Booming Indian food service sector to grow by $30b over five years

By RJ Whitehead

- Last updated on GMT

India's food service growth has resulted in a knock-on effect on agriculture, equipment manufacturers, supply chain and employment, but analysts warned the segment still faces issues. ©GettyImages
India's food service growth has resulted in a knock-on effect on agriculture, equipment manufacturers, supply chain and employment, but analysts warned the segment still faces issues. ©GettyImages

Related tags: India, Government

India’s food service industry will increase in value to Rs5.5tr (US$84.5b) in the next five years, representing an annual growth rate of 10%.

This is according to an authoritative analysis by Technopak Advisors for Indian business group Ficci, which took the industry’s current wealth of Rs3.5tr as its baseline.

The report also predicted that the number of Indians directly working in the segment would rise to 9m — an increase of 3.5m by 2022.

The Indian food industry is poised for huge growth​,” it said. “It has emerged as a high-growth and high-profit sector due to its immense potential for value addition, particularly within the food processing industry​.”

Growth driven by trends and policies

Growth is being driven by the increasing number of young and affluent Indians, many with double incomes, who are more accustomed to eating out than the generation before them.

Meanwhile, order-in services have been growing quickly to “emerge as a key contributor to the Indian economy, including employment generation, skill development, growth in allied industries and entrepreneurship​”.

India’s overall retail opportunity is substantial and, coupled with a demographic dividend and rising Internet penetration, strong growth in retail and e-commerce is expected​,” said Sanjaya Baru, Ficci’s secretary general, adding that government policies such as Make in India and Digital India have successfully provided stimulus to the food service sector.

Mumbai and Delhi NCR account for 22% of the market, followed by Pune, Ahmedabad, Bengaluru, Chennai, Hyderabad and Kolkata, which together make up a 20% share.

Still issues to iron out

Yet while food service’s growth has resulted in a knock-on effect on agriculture, equipment manufacturers, the supply chain and employment, the analysis warned that the segment still faces issues.

"Certain challenges such as availability of quality manpower, high attrition rate, high real estate cost, fragmented supply chain and over-licensing act as headwind for the growth of the industry​.”

Saloni Nangia, president of Technopak Advisors, voiced hope that the state and central governments will support food service’s rise through policy and fiscal measures.

For the rapid growth of the sector, the government should grant it industry recognition and facilitate the easy availability of working capital loans to players through policy formulation​,” she said.

The Ficci report also criticised the lack of involvement by industry bodies, such as the National Restaurant Association to lobby governments for favourable policy moves.

Efforts have to be made to remove the various factors that are impediments to the growth of the industry and impacting the smooth functioning of business operations​,” it added.

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