Indian Processed Food Industry

Executive Summary
The size of global processed food industry is estimated to be valued around US $3.6 trillion and accounts for three-fourth of the global food sales. Despite its large size only 6! of processed foods are traded across borders compared to "6! of ma#or bul$ agricultural commodities. %ndian food-processing industry is miniscule in comparison and is estimated to be US $&' billion and is li$ely to gro( at over "'! on the basis of an e)pected *D+ gro(th rate of ,-,.-! p.a. .ith enormous scope for value addition increase in the consumption of processed food products in %ndia and many fiscal incentives being planned by the government this sector is poised to maintain the gro(th momentum in the future. /oreover the advent of the .T0 regime and the possibility of reduced subsidies in developed countries can add to %ndia1s strengths in food production and processing industry. %ndia accounts for less than ".-! of international food trade despite being one of the (orld1s ma#or food producers (hich indicates huge potential for both investors and e)porters. .ith rapid increase in the per capita income and purchasing po(er along (ith increased urbanization improved standards of living there lies a large untapped opportunity to cater to "''' million domestic consumers. %t is estimated that 3'' million upper and middle class consume processed food. .ith the convenience needs of dual income families 2'' million more consumers are e)pected to move to processed food by 2'"'. The mar$et size for the processed foods is thus bound to increase from US $"'2 billion currently to US $33' billion by 2'"&-"- assuming a gro(th of "'!. The share of the value added products in processed foods (ould almost double from US $&& billion currently to US $,, billion during the same period gro(ing at the rate of "-!. This presents enormous opportunities for investment in processed food sector. Several global food giants and leading %ndian industrial enterprises are already ma$ing their presence felt in a big (ay in the sector. Some of them are 3estle %ndia 4adbury5s %ndia 6elloggs 7industan Unilever %T4-8gro *odre# 9oods and /T: 9oods. %t is estimated that the food production in %ndia is li$ely to gro( t(o-fold in the ne)t ten years. Thus there is ample of opportunities for investments in food and food-processing

technologies e;uipments especially in areas of canning dairy < food-processing specialty processing pac$aging frozen food and thermo processing cold chains and in the area of food retail. /inistry of food processing in its =ision 2'"- document has estimated the size of processed food sector to treble processing level of perishable to increase from 6! to 2'! value addition to increase from 2' ! to 3-! and %ndia1s share in global food trade to increase from ".- ! to 3!.The government1s focus to(ards food processing industry as a priority sector (ill ensure policies to support investment in this sector and attract more 9D%. %ndia (ith its vast pool of natural resources and gro(ing technical $no(ledge base has strong comparative advantages over other nations. 8ccording to 4%% estimates food-processing sector has the potential of attracting US $33 billion of investment in "' years and generate employment of > million person-days. The food-processing sector in %ndia is clearly an attractive sector for investment and offers significant gro(th potential to investors. The report outlines the tremendous gro(th potential in the sector and various opportunities for investments. .e initiate coverage on :uchi Soya and ?a$shmi @nergy <9oods (ith a AUB recommendation. %ndia is the (orld1s second largest producer of food ne)t to 4hina and has the potential of being the biggest (ith the food and agricultural sector. The food processing industry is one of the largest industries in %ndia-it is ran$ed fifth in terms of production consumption e)port and e)pected gro(th. The food industry is on a high as %ndians continue to have a feast. 9uelled by (hat can be termed as a perfect ingredient for any industry C large disposable incomes - the food sector has been (itnessing a mar$ed change in consumption patterns especially in terms of food. %ncreasing incomes are al(ays accompanied by a change in the food bas$et. The proportionate e)penditure on cereals pulses edible oil sugar salt and spices declines as households climb the e)penditure classes in urban %ndia (hile the opposite happens in the case of mil$ and mil$ products meat egg and fish fruits and beverages. 9or instance the proportionate e)penditure on staples Dcereals grams pulsesE declined from &- per cent to && per cent in rural %ndia (hile the figure settled at 32 per cent of the total e)penditure on food in urban %ndia.

8 large part of this shift in consumption is driven by the processed food mar$et (hich accounts for 32 per cent of the total food mar$et. %t accounts for US$ 2>.& billion in a total estimated mar$et of US$ >".66 billion. The 4onfederation of %ndian %ndustry D4%%E has estimated that the food processing sector has the potential of attracting US$ 33 billion of investment in "' years and generate employment of > million person-days. The *overnment has formulated and implemented several +lan Schemes to provide financial assistance for setting up and modernizing food processing units creation of infrastructure support for research and development and human resource development in addition to other promotional measures to encourage the gro(th of the processed food sector. 9ood processing is a large sector that covers activities such as agriculture horticulture plantation animal husbandry and fisheries. %t also includes other industries that use agriculture inputs for manufacturing of edible products. The /inistry of 9ood +rocessing *overnment of %ndia indicates the follo(ing segments (ithin the 9ood +rocessing industryF G Dairy fruits < vegetable processing G *rain processing G /eat < poultry processing G 9isheries G 4onsumer foods including pac$aged foods beverages and pac$aged drin$ing (ater. Though the industry is large in size it is still at a nascent stage in terms of development of the country5s total agriculture and food produce only 2 per cent is processed.

Processed Food Industry: A sunrise sector

9ood-processing industry is significant for %ndia1s development because it has important lin$ and synergy (ith industry and agriculture the t(o main support of the economy. Total size of food-processing industry is around US $&' billion gro(ing at "'! and the size of processing sector is estimated to be US $2.-3 billion. The industry is mainly unorganized (ith H-! of the processing units belonging to the unorganised category the organized category though small is gro(ing fast. The food production is e)pected to double in the ne)t "' years and the consumption of value added food products is e)pected to gro( at a much faster pace. This gro(th (ill benefit the economy increase agricultural yields create employment and raise the standard of living of various associated people. :ising consumer affluence and economic liberalization is opening up ne( opportunities in the sector . The food-processing industry has been identified as a focus area for development and has been included in the priority-lending sector. /ost of the food-processing industries (ith the e)ception of beer < alcoholic drin$s and items reserved for small scale sector li$e vinegar bread and ba$ery have been e)empted from the provisions of industrial licensing under %ndustries DDevelopment and :egulationE 8ct ">-". 8utomatic approval up to "''! of e;uity in case of foreign investment is available for most of the processed food items. .ith over "."' billion consumers and fourth largest economy in terms of purchasing po(er parity U34T8D and 8T 6earney has ran$ed %ndia amongst the top three investment destinations in the (orld. Low level of processing The industry has very lo( processing level i.e 2.2! for fruits and vegetables around 3-! in mil$ 2"! in meat and 6! in poultry products (hich is significantly lo(er by international standards. 9or e.g. processing of agriculture produce is around &'! in 4hina 3'! in Thailand H'! in Arazil H,! in the +hilippines and ,'! in /alaysia. =alue addition to agriculture produce in %ndia is #ust 2'! (ith (astage estimated to be valued at around US "3billion$. Food-processing- a growing market

