowed under automatic route in this sector. The Indian automotive industry has already attained a turnover of Rs. 1,65,000 crore (34 billion USD) and has provided direct and indirect employment to 1.31 crore people in the country. The growth of Indian middle class, with increasing purchasing power, along with strong macro-economic fundamentals have attracted the major auto manufacturers to Indian market. The market linked exchange rate, well established financial market, stable policy governance work and availability of trained manpower have also shifted new capacities

and flow of capital to the auto industry of India. All these have not only enhanced competition in auto companies and resulted in multiple choices for Indian consumers at competitive costs, but have also ensured a remarkable improvement in the industry's productivity, which is one of the highest in Indian manufacturing sector. The Department of Heavy Industry, under the Ministry of Heavy Industries and Public Enterprises, is the main agency in India for promoting the growth and development of the automotive industry. The department assists the industry in achievement of its expansion plans through policy initiatives, suitable interventions for restructuring of tariffs and trade, promotion of technological collaboration and up-gradation as well as research and development. The department is also concerned with the development of the heavy engineering industry, machine tools industry, heavy electrical industry, industrial machinery, etc. The automobile sector recorded growth of 13.56% in 2006-07. During the year 2007-08 (April-December), the industry decelerated at 3.49%. The automobile exports crossed the US$ 1 billion mark in 2003-04 and increased to US$ 2.76 billion in 2006-07. The industry exported 15% of its passenger car production in 2006-07, 10% of commercial vehicles production, 26% three wheelers and 7% two wheelers. Similarly, during the year 2006-07, the auto component industry continued its high growth path and emerged as one of the fastest growing sector in Indian engineering industry by clocking 21% growth in output during the year. This industry crossed a total turnover of over US $ 15 billion (Rs. 64,500 crore), with exports of US $ 2.9 billion (Rs. 12,643 crore) during the year. Investment in the industry also grew by over Rs. 4500 crore during the year as the industry continued to invest in capacity enhancements and new greenfield sites to cope with the increasing demand. The auto component industrys export growth was 15% in 2006-07. While, the total imports was US $ 3.3 billions (Rs. 14,644 crore). On the quality and productivity front, auto component industry maintained its leadership with more than 95% companies being certified as per the ISO 9000 system standards and more than 70% of the companies are certified as per the ISO/TS 16949 standards. It has also the distinction of having the maximum number of 11 Deming award winning companies. In order to further accelerate and sustain advancements in the auto sector, the department has undertaken several policy measures and incentives. The most important being the announcement of the 'Auto Policy' of 2002, which aims to establish a globally competitive automotive industry in India and double its contribution to the economy by 2010. The policy seeks to set out the direction of growth for the sector and promote R&D therein so as to ensure continuous technology upgradation as well as building up of better designing capacities. It emphasizes on low emission fuel auto technologies and availability of appropriate auto fuels in order to take auto manufacturing to a selfsustaining level. OBJECTIVE OF AUTO POLICY Exalt the sector as a lever of industrial growth and employment and to achieve a high degree of value addition in the country

Emerge as a global source for auto components Establish an international hub for manufacturing small, affordable passenger cars and a key center for manufacturing tractors and two-wheelers in the world Ensure a balanced transition to open trade at a minimal risk to the Indian economy and local industry Conduce incessant modernization of the industry and facilitate indigenous design, research and development Steer India's software industry into automotive technology Assist development of vehicles propelled by alternate energy sources

Development of domestic safety and environmental standards at par with international standards. Another milestone in this field has been the launching of the National Automotive Testing and R &D Infrastructure Project (NATRIP) which aims to create core global competencies in automotive sector and facilitate its integration with the world economy. It seeks to develop 'state-of -the- art' testing, validation and R& D infrastructure in the country with a view to support the growth and development effort of the automotive industry to reach international levels. NATRIP envisages setting up of world-class and homologation facilities in India with a total investment of Rs.1,718 crore within the three automotive hubs of the country. These are:- Manesar in Northern India; Chennai in Southern India; and Pune and Ahmednagar in Western India. The project largely aims at:Creating critically needed automotive testing and validation infrastructure to enable the Government to usher in global vehicular safety, emission and performance standards Deepening of manufacturing in India by achieving high degree of value addition and enhancing employment potential in the country

Facilitating convergence of India's strengths in IT and electronics with automotive engineering Enhancing India's global outreach in this sector by facilitating development and mass production of high technology driven, affordable and globally acceptable automotive products and by de-bottlenecking their exports and Removing the crippling absence of basic product testing, validation and development infrastructure for automotive industry.

Besides, the announcement of 'Automotive Mission Plan' for the period of 2006-2016 is a major step taken to make India a global automotive hub. The Mission Plan aims to make India emerge as the destination of choice in the world for design and manufacture of automobiles and auto components, with output reaching a level of US$ 145 billion (accounting for more than 10% of the GDP) and providing additional employment to 25 million people by 2016. It envisages increase in production of automotive industry from the current level of Rs.169000 crore to reach Rs.600000 crore by 2016. The Mission seeks to oversee the development of the automotive industry, that is, the present scenario of the sector, its broad role in the growth of national economy, its linkages with other key facets of the economy as well as its future growth prospects. This is involved in improving the automobiles in the Indian domestic market, providing world class facilities of automotive testing and certification as well as ensuring a healthy competition among the manufacturers at a level playing field. The future challenges for the Indian auto industry in achieving the targets defined in the Automotive Mission Plan would primarily consist of developing a supply base in terms of technical and human capabilities, achieving economies of scale and lowering manufacturing costs, as well as overcoming infrastructural bottlenecks. It also involves stimulating domestic demand and exploiting export and international business opportunities. In all these, the role of the Government is of facilitating infrastructure creation, promoting the countrys capabilities, creating a favourable and predictable business environment, attracting investments and promoting R&D. While, the role of industry is primarily of designing and manufacturing products of world-class quality standards, establishing cost competitiveness, improving productivity of both labour and capital, achieving scale and R & D enhancing capabilities as well as showcasing Indias products in potential markets. All such initiatives indicate that the Indian automotive industry has been emerging as a sunrise sector of the economy. It is not only meeting the growing domestic demands, but also gradually increasing its penetration in the international markets. It has been continuously restructuring itself and absorbing newer technologies in order to align itself to the global developments and realize its potentialities. Endowed with several advantages like low cost and high skill manpower; globally competitive auto-ancillary

