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An Introduction to the Sector
India is fervently poised for the Food Revolution
This will ensure agricultural diversification and large investments
in food processing.
The concept of food security has two dimensions ± availability of
food and access to food.
30% of the food produced in the country is wasted.
There is a need to increase the range of foods available to improve
overall nutrition.
Special foods for patients suffering from hypertension, diabetes
gives health benefits.
Packaging of food products has become important to ensure safety
and hygiene.
A comprehensive view
The Indian food market is approximately Rs 2,50,000 crore ($69.4
billion)
Value--added food products comprise Rs 80,000 crore ($22.2 billion).
Value
The food processing industry is witnessing a 20% annual growth rate.
Post--Green Revolution, it is essential that agricultural research
Post
reoriented to address new challenges. Application of
biotechnology, RNA use, and molecular biology.
Nutritional research and improved cost-
cost-effective vaccine
programmes
]igher growth during 2005-
2005-06 in almost all the products belonging
to Food and Beverage segment
The overall industry has achieved a growth rate of about 8 % in
terms of value during 2004-
2004-05
Government¶s high priority for development of food processing
industry to encourage commercialization and value addition to
agricultural produce.
Agro based l00 percent export oriented units allowed sale up to 50
per cent in Domestic tariff area.
India¶s middle class segment continues to hold the key to success
of the processed food market in India.
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Indian food and beverage companies are making a beeline for regional
overseas markets like Bangladesh, Pakistan, Nepal, Middle East
The market is seeing players like ]einz, Mars, Marico, Pepsi, ITC,
Dabur, Britannia, Cadbury, ] , Pillsbury, Nestle and Amul.
Both public and private players operate in the market, e.g., ]industan
ever, Nestle and NDDB, NAFED.
The price stability throughout the year has contributed to the increase
in domestic liquor sales.
Branded products are preferred in the Edible oil segment as the urban
consumers are increasingly becoming health conscious and looking
out for low cholesterol cooking medium.
m
ack of adequate infrastructure.
Absence of a strong and dependable cold chain system which is
very vital
There is a need for a review of the Agricultural Produce and
Marketing Act to ensure freedom to farmers
Some commodities in one segment are used as inputs in another
segment of the food processing industry
Excise Duty on all Value Added food products like Nutritional
and health foods
Ice ±creams and Non-
Non-alcoholic beverages dispensed by vending
machines are exempt from excise duty
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Packaging material for match sticks is exempted from excise
duty.
The higher railway freight has pushed up cost of raw materials
and inputs such as sugar, edible oil and all these add to cost of
production.
FICCI has highlighted some areas of concern impacting the
overall Food and Beverage Industry
India is among the world's major producer of food and produces
over 600 million tonnes of food products every year
India¶s food consumption market is expanding rapidly to attract
global food and drink giants
India is the second largest producer of rice and wheat and the
largest producer of pulses.
Indian food processing industry is poised for further growth in
view of the liberal policy measures and government¶s
commitment for reforms and development of food and agro-
agro-
processing industries.
]ealth food, health food supplements, Convenient Food and
Branded Food are rapidly gaining vast popularity with the
changing life styles of the consumers.
The unorganized, small players account for more than 75% of the
industry output in volume terms and 50% in value terms
Since liberalization in 1991 till January 2004 proposals for projects
of over Rs.87715 crores have been proposed in various
segments of the food and agro-
agro-processing industry.
The Government has provided many liberal incentives to
encourage the Food Processing industry.
m
The grain-
grain-processing sector is largely un-
un-organized, although there
are a few large players in the market.
Brands like "Captain Cook"ð
Cook"ð some large players, like ]industan
ever (with its Annapurna brand) and Godrej Pillsbury
(Pillsbury), Agro Tech (]ealthy World), Nature Fresh and ITC
(Aashirvaad) re players of the market
Increased competitive activity is spurring market growth
The segment, which had been growing with excellent rate of 40-40-
50% till 2000 grown by 12% in 2004-
2004-05.
m
The annual production of bakery products was 50 lakh tones in
2004--05 with estimated value of Rs 69 billion.
2004
The organized sector has a market share of 45 per cent and the
balance 55 per cent is with the unorganized sector in the baked
products.
m
The large organized sector players who are prominent in the high-
high-
and medium-
medium-price segments include Britannia, Modern
Industries td.
ocal manufacturers with numerous local brands cater to populous
segment and contribute considerably in the bread segment.
m
::
m
The major brands of biscuits are ± Britannia, Parle, Bakeman, Priya
Gold etc
The per capita consumption of biscuits in our country is about 1.52
kg as compared to more than 12 kg in developed countries
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"
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The market for semi-
semi-processed/cooked and ready to eat foods was
around Rs 82.9 billion in 2004-
2004-05.
] has entered the ready to eat segment through Indus Valley
rice meals in seven flavours
ITC µs more than 50 packaged branded food products under
Kitchens of India and Aashirvaad brands with different varieties
of ready to eat/ cooked food is gaining popularity in the market.
$
The total production of culinary products and snack food was
around Rs 1750 crore in 2004-
2004-05 and is growing at a moderate
rate of 8 per cent
The culinary products including mainly wheat based products
comprising of noodles, vermicelli, macaroni and spaghetti is
gaining popularity
] (Kissan and Knorr range) and Nestle
(Maggi) dominate this segment. ]einz and
Top Ramen are also strong players.
% "$$
" " &
$
India is the second largest producer of both
fruits and vegetables in the world.
The market has immense potentialities
provided some infrastructural facilities for
efficient transportation and marketing of
fruits and vegetables are created.
The largest agro-
agro-processing industries of the country with an
annual turnover of Rs 200 billion.
Indian sugar industry uses sugar cane as the only input
The sugar industries have sprung up in states like Uttar Pradesh,
Maharashtra, Punjab, Gujarat, Andhra Pradesh, West Bengal.
The leading players in Indian sugar industry are Balrampur Chini
Mills td, Bajaj ]industan td, Andhra Sugars td, Thiru
Arooran Sugars td and, Dhampur Sugar td.
The Government controls sugar capacity additions through
industrial licensing, determines the price of the major input
sugarcane, decides the quantity
Inadequate sugar cane availability, uneconomical size, bad
condition of plant and machinery are responsible for closure of
many mills in the country.
Central Government has also
provided inland transport
subsidy for sugar export.
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