.ith rapid increase in the per capita income and purchasing po(er along (ith increased urbanization improved standards of living there lies a large untapped opportunity to cater to "''' million domestic consumers. %t is estimated that 3'' million upper and middle class consume processed food. .ith the convenience needs of dual income families 2'' million more consumers are e)pected to move to processed food by 2'"'. The mar$et size for the processed foods is thus bound to increase from US $"'2 billion currently to US $33' billion by 2'"&-"- assuming a gro(th of "'!. The share of the value added products in processed foods (ould almost double from US $&& billion currently to US $,, billion during the same period gro(ing at the rate of "-!. This presents enormous opportunities for investment in processed food sector. Several global food giants and leading %ndian industrial enterprises are already ma$ing their presence felt in a big (ay in the sector. Some of them are 3estle %ndia 4adbury5s %ndia 6elloggs 7industan Unilever %T4-8gro *odre# 9oods and /T: 9oods. 8ccording to *overnment estimates :s " ''' billion investment is needed in this sector across all segments of the value chain from agri inputs to logistics to front-end infrastructure and distribution out of (hich bul$ of investment (ill be from private sector. 8s a result various private corporate houses li$e :eliance have ventured in this space (ith full vigor. 7ence there is immense potential for investment in this sector. To facilitate the prompt gro(th of food-processing industry the *overnment has implemented the scheme for infrastructure development comprising a food par$ scheme establishing pac$aging centers integrated cold chain facilityI value added centers and irrigation facilities.

Where the opportunity lies- areas for investment

%t is estimated that the food production in %ndia is li$ely to gro( t(o-fold in the ne)t ten years. Thus there is ample of opportunities for investments in food and food-processing technologies e;uipments especially in areas of canning dairy < food-processing specialty processing pac$aging frozen food and thermo processing cold chains and in the area of food retail. 0ne of the $ey reasons for lo( levels of food processing is poor infrastructure for storage mar$eting and distribution of food products. 2--&'! of agri-produce is lost post harvest season. 8ccording to estimates %ndia1s mar$etable surplus is set to increase by 3-' mtpa to ,H' mtpa by 2'"2. &'! of the increase D"-' mtpaE (ould be accounted by perishable fruits and vegetables. The need for investments in the areas of infrastructure and supply chain is evident from the fact that %ndia1s current storage infrastructure for all food items is only "'' mtpa. The *overnment has announced various policy and fiscal measures to e)pand the storage capacity. %t has announced "--2-! capital subsidy scheme for facilitating construction of rural godo(ns and has also sanctioned "6 mt of ne( capacity the last five years. Cold chain The estimated cold-storage capacity at ">.- mt is less than "-! of the annual horticulture production and is mainly dominated by potatoes D,'! of capacityE. The size of cold chain industry is estimated to be around US $2.2-2.H billion and is e)pected to gro( at 2'-2-! annually. 9D% to the e)tent of "''! is allo(ed in the sector. .ith the rising focus on horticulture increasing corporate participation and advent of food par$s and agri e)port zones is li$ely to result in significant restructuring of cold storage infrastructure (ith an estimated investment of US $,-"' billion. =oltas Alue-Star and 6irlos$ar +neumatic are some of the cold storage players and e;uipments. :adha$rishna 9oodland and Sno(man 9rozen are ma#or providers of cold storage facilities. 4oncor is setting up a country(ide net(or$ of "& cold-chain comple)es for horticulture in Delhi /umbai and Aangalore among other places. Supply chain

8n efficient supply chain not only brings do(n the price of the end product but also eliminates intermediaries by connecting farmers directly to the super stores. %t has thus become an important aspect of organised retail setup. The food supply chain in %ndia is highly fragmented (ith numerous intermediaries and lac$ of economies of scale. Sophisticated applications such as demand forecasting data integration financial flo( management supply-demand matching information sharing (ill enable it to become mature and efficient. Food safety management systems The tightening of restrictions and the introduction of the Sanitary and +hytosanitary 8greement by global industry bodies li$e the .orld 7ealth 0rganisation D.70E have led to increased adherence of safety norms and regulations. %ndian companies (ill have to strictly adhere to international food safety standards in order to gain a larger share of (orld trade. Machinery %n pac$aging freshness and hygiene remains a $ey factor in determining buying by consumers. %n recent times a number of ne( technologies have emerged both in processing and pac$aging (hich have made an impact on the shelf life of food products. Food parks 3' mega food par$s (ith investments of around US $""' million are coming up across the country to attract 9D% in the food-processing sector. The food par$s (ill have facilities ranging from cold storage sorting grading food-processing pac$aging and ;uality control and :<D laboratories. The government for these food par$s has identified /aharashtra 8ndhra +radesh +un#ab and Jhar$hand and one 3ortheast region. Food retail 9ood and groceries form ma#or portion DH-!E of the retail pie. 7o(ever it has the lo(est level of penetration of "! in organized retail. Aranded foods mar$et size is gro(ing at "--2'!. +layers have outlined ma#or e)pansion plans recognizing the opportunity.

Industry Analysis

Driving Forces
Abundant availability of raw material

%ndia has varied agro climatic conditionsI it has a (ide-ranging and large ra( material base suitable for food-processing industries. %t has a vast coastline of ,''' $m vast marine land (ith "' ma#or ports. %ndia produces annually >' million tones of mil$ Dhighest in the (orldE "-' million tones of fruits and vegetables Dsecond largestE &,million livestoc$ DlargestE 2'& million tones food grain Dthird largestE 6.3 million tones fish Dthird largestE &,> million poultry and &- 2'' million eggs. %ndia5s agricultural production base is huge. ?o( cost production base for domestic and e)port mar$et can be set up considering %ndia1s comparatively cheap labour force and lo(er cost of production. %ndia has access to significant investments to facilitate food-processing industry. Demographic trends The food-processing industry has a bright future due to demographic environment in %ndia (hich is a $ey positive. Rising income levels leading to large customer ase %ndia (ith its population of more than " billion accounts for close to "H! of the global population. %t is one of the most attractive consumer mar$ets in the (orld (ith the increase in income levels across the population segments. 9ood and grocery comprise the largest share of the spending pie follo(ed by personal care items thus offering a lot of scope for the food-processing industry. 8ccording to 348@: data the consuming class (ith an annual income of US $>,' D:s &- '''E or above is gro(ing and is e)pected to constitute over ,'! of the population by 2''>-"'. The increase in income levels and higher tendency to spend provides great opportunities for companies across various sectors.