industry; established testing and R & D centres; production of steel at lowest cost; etc., the industry provide immense investment opportunities. This has instilled confidence in auto manufacturers to face international competition as well as improve quality standards of vehicles with safety norms in the wake of rapidly increasing traffic. Various policy incentives including time bound implementation of Automotive Mission Plan together with establishment of world class testing, homologation and certification facilities would ensure Indian automotive industry a distinct edge amongst the newly emerging automotive destinations of the world.

Drugs and Pharmaceuticals

Drugs and pharmaceutical industry plays a vital role in the economic development of a nation. It is one of the largest and most advanced sectors in the world, acting as a source for various drugs, medicines and their intermediates as well as other pharmaceutical formulations. Being the intense knowledge-driven industry, it offers innumerable business opportunities for the investors/ corporates the world over. The existence of welldefined and strong pharmaceutical industry is important for promoting and sustaining research and developmental (R&D) efforts and initiatives in an economy as well as making available the quality medicines to all at affordable prices. That is, it is essential to improve the health status of the individuals as well as the society as a whole, so that positive contributions could be made to the economic growth and regional development of a country. The Indian drugs and pharmaceutical industry, over the years, has shown tremendous progress in terms of infrastructure development, technology base creation as well as product usage. On the global platform, India holds fourth position in terms of volume and thirteenth position in terms of value of production in pharmaceuticals. The pharmaceutical industry has been producing bulk drugs belonging to all major therapeutic groups requiring complicated manufacturing processes as well as a wide range of pharma machinery and equipments. It has also developed excellent 'good manufacturing practices' (GMP) compliant facilities for the production of different dosage forms. Besides, the amendment to the Patents Act, 1970 [enactment of Patents (Amendment) Act, 2005], has opened up new avenues for the sector. The new patent regime has ushered in the era of product patents for the pharmaceutical sector, in line with the obligations under the World Trade Organisation (WTO) and Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement. As a result, the Indian pharmaceutical industry has become self-reliant in several areas and has developed a more sound and technologically advanced R&D segment. The industry offers several opportunities for investments and trade owing to the following advantageous features:-

Self-reliance displayed by the production of 70 per cent of bulk drugs and almost the entire requirement of formulations within the country; Low cost of production of quality bulk drugs and formulations Low R&D costs Strong scientific, innovative and technical manpower Excellent and world-class national laboratories specialising in process development and development of cost effective technologies Increasing balance of trade in pharma sector Efficient and cost effective source for procuring generic drugs, especially the drugs going off patent in the next few years Excellent centre for clinical trials in view of the diversity in population Fast growing biotech industry which has great potential in the international market Apart from its strengths in manufacturing and exporting allopathic medicines, the systems of medicines like Ayurveda, Unani, Siddha, Yoga, Naturopathy and Homeopathy are also prevalent in the country.

Driven by all such factors, India has been recognized as one of the leading global players in pharmaceuticals. The annual turnover of the industry is estimated to be about US $ 17 billion (over Rs.68,000 crores) during 2006-07. Indian exports are destined to more than 200 countries around the globe including highly regulated markets of US, Europe, Japan and Australia. The value of exports of drugs and pharmaceuticals has increased to Rs. 24,942 crores in 2006- 07 from around Rs. 22,216 crores in 2005-06. While, the imports of medicinal and pharmaceutical products have been around Rs.5867.3 crores (provisional) in the year 2006-07. It is estimated that by the year 2010, the industry has the potential to achieve over Rs. 1,00,000 crore in formulations and bulk drug production. Moreover, increasing number of Indian pharmaceutical companies have been getting international regulatory approvals for their plants from agencies like USFDA (USA), MHRA (UK), TGA (Australia), MCC (South Africa), Health Canada, etc. India has the largest number of USFDA approved plants for generic manufacture. Leading Indian companies are now seeking more Abbreviated New Drug Approvals (ANDAs) in USA in specialized segments like anti infectives, cardiovasculars and central nervous system groups. The concerned authority in India is the Department of Chemicals and Petro-Chemicals, under the Ministry of Chemicals and Fertilizers, which is responsible for planning, developing and regulating the drugs and pharmaceuticals industry. The Department seeks to ensure abundant supply of good quality essential pharmaceuticals/ drugs for mass consumption and at reasonable prices within the country. It aims to formulate and implement policies and programming of the chemicals, petrochemicals and drugs and pharmaceutical sectors in the economy. The major activities handled in the Pharmaceutical division of the Department relate to the development of the pharmaceutical industry, that is, its production, exports, imports, R&D, pricing, duty matters, etc. There is a 'Export Promotion Cell' in the division which

