South Asia radius

Food processing minister resumes crusade to charm foreign investors

By RJ Whitehead

- Last updated on GMT

© iStock
© iStock

Related tags: Junk food, Food processing, Food, Investment

India’s food processing minster has returned home after a trade tour to Japan, where she met executives of close to a dozen food companies in a bid to attract them to invest in production in India—at a time when few others are following that route.

After three days in the Far East, Harsimrat Kaur Badal held meetings with Japanese ministers and chief executives of companies including Kagome, Ise Foods ad Marubeni Corp to help boost bilateral trade.

Japan has one of India’s major foreign direct investors, having spent almost US$20bn in the country since 2000—or around 8% of all investment over the period, according to official figures.

Currently exports between the two countries are worth around US$14bn—of which food and beverage accounts for just US$1bn. Wealthy East Asian companies should be able to exploit this position, Badal said.

"Japanese companies are flush with funds and are looking at investing in India. The Japanese are not looking at India as just a large market but also as a manufacturing hub. I am sure we will take food diplomacy to another level​," the minister told Economic Times​. 

Badal added that Ise Foods, one of Japan’s biggest egg manufacturers, had expressed an interest in setting up operations in India, the world’s third-biggest egg producer, and highlighted its seafood and nut production as of particular interest to Japanese companies.

Badal is one of the Indian government’s busiest ministers. Her role requires her to keep a tight grip on the changing requirements of food processing policy, while at the same time often venturing overseas in her diplomatic capacity as a food industry ambassador.

The Japanese interest will act as a fillip for the government of Narendra Modi after its contentious policy to allow foreign direct investment in the food-only retail segment has met with little success in attracting major international companies.

Whereas FDI has been allowed in food processing for some time, it was only introduced for food retail last June. 

The two segments go hand in glove, especially as under the terms of the FDI policy, foreign retailers are allowed to operate in India as long as they trade in locally produced products. A stipulation designed to placate farmers who demanded more trade protection for the Indian produce sector from FDI, it is also hoped that it will prompt much more domestic processing.

With only 2% of its produce, 6% of its poultry 8% of its seafood and 35% of its dairy manufactured at home, according to official figures, the Indian government is determined to promote overseas investment in these areas.

Meanwhile, over in retail, some international majors been taking a wait-and-see approach to business in India in the hope that they will learn from their rivals before entering the market. For such companies, Walmart’s initially fraught entry into India sounds a cautionary note.

Around three years ago, the world’s biggest grocery chain bought out its Indian partner, Bharti Enterprises, after an unhappy partnership. The American retailer has since focused on operating cash and carries and recently opened its first store in more than two years after a hold on further expansion was lifted. 

In her meetings with the Japanese food executives, the food processing minister will no doubt have trumpeted Walmart’s announcement last November that it would open a further 50 stores in the next 4-5 years, following its posting of 34% sales growth in the last year.

"We are excited with this continuous progress and our contribution to the Indian economy through job creation, supporting 'Make in India' through local sourcing, supporting women entrepreneurs, small and medium enterprises, start-up entrepreneurs and farmers​," said Krish Iyer, Walmart India’s chief executive, at the time.

Potential retailers will also be buoyed be the news this week that they could be allowed to begin selling non-food items by November.

This comes after the government initially shelved plans to include general merchandise such as toiletries and dry goods when FDI in food retail was first introduced,

Releasing a draft on the government’s model food-processing policy, Badal said: “I think before November, when the World Food India 2017 fair is held in Delhi, the government will take a decision on [non-food items in FDI food retailing]​.”

The draft policy also provides details of state subsidies for investors to open food-processing units and explains credit incentives for building and equipping factories.

More stories from India…

Indian regulator hears more calls for junk food labelling

Nutritionists have once again been calling for food authorities to introduce a labelling system to denote junk food, similar to the green spot that is mandatory for vegetarian foods.

Junk

India’s junk-food provisions need to be upgraded, campaigners say of a country that does not even have a statutory definition of “junk food​”.

"Food products like soft drinks, chips, pizzas, fried food and high-calorie biscuits should have ‘J’ marking for easy identification​,” one nutritionist told Times of India​, adding that “most Indians do not understand nutrition table.” 

Another solution tipped by experts could feature a standard measure that could identify foods that fall in the junk category.

The idea of junk-food labelling is not new in India, and it appears to be gathering steam. In January, the food regulator took its first steps to define “junk food​”—the first step before such labelling could go through legislation.  

We are trying to define junk food based on the proportion of salt, sugar and fat content… The calculations are based on the Indian diet chart and recommended diet as well as international standards​,” said Pawan Kumar Agarwal, chief executive of the FSSAI.

A decision on the definition and whether to introduce warning labels is expected in the next  few weeks.

Related news

Follow us

Featured Events

View more

Products

View more

Webinars