Relatively young population %ndia has a relatively young population (ith close to --! of population in the age group of 2'- -> years. This group is also high in consumption and therefore this trend is e)pected to provide a further boost to the gro(th of consumption in %ndia. Changing lifestyles %ncrease in literacy and e)posure to (estern lifestyles by more and more urban consumers have led to change in mindset and preference. %ncrease in the population of (or$ing (omen and increase in nuclear double income families in urban areas are some of the other factors that are influencing the lifestyles. 8s a result there has been an increase in demand for processed ready-to-coo$ and ready-to-eat food. 8ccording to @uromonitor money spend by %ndians on meals outside the home has more than doubled in the past decade to about US $- billion a year and is e)pected to further double in the ne)t - years. Thus there lies significant gro(th potential for the sector and its investment
attractiveness.

Increase in consuming class in rural areas

3early H'! of %ndia1s population resides in rural areas and account for nearly -'! of %ndia1s consumption. @ven (ith increasing urbanization and migration it is estimated that 63! of %ndia5s population (ill continue to live in rural areas in 2'2-. 8verage income levels for rural %ndia (ill increase (ith higher agri-incomes and a gradual shift from farm to non-farm employment. 3H! of rural households could move into the middle incomeand-above consuming class by 2'"' according to 348@: survey from #ust "--"H! in the late ">>'s. This (ill result in a consuming class of -6 million rural households by 2'"' more than half of %ndia5s overall estimated middle class by this time. This (ill open up vast and relatively une)plored section of %ndia to companies.

Indian Food Processing Industry y sectors

%ndia5s food-processing sector covers fruit and vegetablesI meat and poultryI mil$ and mil$ products alcoholic beverages fisheries plantation grain processing and other consumer product groups li$e confectionery chocolates and cocoa products soya-based products mineral (ater high protein foods etc. The most promising sub-sectors includessoft-drin$ bottling confectionery manufacture fishing a;uaculture grain-milling and grain-based products meat and poultry processing alcoholic beverages mil$ processing tomato paste fast food ready-to-eat brea$fast cereals food additives flavors etc. 7ealth food and health food supplement is another rapidly rising segment of this industry (hich is gaining vast popularity amongst the health conscious. The dairy sector has an estimated consumer demand for mil$ and mil$ products at :s " &'' billion gro(ing at about ,! p.a. +oultry meat is estimated to have production of "., million tones gro(ing at a 48*: of ""!. Aesides ready-to-eat D:T@E industry still nascent in %ndia is estimated to be about :s - billion gro(ing at 3'! p.a and e)pected to cross :s "- billion by 2'"'. The (ine sector is gro(ing at about -'! p.a is e)pected to have a mar$et size of :s 2' billion by 2'"'. Dairy /il$ and mil$ products is rated as one of the most promising sectors in the processed food industry. %ndia is the largest producer of mil$ in the (orld (ith production of >H." million tones in 2''--'6 gro(ing at a 48*: of &!. 8ccording to estimates by Dairy %ndia the size of the %ndian dairy mar$et is :s 2 2H 3&' crores (hich is e)pected to more than double to :s - 2' H,' crores by 2'"". %ndia1s total mil$ production is pro#ected to cross "'' million tones by end of 2''H according to the tenth five-year plan estimates. /il$ and mil$ products account for a significant "H! of %ndia1s total e)penditure on food. %ndia is on the verge of assuming an important position in the global dairy industry8bout 3-! of mil$ produced in %ndia is processed. The organized sector comprising of large dairy plants processes about "3 million tones (hereas the unorganised sector Dhal(aiis and vendorsE process about 22 mtpa.

Fruits and Vegetable Processing %ndia is the 2nd largest producer of fruits D-' million tonesE and vegetables D"'' million tonesE. The installed capacity of fruit and vegetable processing industry has increased from "".', la$h tones in ">>3 to 2".", la$h tones in 2''6. The industry is still nascent and #ust about 2.2! of the total output of fruits and vegetables is processed as per estimates. The country5s share in the (orld trade of processed fruits and vegetables is still less than "!. ?i$e(ise the consumption of value added fruits and vegetables are also lo( compared to the primary processed food in general and fresh fruits and vegetables in particular. This thro(s up a huge opportunity for the sector through increased penetration in the domestic mar$et. The government e)pects the processing in this sector to gro( to "'! in 2'"' and 2-! of the total produce by 2'2-. !rains %ndia produces more than 2'' million tones of different food grains every year. 8ll ma#or grains li$e rice (heat maize barley and millets li$e #o(ar Dgreat milletE ba#ra Dpearl milletE < ragi Dfinger milletE are produced in %ndia. 8bout "-! of the annual production of (heat is converted into (heat products. There are "' ''' pulse mills in the country (ith a milling capacity of "& million tones milling about H-! of annual pulse production of "& million tones. Meat and poultry processing 8t &,- million %ndia has the (orld1s largest livestoc$ population- accounting for over --! and "6! of the (orld1s buffalo and cattle populations respectively Dthe (orld1s largest bovine populationE. %t ran$s second in goats third in sheep and camels and seventh in poultry populations in the (orld. +rocessing of meat products is licensed under /eat 9ood +roducts 0rder D/9+0E ">H3. Total meat production in the country is estimated at - million tones annually. %ndian consumer prefers to buy freshly cut meat rather than processed or frozen meat. 8 mere 6! of production of poultry meat is sold in processed form. 0f this only about "! undergoes processing into value added products D:eady-to- eatK :eady-to-coo$E. +rocessing of large animals is largely for the purpose of

e)ports. This is because of lo( processing of value added meat products and consumer preference for fresh meat. The total processing capacity in %ndia is over " million tones p.a of (hich &'--'! is utilized. %n meat < meat processing sector poultry meat is the fastest gro(ing animal protein in %ndia. The estimated production is "- '' ''' tones gro(ing at 48*: of "3! through ">>"- 2''-. %ndia ran$s among the top si) egg producing countries and ran$s among the top five chic$en producing countries. +er capita consumption has gro(n from ,H' grams in 2''' to about ".6, $g in 2''-. This is e)pected to gro( to 2 $g in 2''>. *ro(th in Auffalo meat production has been less rapid D48*: of -! in the last 6 yearsE. The current production levels are estimated at ".> million mt. 0f this about 2"! is e)ported. /utton and lamb is relatively small segment (here demand is outstripping supply (hich e)plains the high prices in domestic mar$et. The production levels have been almost constant at >-' ''' mt (ith annual e)ports of less than "' ''' mt. This has restricted large processing companies from developing business interests in this sector.