acts as a nodal agency in the matters related to export of pharmaceuticals. The Cell collects statistical data on export and import of pharmaceuticals in the country as well as undertakes promotional activities for the acceleration of their exports. There is an attached office of the Division, known as 'National Pharmaceutical Pricing Authority (NPPA)', which looks after price fixation/revision of pharmaceutical and other related matters. That is, it aims to fix/ revise the prices of controlled bulk drugs and formulations as well as enforce prices and availability of the medicines in the country. It also monitors the prices of decontrolled drugs and formulations in order to keep them at reasonable levels and oversees the implementation of various provisions of the Drug Prices Control Order 1995. This order has been issued by the Government of India under Section 3 of Essential Commodities Act, 1955 for regulating the prices of drugs. It includes the list of price controlled drugs, procedures for fixation of prices of drugs, method of implementation of prices fixed by Government, penalties for contravention of provisions, etc. Broadly, the functions of NPPA are to: Implement and enforce the provisions of the Drugs (Prices Control) Order in accordance with the powers delegated to it Deal with all legal matters arising out of the decisions of the Authority Monitor the availability of drugs, identify shortages, if any, and to take remedial steps Collect/ maintain data on production, exports and imports, market share of individual companies, profitability of companies, etc. for bulk drugs and formulations Undertake and/ or sponsor relevant studies in respect of pricing of drugs/ pharmaceuticals Recruit/ appoint the officers and other staff members of the Authority, as per rules and procedures laid down by the Government Render advice to the Central Government on changes/ revisions in the drug policy and Render assistance to the Central Government in the parliamentary matters relating to the drug pricing. There are five public sector undertakings (PSUs) in the pharmaceutical sector, namely:Indian Drugs and Pharmaceuticals Ltd. (IDPL) Hindustan Antibiotics Ltd. (HAL) Bengal Chemicals and Pharmaceuticals Ltd. (BCPL) Bengal Immunity Ltd. (BIL) Smith Stanisteet Pharmaceuticals Ltd.(SSPL)

With liberalization, globalisation and new obligations undertaken by India under the WTO Agreements, the drug and pharmaceutical industry in the country has been facing

many new challenges. Accordingly, the Department has undertaken several policy initiatives in order to improve R&D conditions in the industry. The major policy being the Drug Policy, which has been announced and modified, from time to time, with the aim of achieving the following objectives: Ensuring abundant availability, at reasonable prices, of essential life saving and prophylactic medicines of good quality Strengthening the system of quality control over drug and pharmaceutical production and distribution as well as promoting their rational use Encouraging R&D in the pharmaceutical sector in a manner compatible with the countrys needs and with particular focus on diseases endemic or relevant to India Strengthening the indigenous capability for cost effective quality production and exports of pharmaceuticals by reducing barriers to trade in the sector and Creating an environment conducive to channelising new investments into the pharmaceutical industry and to introducing new technologies and drugs.

Similarly, in order to achieve such objectives, another policy has also been framed namely the 'Pharmaceutical Policy' in 2002, which aims to bring new incentives into the sector beyond those enumerated in the drug Policy, so that policy inputs are directed more towards promoting accelerated growth of the pharmaceutical industry and towards making it more internationally competitive. Some of the salient features of this policy are: Abolition of Industrial licensing for all bulk drugs cleared by Drug Controller General (India), all their intermediates and formulations, subject to stipulations laid down from time to time in the Industrial Policy, except in the cases of:1. Bulk drugs produced by the use of recombinant DNA technology 2. Bulk drugs requiring in-vivo use of nucleic acids as the active principles and 3. Specific cell/tissue targetted formulations. Permission of foreign investment upto 100 per cent, subject to stipulations laid down from time to time in the Industrial Policy, through the automatic route in the case of all bulk drugs cleared by Drug Controller General (India), all their intermediates and formulations, except those referred in the above point, kept under industrial licensing. Availability of automatic approval for 'Foreign Technology Agreements' in the case of all bulk drugs cleared by Drug Controller General (India), all their intermediates and formulations, except those referred in the first point, kept under industrial licensing for which a special procedure prescribed by the Government would be followed. Measures to give impetus to R&D in the drugs sector are as follows:-

1. Constitution of the Pharmaceutical Research and Development Support Fund (PRDSF) and the Drug Development Promotion Board (DDPB)

2. A manufacturer producing a new drug patented under the Indian Patent Act, 1970, and not produced elsewhere, if developed through indigenous R&D, would be eligible for exemption from price control in respect of that drug for a period of 15 years from the date of the commencement of its commercial production in the country 3. A manufacturer producing a drug in the country by a process developed through indigenous R&D and patented under the Indian Patent Act, 1970, would be eligible for exemption from price control in respect of that drug till the expiry of the patent from the date of the commencement of its commercial production in the country by the new patented process etc. The system of the price control would be operated through a single list of price controlled drugs selected on the basis of criteria as laid down in the policy and formulations based thereon, with a Maximum Allowable Post-manufacturing Expenses (MAPE) of 100% for indigenous formulations and margin upto 50% for imported formulations. Ceiling prices may be fixed for any formulation, from time to time, and it would be obligatory for all, including small scale units or those marketing under generic name, to follow the price so fixed. Setting up of the 'National Institute of Pharmaceutical Education and Research (NIPER)' as an institute of national importance in order to achieve excellence in pharmaceutical sciences and technologies, education and training. Besides tackling problems of human resources development for academia and the indigenous pharmaceutical industry, the institute seeks to make efforts to maximize collaborative research with the industry and other technical institutes in the area of drug discovery and pharma technology development.

Due to various policy measures taken by the Government in recent past, research and development (R&D) activities in this sector has not only increased quantitatively but also qualitatively. Presently, atleast 10 leading Indian pharma companies are into new drug discovery and some of them have increased their R&D spending by over 5 per cent of their respective sales turnover. There are other efforts like providing fiscal incentives to R&D units in pharma sector as well as streamlining procedures related to development of new drug molecules, clinical research and new drug delivery systems. As a result, India is emerging as an alliance and outsourcing destination of choice for global pharma companies across the value chain. Hence, the drugs and pharmaceutical is one of the most diversified of all the industrial sectors. The accumulated knowledge of traditional medicinal system and large biodiversity of India offers great advantage to the drug industry. The rapidly changing economic, trade and intellectual property scenario, nationally and internationally, poses many challenges to it, including the challenge of becoming leaders and competitors globally. This necessitates a shift in the approach of the industry, that is, moving away from manufacturing only known drugs to discovering and commercialising new molecules through innovative process routes. It would mean that the Indian pharma industry has to focus more on R&D, so as to enable India to maintain its status in the world pharma market and move ahead to become a global leader. In other words, the

strength of the industry lies in leveraging the countrys power in organic synthesis and process engineering as well as developing cost-effective technologies in the shortest possible time for drug intermediates and bulk activities, without compromising on quality.

