South Asia Radius

India predicted to attract more than $30bn in investment

By Richard Whitehead

- Last updated on GMT

© iStock
© iStock

Related tags Food processing industry Food Food processing

Indian food processors are on track to tempt US$33bn in investment and generate employment for almost 10m in the next seven years.

That’s according to a joint research paper by Assocham, the apex industry body, and management consultant Grant Thornton, which assessed the direction of the food processing industry until 2024.

Already a key job contributor in India, policymakers have now identified food processing as central to their goal of moving workers from agriculture to manufacturing as part of the government’s flagship “Make in India​” policy. 

According to Grant Thornton, the segment is currently worth US$120bn-US$130bn, out of an overall food retail market worth nearly US$260bn in 2015, and predicted to reach US$480m by 2020.

Yet despite being the world’s biggest producer of milk, pulses, sugarcane and tea, and the second largest harvester of wheat, rice, fruits and vegetables, India’s proportion of processed foods is low, ranging between 2% and 35% depending on produce category.

This indicates an extensive opportunity in the food processing sector, the paper assesses, with globalisation and growing cross-border trade amounting to some 460m tons annually. 

The share of processed food shipments, compared to total exports, has been around 12% over the last few years, though its value has been growing at an annual rate of 23.3%. 

The unorganised sector accounts for 42% of India’s food processing industry, the Assocham study found, suggesting that a sizeable presence of small-scale industries pinpoints the sector’s role in employment generation.

Food and grocery is the largest segment in India‘s retail sector, with a share of more than 60% in India‘s total retail market in 2014. Moreover, it accounts for a massive 31% of India’s overall consumption basket—contrasting with Americans spending just 9% of their income on groceries, 17% among Brazilians and 25% in China.

Much of the segment’s US$30bn in new investment by 2024 will come as a result of various measures the government has introduced to boost its attractiveness. While food processing has enjoyed loose FDI regulations for some time, food retail was recently brought into the fold for foreign companies, as long as they work with locally produced ingredients.

Assocham also pointed out that such investment will provide much-needed strengthening to India’s crumbling supply chain, as will the launch of infrastructure development schemes  by the government. 

More stories from India…

FSSAI lab staff trained to test mycotoxins, pesticide and residues 

India’s food regulator will continue to work with the the Global Food Safety Partnership to train lab staff to test mycotoxins, pesticides and veterinary drug residues (Joe Whitworth writes​).

The FSSAI had previously run a programme with the GFSP to teach 10 trainers about pesticide residues and mycotoxins in Singapore last year. Those attendees will now train the food testing personnel in India.

The next sessions will take place in Hyderabad, Mysore, Kolkata and Nashi, for which the GFSP, a global initiative to improve food safety in middle-income countries, will provide training to master trainers on veterinary drug residues at the University of Maryland.

A meeting of members of the governing council of the GFSP, represented by World Bank, UNIDO, FAO, FDA, FIA, USAID and Waters Corporation, took place recently in New Delhi.

There’s representatives also met with FSSAI and other food safety stakeholders, including the CEOs of Hindustan Unilever, Nestlé, Tata, and industry bodies.

Ashish Bahuguna, chairman of FSSAI, said the authority was relatively new and there was an opportunity to learn from global best practices.

Pawan Agarwal, its chief executive, said he hoped that collaboration with GFSP would grow in coming years.

The FSSAI has other food-safety partnerships with authorities in Germany, France, Netherlands and New Zealand.

The authority is also working with agencies in other countries, including America, Canada and Singapore, to benchmark the food-safety regulatory system in India.

Related topics Policy Industry growth South Asia

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