Fish Processing %ndia is the third largest fish producer in the (orld and is second in inland fish production. 9ish production in the country has increased from '.H- mt in ">-'--" to 6.-' mt in 2''--'6. %n 2''--'6 it contributed about "! of the total *D+ and -.3! of the *D+ from agriculture sector. The geographic base of %ndian marine fisheries has , "", $m. coastline 2.'2 million s;.$m. of e)clusive economic zone including '.- million s;. $m. of continental shelf and 3 >3H fishing villages. %ndia is endo(ed (ith rich fishery resources and has vast potential for fishes from both inland and marine resources. +rocessing of fish into canned and frozen forms is carried out almost entirely for the e)port mar$et. %t is (idely felt that %ndia1s substantial fishery resources are under-utilised and there is tremendous potential to increase the output of this sector. The potential could be gauged by the fact that against fish production potential in the e)clusive economic zone of 3.> million tones actual catch is to the tune of 2.,H million tones. 7arvesting from inland sources is around 2.H million tones. %n last si) years there (as substantial

investment in fisheries to the tune of :s 3 ''' crores of (hich foreign investments (ere of the order of :S.H''.

!overnment "egulation and Support

Since liberalisation several policy measures have been ta$en (ith regard to regulation < control fiscal policy e)port < import ta)ation e)change < interest rate control e)port promotion and incentives to high priority industries. 9ood-processing and agro industries have been accorded high priority (ith a number of important relieves and incentives. Some of the important policy changes are as follo(s

Regulation and Control 8s per e)tant policy 9D% up to "''! is permitted under the automatic route in the food infrastructure Dfood par$ cold chainK(arehousingE. 8utomatic approval to 9D% up to "''! e;uity in 9+% sector e)cluding alcoholic beverages and a fe( reserved items. 9oreign investments are allo(ed in SS% reserved items under an e)port obligation Dpic$les chutneys bread pastry hard-boiled sugar candy rapeseed oil sesame oil groundnut oil s(eetened cashe( nut products ground and processed spices other than spice oil and oleoresin tapioca sago and its flourE. 9D% up to "''! is permitted on the automatic route for distillation < bre(ing of alcohol sub#ect to licensing by the appropriate authority. 3o industrial license is re;uired for almost all of the food < agro processing industries e)cept for some items li$eF beer potable alcohol < (ines cane sugar hydrogenated. 8nimal fats < oils etc. and items reserved for e)clusive manufacture in the small-scale sector. Up to a ma)imum of 2&! foreign e;uity is allo(ed in SS% sector

Fiscal policy and ta"ation# :upee is no( fully convertible on current account and convertibility on capital account (ith unified e)change rate mechanism is foreseen in coming years. :epatriation of profits is freely permitted in many industries e)cept for some (here there is an additional re;uirement of balancing the dividend payments through e)port earnings. ?iberal corporate ta) policy is applicable for e)port and domestic earnings income ta) rebate allo(ed D"''! of profits for five years and 2-! of profits for the ne)t five yearsE for setting up of ne( agro-processing industries to process and pac$age fruits < vegetables. 9ruits < vegetables and dairy machineries are completely e)empt from central e)cise duty. 4entral e)cise duty on preparation of meat poultry and fish pectin pats and yeast is also completely e)empt. Luantity restrictions on all food products have been removed. +ea$ rate of customs duty has been reduced from 3'! to 2-! De)cluding agricultural and dairy productsE and duty structure on designated items has been rationalized. 4ustoms duty on refrigerated goods transport vehicles has been reduced form 2'! to "'!. @)cise Duty of "6! on dairy machinery has been fully (aived off and e)cise duty on meat poultry and fish products has been reduced from "6! to ,!. $"port promotion# 9ood-processing industry is one of the thrust areas identified for e)ports. 9ree Trade Mones D9TME and @)port +rocessing Mones D@+ME have been set up (ith all infrastructures. 8lso setting up of "''! @)port 0riented Units D@0UE is encouraged in other areas. They may import free of duty all types of goods including capital foods. 4apital goods including spares up to 2'! of the 4%9 value of the capital goods may be imported at a concessional rate of customs duty sub#ect to certain e)port obligations

under the @+4* scheme. @)port lin$ed duty free imports are also allo(ed. Units in @+MK9TM and "''! @0Us can retain -'! of foreign e)change receipts in foreign currency accounts. -'! of the production of @+MK9TM and "''! @0U units is saleable in domestic tariff area. 8ll profits from e)port sales are completely free from corporate ta)es. +rofits from such e)ports are also e)empt from /8T. 8gri e)port zones and food par$s Setting up of 6' agri zones for end-to-end development for e)port of specific product from geographically contiguous areas. -3 food par$s approved to enable small and medium food and beverage units to set up and to use capital intensive common facilities such as cold storage (arehouse ;uality control labs effluent treatment plant etc.

"egulatory Frame#or$
There are different la(s that govern the food-processing sector in %ndia. The prevailing la(s and standards adopted by the *overnment to verify the ;uality of food and drugs is one of the best in the (orld. /ultiple la(sKregulations prescribe varied standards regarding food additives contaminants food colours preservatives and labeling. %n order to rationalize the multiplicity of food la(s a *roup of /inisters (as recently set up to suggest legislative and other changes to formulate a modern integrated food la( (hich (ill be a single reference point in relation to the regulation of food products. The food la(s in %ndia are enforced by the Director *eneral of 7ealth Services /inistry of 7ealth and 9amily .elfare *overnment of %ndia D*0%E. %arious food laws applica le to food and related products in India are# Prevention of Food &dulteration &ct 'PF&() *+,- and Rules 'Ministry of .ealth / Family 0elfare(# 4overs specifications related to food colour preservatives pesticide residues pac$aging and labeling and regulation of sales. 1he Standards of 0eights and Measures &ct) *+23) and Standards of 0eights and Measures 'Packaged Commodities( Rules) *+22F Designed to establish fair trade practices (ith respect to pac$aged commodities 8griculture +roduce D*rading < /ar$ingE 8ct D/inistry of :ural DevelopmentE. @ssential 4ommodities 8ct ">-- D/inistry of 9ood < 4onsumer 8ffairsE. Fruit Products 4rder 'FP4() *++,F Specifications and ;uality control re;uirements regarding the production and mar$eting of processed fruits and vegetables s(eetened aerated (ater vinegar and synethic syrups. Meat Food Products 4rder) *+25 'MFP4(# 8dministers the permissible ;uantity of heavy metals preservatives and insecticide residues for meat products Milk and Milk Products 4rder) *++6F :egulates the production distribution and supply of mil$ productsI establishes sanitary re;uirements for dairies machinery and premisesI and sets ;uality control standards for mil$ and mil$ products.