Telecommunications
Telecommunications is widely recognised as the prime support services needed for rapid growth and modernization of various sectors of the economy. Development of sound telecom infrastructure plays an important role in meeting the diverse needs of people and improving their quality of life. Telecommunication covers a very wide variety of services such as sound & television broadcasting; space communications; aeronautical and maritime mobile communications; meteorological aids and services; radio amateurs; as well as the public telecommunications services. Provision of telecom services to the rural areas has been recognised as another thrust area to attain the goal of accelerated economic development. India's telecommunication network is the third largest in the world and the second largest among the emerging economies of Asia. It is also amongst the fastest growing telecom markets in the world. Our telecom industry manufactures a complete range of telecom equipments using the state of the art technologies designed specifically to match the diverse terrain and climatic conditions. Production of telecom equipment has increased from Rs.17,833 crore in 2005-06 to Rs.23,656 crore in 2006-07. As a result, India is expected to become a manufacturing hub for telecom equipment. Tele-density, the most important factor in determining the penetration of telephone lines in a country has been increasing over the years, from 16.83 per cent in December 2006 to 23.89 per cent in December 2007. The total number of telephones has increased from 189.92 million as on December 31, 2006 to 272.87 million as on December 31, 2007. The Department of Telecommunications , under the Ministry of Communications and Information Technology, is the concerned authority for all matters relating to telecom. The department is responsible for formulating the developmental policies; granting licenses for various telecom services ; promoting standardization, research and development as well as private investment in the sector. Foreign Direct Investment (FDI) was permitted in the telecom sector beginning with the telecom manufacturing segment in 1991. For this sector, FDI includes investment made by Non-Resident Indians (NRIs), Overseas Corporate Bodies (OCBs), Foreign Entities, Foreign Institutional Investors (FIIs), American Depository Receipts (ADRs)/Global Depository Receipts (GDRs), etc. Telecommunications is the third largest recipient of FDI after services (financial and non-financial) and computer hardware and software which attract 20.43 per cent and 15.21 per cent respectively. With the opening up of the sector for private players, an independent regulatory body called as the Telecom Regulatory Authority of India (TRAI) was established in 1997,

under the Telecom Regulatory Authority of India Act, 1997 with the aim of providing an adequate framework of safeguards for ensuring fair and healthy competition. The Telecom Regulatory Authority of India Act, 1997 was amended by the Telecom Regulatory Authority of India (Amendment) Act, 2000 . By the Amendment Act, an Appellate Tribunal known as the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) has been set up to protect the interests of service providers and consumers of the telecom sector and thus ensure an orderly growth of the sector. It has been empowered to adjudicate any dispute between a licensor and a licensee; between two or more service providers; between a service provider and a group of consumers; and to hear and dispose of appeals against any direction, decision or order of TRAI. Given the existing telecommunication set up, the future vision for the sector envisages a total of 650 million telephone connections (including 66 million wired and 584 million wireless connections) by the end of 2012; concurrent provision of 200 million rural telephone connections, which translates into a rural tele-density of 25 per cent; availability of broadband connectivity on demand, without any limitation on the speed; as well as increase in internet and broad-band subscribers to 40 million and 20 million, respectively, by 2010. Hence, India offers immense opportunities for telecom service operators, infrastructure vendors, manufacturers and associated services companies.

Food Processing
Food processing sector is indispensable for overall development of an economy as it provides a vital linkage and synergy between the agriculture and industry. It helps to diversify and commercialise farming; enhance income of farmers; create markets for export of agro foods as well as generate greater employment opportunities. Through the presence of such industries, a wider range of food products could be sold and distributed to the distant locations. The term 'food processing' is mainly defined as a process of value addition to the agricultural or horticultural produce by various methods like grading, sorting and packaging. In other words, it is a technique of manufacturing and preserving food substances in an effective manner with a view to enhance their shelf life; improve quality as well as make them functionally more useful. It covers spectrum of products from sub-sectors comprising agriculture, horticulture, plantation, animal husbandry and fisheries. The Indian food processing industry is one of the largest in the world in terms of production, consumption, export and growth prospects. Earlier, food processing was largely confined to the food preservation, packaging and transportation, which mainly involved salting, curdling, drying, pickling, etc. However, over the years, with emerging new markets and technologies, the sector has widened its scope. It has started producing many new items like ready-to-eat food, beverages, processed and frozen fruit and vegetable products, marine and meat products, etc. It also include establishment of postharvest infrastructure for processing of various food items like cold storage facilities, food parks, packaging centres, value added centres, irradiation facilities and modernised abattoir.

