Foreign firms investing over US$1bn in Indian food processing industry

25-Mar-2013 - Last updated on 25-Mar-2013 at 16:55 GMT

Related tags Food processing Investment

According to a dispatch to parliament, in just under three years since foreign direct investment (FDI) was opened up for the food processing industry, investors have pumped almost Rs6,200 crore (US$1.15bn) into the segment.

“Total foreign direct investment in [the food processing] sector from April 2009 to December 2012 [stands at] Rs 6,197.63 crore,” the minister of state for food processing industries, Charan Das Mahant (pictured), told the Rajya Sabha in a written reply.

Food processing is one of the industries whereby 100% FDI is allowed, meaning that foreign companies do not require the government’s approval to start trading in India. Moreover, they can take advantage of the development schemes offered by the government.

30 mega-projects

During the 11th Five-year Plan, the government had launched a mega food parks scheme for the development of FPIs and has approved 30 such projects so far.

Quoting figures from the Annual Survey of Industries and National Sample Survey, the minister also announced that said 6.4m workers are currently engaged in the country's FPI sector, although this figure did not include some rural and unorganised areas not covered by the survey.

Until last week, the minister claimed the government had supported just under 1,000 food processing units with financial assistance amounting to just under Rs145 crore (US$27m) under the Scheme for Technology Upgradation, Establishment and Modernisation of Food Processing Industries.

In Andhra Pradesh alone, 171 units have received assistance amounting to Rs337 crore (US$2.7m), while a similar number of units were given assistance in Punjab and 105 in Maharashtra. In all, 26 states have received grants under this scheme over the current financial year.

States given leeway

Meanwhile, the ministry has set out to further court development by encouraging state governments to frame food processing policies aimed towards boosting rural infrastructure, raising the standard of food processing, generating farm-level employment and protecting the environment.

Mahant said that the government had approved a policy of state action through the National Mission on Food Processing starting from April. Through it, individual states will be given power to frame their own food processing policies according to their situation.