 1he Food Safety and Standards &ct) 6773# %n 8ugust 2''6 the *overnment of %ndia had passed a ne( legislation 9ood Safety and Standards 8ct. The 8ct proposes establishment of a ne( authority the 9ood Safety and Standards 8uthority reorganisation of scientific support pertaining to the food chain through the establishment of an independent ris$ assessment body and a ne( 9ood ?a( merging eight separate 8cts. G The %nfant /il$ Substitutes 9eeding Aottles and %nfant 9oods D:egulation of +roduction Supply and DistributionE 8ct ">>2 and :ules ">>3. G The %nsecticide 8ct ">6,. G @)port DLuality 4ontrol and %nspectionE 8ct ">63. G @nvironment +rotection 8ct ">,6. G +ollution 4ontrol D/inistry of @nvironment and 9orestsE. G %ndustrial ?icenses. G A%S 8ct ">,6. G =0+ D4ontrolE 0rder C ">&H. G S@0 D4ontrolE 0rder -">6H.

P4LICI$S &8D R$!9L&1I48S Policy Initiatives

*iven the size of the industry and the nascent development stage the food processing sector is a $ey focus area for the *overnment of %ndia. The importance of the sector is further enhanced by the fact that over H' per cent of the population depends upon agricultural activity for livelihood. The government has therefore been focusing on commercialization and value addition to agricultural produce minimizing preKpost harvest (astage generating employment and e)port gro(th in this sector through a number of regulatory and fiscal incentives. The industry is largely unorganised (ith a small but gro(ing organised sector. The popularity of food and agro products is not surprising (hen the sector is no( offering a gro(th of more than "-' per cent in sales. .ith such promise in the sector a number of foreign companies have #oined the fray. .hile US brands such as /cDonald5s +izza 7ut and 6entuc$y 9ried 4hic$en have become household names more are on their (ay. The ne( (ave in the food industry is not only about foreign companies arriving here attracted by the prospective size of the mar$et. %t is also about the migration of the /ade in %ndia tag on food products traveling abroad. %ndian food brands and fast moving consumer goods D9/4*sE are no( increasingly finding prime shelf-space in the retail chains of the US and @urope. These include 4obra Aeer Ai$anervala 9oods /T: 9oods5 ready-to-eat food stuff %T45s 6itchen of %ndia and Satnam 0verseas5 Aasmati rice. The *overnment has formulated and implemented several schemes to provide financial assistance for setting up and modernizing of food processing units creation of infrastructure support for research and development and human resource development in addition to other promotional measures to encourage the gro(th of the processed food sector. G The 4entre has permitted under the %ncome Ta) 8ct a deduction of "'' per cent of profit for five years and 2- per cent of profit in the ne)t five years in case of ne( agro processing industries set up to pac$age and preserve fruits and vegetables. G @)cise Duty of "6 per cent on dairy machinery has been fully (aived off and e)cise duty on meat poultry and fish products has been reduced from "6 per cent to , per cent.

G /ost of the processed food items have been e)empted from the purvie( of licensing under the %ndustries DDevelopment and regulationE 8ct ">-" e)cept items reserved for small-scale sector and alcoholic beverages. G 9ood processing industries (ere included in the list of priority sector for ban$ lending in ">>>. G 8utomatic approval for foreign e;uity up to "'' per cent is available for most of the processed food items e)cept alcohol beer and those reserved for small-scale sector sub#ect to certain conditions. G The Union 4ommerce /inistry has approved a brand promotion campaign for value added N/ade in %ndiaO cashe( being launched in the .est 8sian mar$et by /arch end. The campaign mooted by 4ashe( @)port +romotion 4ouncil of %ndia D4@+4%E involves a financial assistance of US$ 3&& H,H by the /inistry. G 9ull repatriation of profits and capital has been allo(ed. G Mero duty import of capital goods and ra( material for "'' per cent e)port oriented units. G Sales of up to -' per cent in domestic tariff area for agro based "'' per cent e)port oriented units is allo(ed. G *overnment grants have been given for setting up common facilities in agro 9ood +ar$. G 9ull duty e)emption on all imports for units in e)port processing zones has been done. Food Safety and Standard &ct) 6773 Till the year 2''- thirteen different la(s (ere applicable on the food and food processing sector. /ultiple la(sK regulations prescribe varied standards regarding food additives contaminants food colours preservatives and labeling. %n order to rationalize the multiplicity of food la(s a *roup of /inisters D*o/E (as set up to suggest legislative and other changes to formulate integrated food la( to be a single reference point in relation to regulation of food products. Aased on the recommendations of the *o/ the ministry of food processing enacted the 9ood Safety < Standard 8ct D9SS8E 2''6. Salient features of the actF

G 9SS8 (ill be aided by several scientific panels and a central advisory committee to lay do(n standards for food safety. These standards (ill include specifications for ingredients contaminants pesticide residue biological hazards and labels. G The la( (ill be enforced through State 4ommissioners of 9ood Safety and local level officials. G @veryone in the food sector is re;uired to get a licence or a registration (hich (ould be issued by local authorities. G @very distributor is re;uired to be able to identify any food article to its manufacturer and every seller to its distributor. 8nyone in the sector should be able to initiate recall procedures if he finds that the food sold had violated specified standards. Foreign Direct Investment The government of %ndia is planning to offer "'' per cent foreign direct investment and income ta) benefits in the food processing sector. 9oreign direct investment D9D%E in the country5s food sector is poised to hit the US$ 3billion mar$. %n the last one year alone 9D% approvals in food processing have doubled. The cumulative 9D% inflo( in food processing reached US$ 2 ,'& million in /arch 5'6. %n 5'-- '6 the sector received approvals (orth US$ &" million. This figure is almost double the US$ 22 million approved in 2''&-'-. 3early 3' per cent of 9D% in this sector comes from @U countries such as 3etherlands *ermany %taly and 9rance. Some of the successful ventures from @U countries are +erfetti 4adbury *odre#-+ilsbury 3utricia %nternational /an#ini 4omaco etc. The US-based private e;uity fund 3e( =ernon +rivate @;uity ?imited D3=+@?E has decided to invest :s &- ' million in 6ochi-based masala ma#or @astern 4ondiments the flagship company of @astern *roup. 8merica5s largest chocolate and confectionery-ma$er 7ershey is ac;uiring -" per cent sta$e in *odre# Aeverages < 9oods for US$ -& million.