The liberalisation of the Indian economy and world trade as well as rising consumer prosperity has thrown up new opportunities for diversification in the food processing sector and opened up new avenues for growth. Demand for processed and convenience food is increasing constantly because of urbanisation, changing life-style and food habits of the people. Accordingly, the Indian consumers are being offered newer high quality food products made by using the latest state-of-the-art technology. India has a strong agricultural production base with diverse agro-climatic conditions and arable land of 184 million hectares. It is one of the major food producers in the world and has abundant availability of wide variety of crops, fruits, vegetables, flowers, live-stock and seafood. As per the available information, it produces annually 90 million tonnes of milk (highest in the world); 150 million tonnes of fruits and vegetables (second largest); 485 million livestock (largest); 204 million tonnes of food grains (third largest); 6.3 million tonnes of fish (third largest); 489 million poultry and 45,200 million eggs. As a result, Indian food processing industry has become an attractive destination for investors the world over. The total inflow of foreign direct investment (FDI), year-wise, in food processing sector during the period 2000-01 to 2007-08 (upto November 2007) is as follows: Year 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 (upto November 2007) Grand Total Foreign Direct Investment (Rs. in Crores) 0198.13 1036.12 0176.53 0510.85 0174.08 0182.94 0441.00 0061.63 2781.28

(Source: Annual Report 2007-08, Ministry of Food Processing Industries) Though the private, public and co-operative sectors are to play their rightful role in the progress of the industry, the 'Ministry of Food Processing Industries' is the nodal agency for developing a strong and vibrant food processing sector in the country. It acts as a catalyst and facilitator for attracting domestic and foreign investments towards developing large integrated processing capacities; providing technical guidance and advice to the industry; as well as creating conducive environment for its growth. It covers the products of fruits and vegetables, dairy, milk, poultry, fishery, consumer food, grains, non-molasses based alcoholic drinks, aerated water and soft drinks. The objectives of the Ministry are to:

Utilize and make value addition to agricultural produce for enhancement of income of farmers.

Minimize wastage at all stages in the food processing chain by the development of infrastructure for storage, transportation and processing of agro-food produce. Induct modern technology into the sector from both domestic and external sources. Use efficiently agricultural residues and by-products of the primary agricultural produce as well as of the processed industry. Encourage R&D in food processing for product and process development and improved packaging. Provide policy support, promotional initiatives and physical facilities to promote value added exports. Promote rationalisation of tariffs and duties relating to food processing sector. Create the critical infrastructure to fill the gaps in the supply chain from farm to consumer.

The Government has accorded the sector a high priority and has undertaken several policy measures and initiatives. It has offered a number of fiscal reliefs and incentives as well as approved a large number of joint ventures, foreign collaborations, industrial licenses and 100% export oriented units (EOU) proposals in different food processing areas. Some of the important steps in this direction are:- (i) Most of the processed food items have been exempted from the purview of licensing under the Industries (Development & Regulation) Act, 1951, except items reserved for small-scale sector and alcoholic beverages; (ii) Food processing industries are included in the list of priority sector for bank lending in order to ensure easy availability of credit to them; (iii) Automatic approval for foreign equity upto 100% is available for most of the processed food items, excepting alcohol and beer and those reserved for small scale sector (subject to certain conditions); (iv) In budget 2007-08, excise duty has been waived on all kinds of food mixes including instant mixes, Soya Bari (food supplements) and ready to eat packaged goods as well as on biscuits; (v) Customs duty on sunflower oil (crude) reduced from 65% to 50% and on sunflower oil (refined) reduced from 75% to 60%; (vi) Special additional duty of 4% has been waived in the case of refined edible oil; (vii) Custom duty on food processing machinery reduced from 7.5% to 5%; etc.

Fruit Products Order (FPO), 1955 - promulgated under section 3 of the Essential Commodities Act, 1955, it provides for regulation of sanitary and hygienic conditions in manufacture of fruit and vegetable products. It aims to ensure that hygienic and good quality products are manufactured and sold. It is implemented by the Ministry through the Directorate of Fruit and Vegetable Preservation. The Directorate has five regional offices located at Delhi, Mumbai, Kolkata, Chennai and Guwahati as well as a sub-office at Lucknow. The licensing under this Order laid down the minimum requirement for the following items, namely:- (i) sanitary and hygienic conditions of premises, surrounding and personnel; (ii) water to be used for processing; (iii) machinery and equipment; and (iv) products specifications. In addition, maximum limits of preservatives, additives and contaminants have also been specified for various products. To keep pace with recent developments in the technologies and to harmonize the

FPO standards with PFA, Codex, EU, FDA and other international food standards, the Ministry has taken the initiative to review the existing FPO, 1955 which aims to suggest amendment in the fruit and vegetable products standards based on the scientific development and modernization of the fruits and vegetables processing industries and the rules governing them.

Meat Food Products Order (MFPO), 1973 - promulgated under section 3 of the Essential Commodities Act, 1955 , it aims to ensure supply of wholesome meat food products to the consumers. It deals with quality control of meat food products from processing to finished product by way of ante-mortem and postmortem inspection of meat animals so as to ensure hygienic conditions of processing of meat food products. It was earlier implemented by Directorate of Marketing and Inspection (DMI), but its administration has been transferred to the Ministry. The sanitary, hygienic, packing, marking and labelling requirements are specified in separate Schedules of the Order. To keep pace with recent developments in the manufacture of meat food products and to harmonize the MFPO standards with PFA, Codex, EU, FDA and other international food standards, the Ministry has taken the initiative to review the existing MFPO, 1973 which aims to suggest amendment in the meat products standards based on the scientific development and modernization of the meat and meat processing industries and the rules governing them. Food Safety and Standards Act, 2006 (Integrated Food Law) - has been enacted to:I. Consolidate the laws relating to food II. Establish the Food Safety and Standards Authority of India for laying down science based standards for articles of food III. Regulate manufacture, storage, distribution, sale and import of food articles with a view to ensure availability of safe and wholesome food for human consumption and IV. Pool infrastructure, manpower and testing facilities for better standard fixation and enforcement through their proper re-deployment. That is, Integrated food law aims to achieve a high degree of consumer confidence in the quality and safety of produced, processed, sold or exported food. It seeks to overcome problems like multiplicity of food laws and standard setting and enforcement agencies which creates confusion in the minds of consumers, traders, investors and manufacturers.

