FOOD PROCESSING Food processing involves any type of value addition to agricultural or horticultural produce and also includes

processes such as grading, sorting, packaging which enhance shelf life of food products. The food processing industry provides vital linkages and synergies between industry and agriculture. The Food Processing Industry sector in India is one of the largest in terms of production, consumption, export and growth prospects. The government has accorded it a high priority, with a number of fiscal reliefs and incentives, to encourage commercialization and value addition to agricultural produce, for minimizing pre/post harvest wastage, generating employment and export growth. India's food processing sector covers a wide range of products fruit and vegetables; meat and poultry; milk and milk products, alcoholic beverages, fisheries, plantation, grain processing and other consumer product groups like confectionery, chocolates and cocoa products, Soya-based products, mineral water, high protein foods etc. Indian food processing industry is widely recognized as a 'sunrise industry' having huge potential for uplifting agricultural economy, creation of large scale processed food manufacturing and food chain facilities, and the resultant generation of employment and export earnings. The industry is estimated to be worth around US$ 67 billion and employing about 13 million people directly and about 35 million people indirectly. The food processing sector in India is geared to meet the international standards. Food Safety and Standards Authority of India has the mandate to develop standards and also to harmonise the same with International Standards consistent with food hygiene and food safety requirement and to the conditions of India's food industry. Two nodal agencies, Agricultural & Processed food products Export Development Authority (APEDA) and Marine Products Export Development Authority (MPEDA), were formed for promoting exports from India. MPEDA is responsible for overseeing all fish and fishery product exports; APEDA, on the other hand, holds responsibility for the exports of other processed food products. Advantage India

India is one of the largest food producers in the world India has diverse agro-climatic conditions and has a large and diverse raw material base suitable for food processing companies India is looking for investment in infrastructure, packaging and marketing India has huge scientific and research talent pool Well developed infrastructure and distribution network Rapid urbanisation, increased literacy,changing life style, increased number of women in workforce, rising per capita income- leading to rapid growth and new opportunities in food and beverages sector

50 per cent of household expenditure by Indians is on food items Strategic geographic location (proximity of India to markets in Europe and Far East, South East and West Asia).

India's Position in World's Production

Largest producer of milk in the world (105 million tonnes per annum) Largest livestock population(485 million tonnes per annum) Second largest producer of fruits & vegetables (150 million tonnes per annum) Third largest producer of food grain (230 million tonnes per annum) Third largest producer of fish (7 million tonnes per annum) 52% cultivable land compared to 11% world average All 15 major climates in the world exist in India

46 out of 60 soil types exist in India 20 agri-climatic regions

Key Growth Drivers of Food Processing Sector in India

Increasing spending on health and nutritional foods. Increasing number of nuclear families and working women Changing lifestyle Functional foods, fresh or processed foods Organised retail and private label penetration Changing demographics and rising disposable incomes

Key Opportunities in Food processing Sector

Processable varieties of crop Contract farming Investments in infrastructure through Public Private partnership (PPP) Mega Food parks Integrated cold chain Food safety Management Systems Key segments in the food processing industry Fruits & vegetable processing Fruits and vegetables is one of the most important and fast growing sub-sectors of the food processing sector. 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 vegspice pastes, processed mushrooms and curried vegetables reasons being increase in consumption by nuclear families, working women, students and single employees staying alone. There are abundant investment opportunities are there in expanding the export market. An increasing acceptance of new products with market development efforts has been witnessed lately given the fact that there is a good international demand for certain fruits and vegetable products.The Indian food processing industry is primarily export oriented. India's geographical situation gives it the unique advantage of connectivity to Europe, the Middle East, Japan, Singapore, Thailand, Malaysia and Korea. In 2008-09, India's export of fresh fruit and vegetable was estimated at US$ 0.79 billion and in case of processed fruits and vegetables it stood at US$ 0.68 billion. Meat Processing In meat and meat processing sector, poultry meat is the fastest growing animal protein in India. The estimated production of meat was 6.5 million tonnes during 2007-08. India exports more than 500,000 million tonnes of meat of which major share is buffalo meat. Buffalo meat production during 2008-09 is estimated at 2.8 million tonnes and out of this about 21% is exported. Indian buffalo meat is witnessing strong demand in international markets due to its lean character and it's near organic nature. India is the 6th largest exporter of bovine meat in the world. In 2008-09, India's export of meat products (including buffalo meat, sheep/goat meat, poultry products, animal casings and processed meat) stood at U$ 1.25 billion. Dairy processing India is number one milk producing country in the world with an estimated production of 105 million tonnes in comparison to world milk production of 693 million tonnes during 200708.Buffalo milk is estimated to account for 57% of the total milk production in India. India has a unique pattern of production, processing and marketing/consumption of milk, which is not comparable with any large milk producing country. Approximately 70 million rural households in the country are engaged in milk production. Over 11 million farmers are