%ision strategy and action plan /inistry had commissioned a =ision preparation for the gro(th of 9+% sector. The =ision Document (as released on 8pril 'H 2''-. The =ision envisages that industry should aim to increase processing level of perishables from 6per cent to 2' per cent increase value addition from the present level of 2' per cent to 3&per cent and share in global trade up from ".6 per cent to 3 per cent thus tripling the size of processed food industry by 2'"-. Tripling of the size of industry is estimated to generate direct employment of 2., million and indirect employment of H.& million persons. 1a" Relief for Speed !rowth of FPI Sector Budget of 2006- 07 :ecognizing the enormous benefits that the food processing industry can bring to agriculture and #ob creation and to consumers food processing (ill be treated as a priority sector for ban$ credit. 38A8:D (ill create a separate (indo( (ith a corpus of US$ 22- million for refinancing loans to the sector especially for agro-processing infrastructure and mar$et development. *overnment (ill also set up the 3ational %nstitute of 9ood Technology @ntrepreneurship and /anagement. The +addy +rocessing :esearch 4entre at Than#avur (ill be developed into a national-level institute. G 0utput of foodgrains li$ely to be 2'>.3 /T G 2 per cent credit on farm loans G To double farm loans in 3-Bears G US$ 22 million fund to help tea gro(ers G %ncreased funding for repair of (ater bodies G To double farm loans in 3 years Short term credit to farm 9ood processing industry has been given a fillip as the condensed mil$ ice cream preparation of meat fish and poultry pectins pasta and yeast have been fully e)empted from e)cise duties.

$leventh Five :ear Plan '6772;67*6( Initiatives G To cope up (ith the gro(th of >! visualized during the ""th 9ive Bear +lan mil$ production has to be enhanced so that per capita availability is doubled as mil$ contributes almost 6'-6-! of the total livestoc$ product value G To build participatory institutions of collective action for small-scale farmers that allo( them to get vertically integrated (ith livestoc$ processors and input suppliers G To create an environment in (hich farmers (ill increase investment in (ays that (ill improve productivity in the livestoc$ sector G To promote effective regulatory institutions to deal (ith the threat of environmental and health crisis stemming from livestoc$ G To increase per ha. fish production through private sector to bring it at par (ith national average G To develop +83 culture for raising fish finger-lings G :enovation of " 6&2 seasonal ponds through 3:@* +rogramme to ma$e available appro). 6 ''' ha. additional (ater area G Development of fish seed production and infrastructure in vicinity of 3=D8 reservoirs G +roviding employment to fisherman communities by allotting (ater bodies on long lease for fish culture G To introduce biotechnology in fish seed and fish production

Infrastructure Development in Food Processing Sector

There is a lac$ of suitable infrastructure in the shape of cold chain pac$aging centres value added centre modernized abattoirs etc. %mprovement in general infrastructure is also an aid for energizing of sector. *overnment attaches highest priority to development and e)pansion of physical infrastructure for facilitating prompt gro(th of industries. %n order to address the problem of infrastructure in food processing sector the *overnment has implemented the scheme for infrastructure development comprising the follo(ing componentsF Food Park Scheme The idea behind setting up of food par$s is that small and medium entrepreneurs find it difficult to invest in capital-intensive activities. Therefore as a part of the strategy to develop food processing infrastructure the /inistry has been pro actively pursuing the tas$ of setting up of food par$s in different parts of the country. %n the food par$s common facilities li$e cold storage food testing and analysis lab affluent treatment plant common processing facilities pac$aging centre po(er supply (ater supply seminar K conference K training facilities etc can be assisted. 9inancial assistance for food par$s is provided at 2- per cent for general and 33.33 per cent for difficult areas sub#ect to a ma)imum of :s. &' million. Under the scheme '2 food par$s (ere assisted under ,th +lan 3> under >th +lan Scheme and "' under "'th +lan. 8n amount of :s. ".'& billion has been sanctioned up to December 2''-. 22 food par$s have become operational. %n a bid to boost the food sector the *overnment is (or$ing on agrizones and the concept of mega food par$s. T(enty such mega par$s (ill come up across the country in various cities to attract 9oreign Direct %nvestment D9D%E in the food processing sector. 4orporate 4atalyst %ndia 8 report on %ndian 9ood +rocessing %ndustry The *overnment has released a total assistance of US$ 23 million to implement the 9ood +ar$s Scheme. %t has so far approved -' food par$s for assistance across the country. The 4entre also plans US$ 22 billion subsidy for at least "' mega food processing par$s.

Packaging Centres The Scheme aims to provide facilities for pac$aging (hich may help in enhancement of shelf life of food products and ma$e them internationally acceptable. 8ssistance at 2- per cent of the pro#ect cost in general areas and 33.33 per cent in difficult areas sub#ect to a ma)imum of :s. 2' million is provided for establishment of pac$aging centre. 8ssistance is available to all implementing agencies. So far assistance of :s. "&-' million has been sanctioned to one pac$aging centre in Jammu < 6ashmir. Integrated Cold Chain Facility The scheme is intended to improve viability of cold storages and enhance cold storage capacity. 8ssistance at 2- per cent of the pro#ect cost in general areas and 33.33 per cent in difficult areas sub#ect to a ma)imum of :s. H.- million is provided for establishment of cold chain facilities. During "'th +lan an amount of :s. &'"' million has been sanctioned to(ards assistance for three cold storages in *u#arat three in /aharashtra one each in U.+. 6erala /anipur /eghalaya 8ndhra +radesh 7aryana Delhi and *oa. During >th +lan assistance of :s. "&,.6 million (as e)tended to -3 cold storages. Value dded Centre !V C" The Scheme is intended to enhance value addition leading to enhanced shelf life higher total realization and value addition at each level of handling and also to facilitate traceability. 8ssistance at 2- per cent of the pro#ect cost in general areas and 33.33 per cent in difficult areas sub#ect to a ma)imum :s. H.- million is provided for establishment and modernization of value added centre. So far three =84s i.e. one each in /aharashtra 7imachal +radesh and +un#ab have been sanctioned assistance involving an amount of :s. ""'' million during "'th plan.