As a result of such incentives and measures, the industry has witnessed fast growth in most of its segments. The growth and development of some of the sub-sectors may be enumerated as follows:

The installed capacity of fruits and vegetables processing sector has increased from Rs.11.08 lakh tonnes as on 1st January 1993 to Rs.24.74 lakh tonnes on 1st January 2007 and Rs.26.80 lakh tonnes on 1st January 2008. The utilization of fruits and vegetables for processing is estimated to be around 2.20 per cent of the

total production. Over the last few years, there has been a positive growth in ready to serve beverages, fruit juices and pulps, dehydrated and frozen fruits and vegetable products, tomato products, pickles, convenience veg-spice pastes, processed mushrooms and curried vegetables. During 2007-08 (upto January 2008), the Ministry has released financial assistance of Rs.13.76 crores to 70 fruits and vegetables processing units (excluding North East States, Himachal Pradesh, Jammu and Kashmir and Uttarakhand) in the form of 1st/ 2nd instalment.

In meat and meat processing sector, poultry meat is the fastest growing animal protein in India. The estimated production is 1500 thousand tonnes growing at a rate of 13 per cent through 1991-2005. India exports more than 500,000 MT of meat of which major share is buffalo meat. Indian buffalo meat is witnessing strong demand in international markets due to its lean character and near organic nature. Its exports have the potential to grow significantly and hence presents an opportunity for exporters in the food processing segment. India is the fifth largest exporter of bovine meat in the world. However, in order to develop necessary infrastructure for processing of meat and meat food products for domestic market as well as for export market, the Ministry is providing financial assistance by way of grant-in-aid. During the year 2007-08 (upto December 2007), it assisted nine projects for manufacture of meat and meat food products. India has a unique pattern of production, processing and marketing/consumption of milk. It ranks first in the world in terms of milk production. Approximately 70 million rural households (primarily, small and marginal farmers and landless labourers ) in the country are engaged in milk production. The production stands at 91 million tonnes growing at a rate of 4 per cent. This is primarily due to the initiatives taken by the Operation flood programmes in organizing milk producers into cooperatives; building infrastructure for milk procurement, processing and marketing; as well as providing financial, technical and management inputs by the Ministry of Agriculture and Ministry of Food Processing Industries to turn the dairy sector into viable self-sustaining organized sector. About 35% of milk produced in India is processed. The organized sector (large scale dairy plants) processes about 13 million tonnes annually, while the unorganised sector processes about 22 million tonnes per annum. In the organized sector, there are 676 dairy plants in the Cooperative, Private and Government sectors registered with the Government of India and the State Governments. With long coastline of 8129 kms, 50600 sq km of continental shelf area, 2 million sq km of exclusive economic zones and 1.2 million hectares of brackish water bodies, India is endowed with rich fishery resources. Considerable infrastructure facilities for processing of marine products have been developed over the years. At present, there are over 369 freezing units with a daily processing capacity of 10266 tonnes out of which 150 units are approved for export to EU. 499 units are engaged in production of frozen fish with a total storage capacity of 134767 tonnes. Besides, there are 12 surimi units, 5 canning units and 471 units which are engaged in pre-processing and dry fish storage. The Ministry extends financial assistance for setting up/ technology upgradation/ modernization of fish

processing units. During 2007-08 (upto 31.12.2008), an amount of Rs.2.01 crores has been provided to 10 seafood processing units. India is self sufficient in grain production. All major grains, such as paddy, wheat, maize, barley, millets like jowar (great millet), bajra (pearl millet) and ragi (finger millet) are produced in the country. For the focused growth of the 'pulse milling and flour milling' sector, the Ministry is providing financial assistance to the grain processing industries for its setting up/ expansion/ modernization in the form of grant. During 2007-08 (upto December 2007), in the pulse milling sector, 13 proposals have been received which involves the grant of Rs.222.80 lakhs and in the flour milling sector, 17 proposals have been received which involves the grant of Rs.572.54 lakhs. Further, India is one of the largest producers of oil/ vanaspati products in the world with approximately 15,000 oil mills, 600 solvent extraction units and 250 vanaspati units. Indian oil seed sector accounts for the domestic turnover of Rs. 70,000 crore and import/ export turnover of Rs.16,000 crore. India is also the third largest importer of vegetable oil in the world, next to European Union and China. Consumer food industry includes pasta, breads, cakes, pastries, rusks, buns, rolls, noodles, corn flakes, rice flakes, ready to eat and ready to cook products, biscuits, etc. Bread and biscuits constitute the largest segment of consumer foods. During the year 2007-08 (upto 10.12.07), financial assistance to 93 food processing units relating to consumer industries amounting to Rs.17.16 crore has been provided. India is the largest market for alcoholic beverages in the world. The demand for spirits and beer is estimated to be around 373 million cases. There are 12 joint ventures companies having a licensed capacity of 33919 kilolitres per annum for production of grain based alcoholic beverages. 56 units are manufacturing beer under license from the Government. The wine industry in India provides considerable opportunities for value addition and employment generation in agroprocessing sector. The Ministry has sanctioned a Wine Park at Vinchur, Nasik. Moreover, the Ministry of Food Processing Industries has finalised the document regarding the Vision 2015 for the growth of Indian food processing industries, which is known as the 'Integrated Strategy for Promotion of Agri-business Vision, Strategy and Action Plan for the Food Processing Sector', based on the recommendations made by the Group of Ministers (GOM) for growth of the sector. The objective of the strategy is to increase the level of processing of perishable food from 6% to 20%, value addition from 20% to 35% and share in global food trade from 1.6% to 3% by 2015. The level of processing for fruits and vegetables is envisaged to increase from the present 2.2% to 10% and 15% in 2010 and 2015 respectively. The thrust areas identified for strategic intervention are detailed mapping of food clusters; establishment of Mega Food Parks in identified SSI/ horticulture/ meat/ dairy/ marine sectors; strengthening backward and forward linkages and developing supply chain with cold chain mechanism; modernisation of Abattoirs; developing infrastructure for organized food retail market; rationalizing tax structure for the sector; etc.