organised into about 0.1 million village Dairy Cooperative Societies (DCS). About 35% of milk produced in India is processed. The organised sector (large scale dairy plants) processes about 13 million tonnes annually, while the unorganized sector processes about 22 million tonnes per annum. In 2008-09, export of dairy products was estimated at US$ 0.21 billion. Fisheries Sector In India nearly 10 million people, living in 4,000 coastal villages and more number of interior villages, depend on fisheries sector. The export of marine products has steadily grown over the years - from a mere US$ 0.84 million in 1961-62 to US$ 1,849.08 million in 2008-09. Marine products account for approximately 1.1 % of the total exports from India. Frozen shrimp continued to be the single largest item of export in terms of value accounting for about 44% in the total export earnings. In terms of quantity, fish accounted for the major share at 40% (shrimp 21%).European Union (EU) was the largest market during the year 2008-09 with a percentage share of 32.6% followed by China 14.8%, Japan 14.6% , USA 11.9%, South East Asia 10%, Middle East 5.5% and Other Countries 10.6%. Grain processing sector India during the year 2007-08, accounted for 8.73% of the world's oilseed production of 7.63%; 7.31% of the world's oil meal production of 6.74%; 7.53% of the world's meal export of 6.78%; 6.03% of the world's oil production of 5.86%; 9.22% of world oil imports of 9.58% and 9.33% of the world's oil consumption of 9.28%. On the export front, export of oil meals, oilseeds, minor oils (fats) and castor oil during the financial year 2007-08 is reported at 62.6 lakh tonnes valued at US$ 2.32 billion against the exports of 58.9 lakh tonnes valued at US$ 1.39 billion in the previous year. The solvent extraction processing of oilseed, oilcakes and rice bran during 2007-08 is reported at 121.2 lakh. However, the overall production of solvent extracted oils during 2007-08 form rice bran, oilcakes & minor oilseeds and soybean is reported at 19.4 lakh tonnes. Consumer food industries 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. India's biscuits industry is the largest among all the food industries and has a turnover of around US$ 0.64 billion. India is known to be the second largest manufacturer of biscuits, the first being USA. Indian consumer food inustry is classified under two sectors: organised and unorganised. Bread and biscuits are the major part of the bakery industry and cover around 80 percent of the total bakery products in India. Biscuits stands at a higher value and production level than bread. This belongs to the unorganised sector of the bakery industry and covers over 70% of the total production.

Major Players in Indian Food processing

ITC Limited Parle Products Pvt. Ltd. Agro Tech Foods Amul Perfetti India Ltd. Cadbury India Ltd. PepsiCo India Holdings Nestle India Pvt. Ltd. Britannia Industries Ltd. Hindustan Lever Limited Milkfood MTR Foods Limited Godrej Industries Limited Gits Food Products Pvt. Ltd. Dabur India Ltd.

Unilever Conagra Foods Nissin Foods Walmart Venky's

Foreign Direct Policy in Food processing Industry 100% FDI is allowed under automatic route in food processing industry and food infrastructure including food parks, distillation & brewing of alcohol, cold storage chain and warehousing. FDI in food processing sector is quite encouraging. The amount of FDI inflow for Food Processing Sector in India during the financial year 2010-11 up to November 2010 is US$ 121.7 million as compared to total FDI of US$ 1128.4 million. Schemes for Food Processing Industry Besides attracting FDI through schemes like Mega Food Park, the Government has also extended several fiscal incentives to enhance FDI in food processing sector like:-

Full exemption from excise duty has been given to specified equipments for preservation, storage or transport of apiary, horticultural, dairy, poultry, aquatic & marine produce and meat and processing thereof. Project imports status, with concessional rate of basic customs duty of 5% has been granted to the initial setting up or substantial expansion of a cold storage, cold room (including farm pre-coolers) for preservation or storage or an industrial unit for processing of agricultural, apiary, horticultural, dairy, poultry, aquatic & marine produce and meat. Truck Refrigeration units manufacturing refrigerated vans/trucks have been fully exempted from basic customs duty. Exemption from service tax has been provided to services relating to Erection, Commission or installation' of

Mechanized Food Grain Handling Systems etc. Equipment for setting up or substantial expansion of cold storage; and Machinery/equipment for initial setting up or substantial expansion of units for processing of agricultural, dairy, poultry, aquatic, marine or meat products.

The scope of exemption of service tax has been expanded to include food grains and pulses in addition to fruits, vegetable, eggs and milk.

Government Promoting Skill Development and Research in Food Processing Sector The rapidly growing food processing industry in the country requires availability of matching number of skilled manpower to sustain it on a continuous basis. Food processing sector also requires application-based research to meet the ever increasing industry and the consumer demand. The Ministry of Food Processing Industries through its scheme is assisting application-based projects, which would directly benefit the food processing sector. The Ministry provides financial assistance as grant-in-aid under its scheme of Human Resource Development for (i) Creation of Infrastructure facilities for running degree/diploma curses in food

processing sector, (ii) Entrepreneurship Development Programme, (iii) Setting up of Food Processing Training Centres and (iv) Training at Recognised National/State Level Institutions sponsored by Ministry of Food Processing Industry (MoFPI). For promoting research work in the sector, Ministry provides financial assistance as grant-in-aid under its scheme for Research and Development in Processed Food Sector. The Financial Assistance is given as grant-in-aid to various Universities, IITs, Central/State Government Institutions, Public Funded Organizations etc. The Scheme aims to undertake demand driven R&D work in the field of Food Processing Sector for product and process development, improved packaging, value addition and leading to innovative products and processes with commercial value. Future Outlook In order to increase level of processing and to promote Food Processing Industries to exploit both the domestic and international market potential for processed food products, Vision 2015 document has been finalized by the Ministry of Food Processing Industries (MFPI), which envisages tripling the size of the processed food sector by increasing the level of processing of perishables from 6% to 20% value addition from 20% to 35% and share in global food trade from 1.5% to 3% by 2015. An integrated strategy for promotion of agribusiness Vision, Strategy an Action Plan for the Food Processing Sector has also been approved by the Government