Irradiation Facilities The scheme aims at enhancing shelf life of the food product through irradiation techni;ues by preventing infestation li$e in flour sprouting and change in chemical composition of the product Das in potatoE. 9inancial assistance at 2- per cent of the pro#ect cost in general areas and 33.33 per cent in difficult areas sub#ect to a ma)imum of :s. -' million is provided for establishment of irradiation facilities. So far four irradiation pro#ects i.e. t(o in /aharashtra and one each in .est Aengal and 7aryana have been sanctioned assistance involving an amount of :s. H,.> million. #oderni$ed %attoir The Scheme aims at scientific and hygienic slaughter causing least pain to the cattle and ensuring better byproduct utilization. 8ssistance at 2- per cent of the pro#ect cost in general 4orporate 4atalyst %ndia 8 report on %ndian 9ood +rocessing %ndustry areas and 33.33 per cent in difficult areas sub#ect to a ma)imum of :s. &' million is provided to local bodies for modernization of abattoirs. So far only one case i.e. of /4D Delhi has been approved for grant of :s. &' million. Sector;Specific !overnment Policies Fruits and &egeta%les Though no industrial license is re;uired for setting up 9ruits < =egetable +rocessing industries setting-up "'' per cent @)port 0riented Units re;uire specific *ovt. approvals. G /any 9ruits < =egetables +rocessing industries are eligible for automatic approval of foreign technology agreement and up to -" per cent foreign e;uity participation including tomatoes mushrooms < other frozen vegetables fruit nuts fruit-peel fruit #ellies marmalades fruit #uices < vegetable #uices etc. G This sector is regulated by the 9ruit +roducts 0rder ">-- D9+0E issued under the @ssential 4ommodities 8ct

G 8ll processing units are re;uired to obtain a license under this order G Some items li$eF pic$les < chutneys tapioca sago and tapioca flour are reserved for e)clusive manufacture in the small scale sector G @)port of fruit < vegetable products is freely allo(ed Fisheries G 9oreign e;uity is permitted in fish processing sector. 9ish processing pro#ects (ith a minimum of 2' per cent value addition can be set up as "'' per cent @)port 0riented Units G 8ll items can be e)ported freely e)cept for silver pomfrets of (eight less than 3'' grams G @)port of marine products is allo(ed only after registration of the units as an e)porter (ith the /arine +roducts @)port Development 8uthority D/+@D8E 4ochin #eat ' Poultry G The /eat +roducts 4ontrol 0rder ">H3 under the @ssential 4ommodities 8ct ">-& regulates the manufacture ;uality and sale of all meat products G 8 license is re;uired under this order to set up of a factory for producingKprocessing meat products G @)port of meat is sub#ected to pre-shipment inspection and a certificate is re;uired from State 8nimal 7usbandry DepartmentKDirectorate of /ar$eting and %nspection G Slaughter of co(s is banned in most of the States. @)port of beef is prohibited G 8 3o 0b#ection 4ertificate D304E has to be obtained from the District administration for the slaughter of cattle buffaloes etc. 4orporate 4atalyst %ndia 8 report on %ndian 9ood +rocessing %ndustry G +ermission from the civic bodiesKState *overnment DDepartment of 8nimal 7usbandryE is also re;uired before setting up a meat processing unit integrated (ith a slaughter house 2()(* #ilk ' #ilk +roducts

G /il$ and /il$ +roducts 0rder D//+0E regulates mil$ and mil$ products production in the country. The order re;uires no permission for units handling less than "' ''' litres of li;uid mil$ per day or mil$ solids up to -'' tonnes per annum G 8ll the mil$ products e)cept malted foods are covered in the category of industries for (hich foreign e;uity participation up to -" per cent is automatically allo(ed G %ce cream (hich (as earlier reserved for manufacturing in the small scale sector has no( been de-reserved. 8s such no license is re;uired for setting up of large scale production facilities for manufacture of ice cream G Subse;uent to de canalization e)ports of some mil$ based products are freely allo(ed provided these units comply (ith the compulsory inspection re;uirements of concerned agencies li$eF 3ational Dairy Development Aoard @)port %nspection 4ouncil etc. ,rains The :ice /illing %ndustry D:egulationE 8ct ">-, < :ice /illing %ndustry D:egulation < ?icensingE :ules ">-> have been repealed from 2, /ay ">>H. G :ice milling and pulse milling sectors (hich (ere earlier reserved for the small scale sector have no( been de reserved G Since liberalization there is no license re;uirement for setting up or capacity e)pansion of roller flour mills. The mills can obtain their (heat supply from any source G There is no license re;uirement or priceKdistribution controls on manufacture of (heat products 2()(6 Packaged Foods G The industry is de licensed and automatic approval for foreign investment up to -" per cent of e;uity De)cept for items li$e malted food and items (hich are reserved for production in small scale sectorE is granted G The setting up of "'' per cent e)port oriented units re;uires specific government approval G The pac$aging la(s and regulations affecting food products are mainly covered under the Standards of .eights and /easures 8ct ">H6 and the Standards of

.eights and /easures D+ac$aged 4ommoditiesE :ules ">HH DS./8E specifying the ;uantity and pac$age labeling regulations for all products G The +revention of 9ood 8dulteration 8ct ">-& and the +revention of 9ood 8dulteration :ules ">-- D+98E specify food adulterationKcontamination norms and permissible ingredients from consumer health and safety point of vie( 4orporate 4atalyst %ndia 8 report on %ndian 9ood +rocessing %ndustry G The 8gmar$ :ules relate to the ;uality specifications and needs of certain agricultural products to be eligible for 8gmar$ certification

C.&LL$8!$S &8D 4PP4R198I1I$S

The future of the %ndian farmer depends on the success of the food industry as %ndia5s prosperity is predominantly lin$ed to the gro(th of incomes in the agrarian sector of the economy. %ncreasing liberalization of the economy has tried to lift the protection that the food and agriculture sector once en#oyed in the country. This has e)posed the sector both to the opportunities and challenges of the global food economy. The mar$et forces are compelling the %ndian agriculture producers to increase the ;uality of their farm produce (hile continuing to maintain their cost competitiveness in order to be able to compete effectively in the global food mar$et. @ven in the domestic mar$et rising per capita incomes and changing demographic profile of the population has ensured the gro(ing demand for processed and convenience foods. %ncreasing consumer a(areness about health and hygiene has shifted the focus of the mar$et to PsafeP foods. The %ndian food-processing sector is undergoing a veritable revolution - all the (ay from the plate to the plough. %ndian food processing industry has seen significant gro(th and changes over the past fe( years driven by changing trends in mar$ets consumer segments and regulations. These trends such as changing demographics gro(ing population and rapid urbanization are e)pected to continue in the future and therefore (ill shape the demand for value added products and thus for food processing industry in %ndia. The *overnment of %ndia1s focus to(ards food processing industry as a priority sector is e)pected to ensure policies to support investment in this sector and attract more 9D%. %ndia having access to vast pool of natural resources and gro(ing technical $no(ledge base has strong comparative advantages over other nations in this industry. The food processing sector in %ndia is clearly an attractive sector for investment and offers significant gro(th potential to investors.