All these efforts have given competitive edge to the food processing industry on a global platform. More and more people are consuming value-added and processed food products. The industry possess high export opportunities and its growth seeks to bring immense benefits to the economy by raising agricultural yields, enhancing productivity, creating employment and raising life-standards of a large number of people across the country, especially those in rural areas. Thus, there exists innumerable business opportunities in the diverse areas of food processing. But, the food processing sector still remains largely untapped because of high packing costs, cultural preference of the people for fresh food, seasonalities of raw materials, lack of adequate infrastructural facilities and quality control mechanism. As a result, there is a need to diversify the sector by fully harnessing its potentialities, providing greater incentives as well as creating conducive environment for more investments and exports.

Biotechnology
Biotechnology has been globally recognised as a rapidly emerging and far reaching technology. It is a frontline area of science which plays a key role in the growth and development of a nation. It refers to any technological application that uses biological forms and systems, in a controllable manner, in order to produce new and useful products or processes as well as modify the existing ones. It seeks to provide benefit not only to mankind, but also to other life forms, such as micro-organisms. It also helps to maintain an optimum ecological balance in the environment by reducing harmful hydrocarbons, controlling pollution, etc. In India, the biotechnology is among the fastest growing knowledge based sectors. It has been considered as a powerful enabling technology that can revolutionize agriculture, healthcare, industrial processing and environmental sustainability. Nowadays, it is increasingly being used to develop and design uniquely improved varieties of crops, new pharmaceutical products, plethora of chemicals, cosmetics, fertilizers, growth enhancers, processed foods, health care aids and environment-related substances, etc. Indian biotech segment has been making rapid strides on the global platform. There are large number of therapeutic biotech drugs and vaccines, being currently produced and marketed in the country and helping mankind enormously. The sector registered a revenue of $ 1.07 billion and recorded a 36.55 per cent growth in the year 2005-06. India has been reorganized as a mega bio-diversity country. The biotechnology offers avenues to convert country's diverse biological resources into economic wealth and employment opportunities. There are several factors that create the impetus for India to develop exceptional capabilities in the realm of biotechnology. They are:- large reservoir of scientific human resource, that is, a strong pool of scientists and engineers; cost effective manufacturing capabilities; number of national research laboratories employing thousands of scientists; centers of academic excellence in biosciences; several medical

colleges, educational and training institutes offering degrees and diplomas in biotechnology, bio-informatics and biological sciences; vibrant drugs and pharmaceutical industry; as well as fast developing clinical capabilities. In India, the Department of Biotechnology (DBT), under the Ministry of Science and Technology, is an apex authority for the development of biotechnology sector. It has been set up for the purpose of planning, promoting and coordinating various biotechnological programmes and activities in the country. It is the nodal agency for providing grant-in-aid support to national research laboratories, universities and research foundations for biotechnology related activities in different sectors like health care, agriculture, environment and industry. The main responsibilities of the Department are to: Promote large scale use of biotechnology Identify and set up centres of excellence for R&D in biotechnology and related manufacturing fields Establish infrastructure facilities to support R&D and production Act as an agent of the Government for import of new recombinant DNA based biotechnological processes, products and technology Evolve bio-safety guidelines for laboratory research, production and applications Initiate scientific and technical efforts related to biotechnology Develop integrated programmes for human resource development Promote international collaborations for expanding knowledge base of biotech sector Serve as a nodal agency for collection and dissemination of information relating to biotechnology.

The Department has eight autonomous institutions mandated to work on various aspects of medical, agriculture and industrial biotechnology. These are:-

National Institutute of Immunology, New Delhi National Centre for Cell Science, Pune

Centre for DNA Fingerprinting and Diagnostics, Hyderabad National Brain Research Centre, Manesar, Haryana National Centre for Plant Genome Research, New Delhi Institute of Bioresources and Sustainable Development, Imphal Institute of Life Sciences, Bhubaneshwar

While, the public sector undertakings in the Department, working for the development of biotech sector, are: Bharat Immunologicals and Biologicals Corporation Limited, Bulandshahar Indian Vaccines Corporation limited, Gurgaon

Further, the 'National Bio-Resource Development Board (NBDB)' has been set up under the Department, in order to decide the broad policy framework for effective application of biotechnological and related scientific approaches for research and development as well as sustainable utilization of bioresources, especially for development of new products and processes. The Board seeks to develop a scientific plan of action for contributing to the economic prosperity of the nation through accelerated research and development using the modern tools of biosciences. A National Steering Committee has been constituted to support the activities of the board. In its first meeting held in January 2000, NBDB has identified three priority areas, such as:- (i) preparation of digitised inventories of plant, animal, microbial, and marine resources; (ii) R&D projects, programme support, establishment of centres of excellence, training activities and demonstrations, for the development of bioresources for special areas such as northeastern region, Himalayan region, coastal and island ecosystems, desert region, IndoGangetic Plain and Peninsular India; and (iii) knowledge empowerment and human resource development. The other important functions of the board are to: Evolve effective ex-situ conservation strategies for bioresources of potential scientific and economic value Develop predictive groupings of biological resources through well-established molecular lineages Construct gene maps of bioresources that can be used for locating useful genes Promote the use of biological software in the management of agricultural pests and pathogen Promote value addition to bioresources and strengthen bioinformatics

Train human resource for the achievement of all such objectives.

The Department has been making significant achievements in the growth and application of biotechnology in the broad areas of:- (i) agriculture, in the form of increased agricultural productivity; development of disease, drought and pest resistant varieties; production of high yielding varieties of transgenic organisms (plants and animals); development of hybrid seeds, synthetic/ artificial seeds and genetically engineered crops; improvement in food security by raising crop tolerance to adverse weather and soil conditions; etc. (ii) health care, in the form of manufacturing of safe and cost-effective vaccines; development of bio diagnostic kits to ensure early detection of various diseases; production of various therapeutic proteins; use of DNA fingerprinting; etc. (iii) industry, in the form of preparation of various acids and alcohols; production of vitamins, antibiotics, steroids, number of pharmaceutical drugs and chemicals ; prevention of industrial products from spoilage; etc. (iv) environment and energy, in the form of pollution control; conversion of bio-degradable waste completely into energy like bio-gas fuel; restoration of degraded lands; development of biosensors for detection of pollutants; treatment of industrial effluents; etc. In order to supplement such efforts and to attract large investments into the biotech sector, the Department has been undertaking several policy initiatives and measures from time to time. The most important being, the announcement of 'National Biotechnology Development Strategy' as a overall policy framework in order to boost the biotech industry. It takes stock of what has been accomplished and provides a set up for future, within which strategies and specific actions need to be taken to promote the sector. This policy aims to chalk out the path of progress in areas such as agriculture and food biotechnology, industrial biotechnology, therapeutic and medical biotechnology, regenerative and genomic medicine, diagnostic biotechnology, bio-engineering, nanobiotechnology, bio-informatics and IT enabled biotechnology, clinical biotechnology, manufacturing and bio-processing, research services, bio-resources, environment and intellectual property law.The main objectives of this policy framework are to:- (i) set out the direction for strengthening Indias academic and industrial biotech research capabilities; (ii) work with business houses, Government and academia to move biotechnology from research to commercialisation; (iii) foster Indias overall industrial development; (iv) inform people about the science, applications, benefits and issues of biotechnology; (v) enhance the teaching and workforce training capabilities for the growth of biotech; (vi) establish India as a preeminent international location for biotechnology. In other words, it focuses on issues like human resource development, academic and industry interface, infrastructure development, lab and manufacturing, promotion of industry and trade, biotechnology parks and incubators, regulatory mechanisms, public education and awareness building. The setting up of biotech parks and biotech incubators centres as well as training and pilot projects in various States and organizations provide an excellent template for promotion of biotech start up companies. Under this, there are schemes of providing

financial/logistical support to those young entrepreneurs who are not in a position to incur high capital expenditure in the biotech industry, but have the capabilities to develop, design and perfect new biotech products and processes by utilizing the biotech incubators and pilot level facilities. Some of the existing biotech parks/incubation centres and pilot projects are: Biotech Park at Lucknow, Uttar Pradesh Biotechnology Incubation Centre, Hyderabad, Andhra Pradesh Biotechnology Incubation Centre/Pilot plant facilities at Kerala Biotechnology Incubation Centre/Pilot plant facilities at Himachal Pradesh Biotechnology Park/ Incubation Centre and Common Instrumentation Facility at Bangalore

Besides, the Guidelines for 'Stem Cell Research and Therapy' have been formulated in order to provide a mechanism to ensure that research with human stem cells is conducted in a responsible and ethically sensitive manner and complies with all regulatory requirements pertaining to biomedical research in general and stem cell research in particular. These guidelines aims to:- (i) lay down general principles for stem cell research and therapy keeping in view the ethical issues. (ii) formulate specific guidelines for derivation, propagation, differentiation, characterization, banking, and use of human stem cells for research and therapy. Further, India has been the first country in the world to establish in 1987, a Biotechnology Information System (BTIS) network in order to create an infrastructure that enables it to provide support to biotechnology sector through the application of Bioinformatics. It helps to create human resources in bioinformatics and carry out research in its different areas. Following are the major thrusts of the programme are to:-

1. Undertake advanced research in frontier areas of bioinformatics and computational biology 2. Develop world class human resource in bioinformatics 3. Establish effective academia-industry interface 4. Pursue and promote international cooperation with leading institutions, organizations and countries in the world 5. Create world-class platforms for technology development, transfer and commercialisation

Fifty-two Bioinformatics Facilities (BIF) have been established towards introducing innovation in Biology Teaching through BioInformatics (BTBI). These facilities act as a centralized resource of individual institutions to support bioinformatics tools. International collaborations in biotechnology have also been a major strength of the Department of Biotechnology, with an increasing number of countries renewing their interest in collaboration with India. These are being pursued as an important vehicle for expanding the knowledge base and developing expertise which would accelerate the pace of growth in R&D in the country. In the recent times, there has been a steady progress in international collaboration in biotechnology resulting in many important research projects, products and technologies. Some of them are:- Memorandum of Understanding (MOU) have been signed with Denmark and Finland and joint call for proposals have been issued; Joint projects have also been funded with the Biotechnology and Biological Sciences Research Council (BBSRC), UK; Department has signed two memoranda with Agriculture and Agri-Food, Canada and the National Research Centre, Canada, respectively; New agreements on vision research with NIH, USA and an amendment to the agreement with Contraceptive Research and Development Programme (CONRAD), USA have also been signed; etc. As a result of all these, India has been emerging as a biotechnology hub on a world map and is being looked upon as a preferred investment destination. Advances in molecular biology and biotechnology has led to an overwhelming impact on the economic well being of the society. The Indian biotechnology sector is gaining global visibility for emerging business opportunities and holds great promise in meeting the needs of the growing population for innovative medicines, higher productivity in agriculture and value addition including nutritional enhancement and protection of environment. However, there are several social concerns that need to be addressed in order to propel the emergence of biotechnology innovation in the country, such as conserving bioresources and ensuring safety of products and processes, etc. Accordingly, both the Government and the private sector have to play an important role in educating and protecting the interests of the masses as well as advancing the benefits of modern biotechnology to them.