Challenges faced y the Indian industry

The most crucial challenge today that the %ndian food processing industry is facing is the lac$ of suitable infrastructure in the shape of cold chain pac$aging centres value added centre modernized abattoirs etc. %mprovement in general infrastructure is also a must re;uirement for the industry to progress. Some other important initiatives that are needed are G +romotion of appropriate crossbreeds (hile conserving indigenous breeds of ?ivestoc$ G @stablishment of livestoc$ mar$eting system G +romotion of rural bac$yard poultry in a cooperative mar$eting setup G Development of cooperative dairy firms G @nhancing livestoc$ e)tension services G @ncouraging private veterinary clinic G %nstitutionalizing a frame(or$ for utilizing synergy bet(een restoration and creation of (ater bodies for (ater harvesting and fishery 4orporate 4atalyst %ndia 8 report on %ndian 9ood +rocessing %ndustry G +rovision of an insurance pac$age to avoid distress

Strengths and opportunities that India en<oys

G %t is the seventh largest country (ith e)tensive administrative structure and independent #udiciary a sound financial < infrastructural net(or$ and above all a stable and thriving democracy G Due to its diverse agro-climatic conditions it has a (ide-ranging and large ra( material base suitable for food processing industries. +resently a very small percentage of these are processed into value added products G %t is one of the biggest emerging mar$ets (ith over " billion population and a 2-' million strong middle class G :apid urbanisation increased literacy and rising per capita income have all caused rapid gro(th and changes in demand patterns leading to tremendous ne( opportunities for e)ploiting the large latent mar$et. 8n average %ndian spends about -' per cent of household e)penditure on food items. G Demand for processedKconvenience food is constantly on the rise G %ndia5s comparatively cheaper (or$force can be effectively utilized to setup large lo( cost production bases for domestic and e)port mar$ets G ?iberalized overall policy regime (ith specific incentives for high priority food processing sector provide a very conducive environment for investments and e)ports in the sector G =ery good investment opportunities e)ist in many areas of food processing industries the important ones being F fruit < vegetable processing meat fish <

poultry processing pac$aged convenience food and drin$s mil$ products etc.

Recommendations
.hilst the *overnment initiatives aimed to bring about regulatory reforms and infrastructure development in agriculture mar$eting and private sector investment in infrastructure creation have created the much desired vibrancy in the sector in recent times ho(ever there is a paramount need to ta$e big tic$et measures to catapult the gro(th of food processing sector and ta$e it to the high gro(th tra#ectory. Some of the measures that could be ta$en to spur the gro(th of the sector are as follo(sF 4vercoming long / fragmented supply chain# To overcome the long and fragmented supply chain contract farming can emerge as a significant opportunity for companies (hereby they can create direct farm lin$ages to source appropriate ;uality ;uantity and varieties of inputs. 4urrently contract farming is supported by the governments of fe( $ey producing states in %ndia. 8 fe( companies have been successful in lin$ing up (ith farmers and some models of contract farming based on profit sharing or social investment may emerge in the future. Providing impetus to logistics / supply chain sector# ". Dedicated freight corridors in rail supplemented by concretized dual carriage(ays for the State < 3ational high(ays (ill directly reduce the cost of goods supplied. 2. There is a need to develop a single entity of all multi-modal transportation instead of splitting into rail surface and air as separate /inistries < entities. This entity needs to remain customer < industry centric rather than as the *overnmental control mechanism. 3. Support to private rail operators by providing access to infrastructure of %ndian rail(ays at concessional ratesI ta) holidays for purchase of (agons and creation of infrastructure especially that of rail terminals for cargo consolidation and aggregation. &. +rovide further incentives to 9T.Ms one of the ma#or drivers of (arehousing business.

-. The *overnment should provide industry status to this sector and formulate a separate /inistry for Supply 4hain < ?ogistics sector. 6. Support development of organized strategic logistics hubs by helping in land ac;uisition and by providing ta) incentivesK ta) holidays. H. Ta) incentives to /ulti modal ?ogistical 4entres (hich also have manufacturingKe)porting capabilities. ,. %ncentivize 3+? operators in setting up end-to-end logistics and (arehousing set-up. >. %ncentives for setting up (arehousingKcold storage infrastructure and customized transportation net(or$ development. G Formulation of Comprehensive 8ational Level policy on Food Processing The comprehensive policy (ill ensure private sector investment in infrastructure development increased farm productivity and up gradation of ;uality and give further impetus to the food processing sector. The comprehensive national level food processing policy (ould also ensure institutional strengthening capacity building across the value chain and (ould also see$ to promote innovation in general and technological innovation in particular. G 8eed for Second !reen Revolution in &griculture The first *reen :evolution has run its course. 4ereal yields are rising very slo(ly (ater tables are plunging and agricultural gro(th is also lo(. %ndia needs a second *reen :evolution in %ndia (hich ta$es rice and (heat cultivators beyond the grain production stage to agro-food processing and gives value addition and (ould also solve the issue of constraints in ra( material procurement. This high end initiative re;uires commitment from all the sta$eholders in the food value chain. G Inter Ministerial 0orking !roup to &ddress the Issues The *overnment should set up %nter /inisterial .or$ing *roup D%/.*E under the leadership of /inistry of 9ood +rocessing to loo$ at comprehensively addressing various issues that are holding this sector bac$.

. G 9ndertake appropriate measures to address the skill !ap Issue in the sector# aE The government should allocate separate budget for human resource development for food processing sector for enhancing and up gradation of the s$ills and implementation of the various schemes for s$ill development. 8ll the s$ills development cells and other organizations and ministries should (or$ in tandem for effective implementation of the ob#ectives set. bE There is a need for immediate adoption of %T%1s by the food processing industry in various clusters across the country to upgrade the lo(er end s$ills. The candidates after training couldbe directly employed by the industryI this model is already prevalent in some parts of the country at a small scale but no( it needs a big push from the industry. G Promote agri;food parks y involving industry participation for etter functioning of these parks= G Make concerted efforts to enhance private sector investment in infrastructure development) increasing farm productivity and up gradation of >uality= G &ll Industry incentives under single window clearance=

C48CL9SI48

The %ndian food industry presents a very large opportunity to every sta$eholder. This is primarily driven by a robust consumer demand the changing nature of the %ndian consumer (ho is more informed and (illing to try ne( productsI and the strong production base of the country. 3eedless to add the several gaps in the current production and delivery systems actually present a huge opportunity for the gro(th of companies (illing to bet long term in this sector. 7o(ever the gro(th of food processing companies has been sub-optimal because of high cost lo( level of productivity high (astage and lac$ of competitiveness of %ndian food products in the global mar$et. Therefore to fully leverage the gro(th potential of the sector current challenges that are being faced by the industry need to be properly addressed and steps need to be ta$en to remove the bottlenec$s hampering the sectoral gro(th. 9%44% survey has thus acted as a first step in identifying these challenges thus providing a roadmap for all the sta$eholders to (or$ on and thus contributing in realizing the immense potential of this industry.