Transcript Slide 1

Investment Opportunities in Food
Processing Sector in India
Presentation
at
ISRA Food 2012
Surendra Singh,
Asstt. Industrial Adviser,
M/o Food Processing Industries,
Government of India
Food processing: Potential
 Rising Income: GDP Growth of 7.5% over last five years
 GDP for Food Processing sector recording significant growth
 Higher Disposable income: 3rd largest economy in terms of
purchasing power parity
 Domestic market of over a Billion Consumers; 300 Million
Upper and Middle Class
 Lower operational cost: Cheaper skilled manpower; fiscal
incentives
 Competitive Geographic Location: Proximity major markets
 Fast growing organized retail marketing
Food Processing Sector in India
• Food Processing has emerged as one of the
most important economic growth levers in the
agriculture sector in India, which targets to
address:
 Low farmer price realization
 Surplus production
 Significant wastages
AND
• To capitalize on growing domestic food market
currently estimated at US$ 182 Billion,
expanding at a CAGR of 4.1%.
India Advantage: Natural resources
Richly endowed agricultural nation:
• One tenth of world’s arable land: 158 million hec.
• One fifth of world’s irrigated land: 61 million hec.
• Vast Coastline (7,517 Km) & Freshwater reservoirs
(15 million hec.)
•
All major Climates of the world.
• 20 agro-climatic regions and nearly 46 out of 60
soil types in the country.
• Sunshine hours and day length are ideally suited for
round the year cultivation
Raw materials: Fruits & Vegetables(1)
Raw Materials: Pulses & Cereal
Production(2)
70%
66% (1st)
% of World Production
60%
50%
40%
21% (2nd)
30%
25% (1st)
21% (1st)
Beans, Dry
Rice, Paddy
33% (2nd)
20%
10%
0%
Chick peas
Peas, Green
Lentils
Raw materials: Cattle/ Marine/ milk (3)
 Largest producer of milk-117 million MT
 Largest Cattle Population: 210 million (14.7%)
 Largest Buffaloes population:111 Million (57%)
 Second largest in sheep and goats population: 228
million (11.5%); Produces 6.2 million MT of meat
 Third largest in marine landings – 3.2 Million MT

Fifth in poultry production- 799 Millions
Raw materials: Spices (4)
 More than 50 types of spices with annual production of
3.2 million tons.
 Major spices produced are black pepper, cardamom
(small & large), ginger, garlic, turmeric, chili, etc.
 India is the largest producer, consumer and exporter of
spices.
 India is a treasure house of medicinal aromatic plant
species.
 9500 species of medicinal and aromatic plants
classified and documented.
Advantage India: Fiscal Incentives (1)

Automatic approval to Foreign Direct Investment up to 100% equity in
FPI sector excluding alcoholic beverages and a few reserved items;

51% foreign direct investment permitted in multi-brand retail: Likely to
generate a wave of foreign investments in Indian Food Processing sector

Food processing industry is declared a priority sector: New Trade Policy
places greater thrust on Agro-based industries;

Most capital goods can be imported without requirement of any license/
permission;

Customs duty rates have been substantially reduced on plant and
equipment as well as on raw materials and intermediates especially for
export production;

Institutional & credit support: Priority sector lending to SSI units
Advantage India: Fiscal Incentives (2)
 Most processed food items exempt from excise duty, others
attract 2% ad valorem duty;
 150 % weighted deduction under Income Tax for R&D in
Food Processing Sector
 Tax deduction on the profit derived from the business of food
processing, Dairy, poultry & meat products.
 Investment-linked tax incentives to the Units setting up and
operating Cold Chain warehousing facilities for storing
agricultural produce.
Proactive steps taken by Government of
India
 Dedicated Ministry at Union Government level started.
 Paradigm shift in Government Strategy:
• Regulatory & proactive support
 Focus on catalyzing private investment: Financial
Support for:
 Mega Food Park
 Cold Chain
 Abattoir
 Skill Development
 SEZs & Agri Processing Zones
 Enacted Integrated Food Law:
 One law & one regulator
Industry Giants - Global And Domestic Entering With Huge Investments
 Major Multinationals already present-
Nestle, Pepsi, Coke, Delmonte, Kellogg's, Con agra, Unilever
Perfetti , GlaxoSmithKline, Heinz, Wyeth Ajinomoto, Nissin
Met, Wal-Mart, Le Bon Griffith Laboratories, and many others
are in pipeline………………………………….
Some of the Indian Giants in Food- ITC, Dabur, Britannia,
Parle, Amul, Haldiram, Godrej Capital Foods, Future Group,
Temptation Foods, Keventer Agro, Zydus, Cadilla etc.
The Indian Multinationals entering in retail marketingReliance, Bharti Group, Tata, Wipro & Thapar etc.
Snapshot of:
India’s Mega Food Parks & cold
chain infrastructure
Mega Food Parks
• Scheme formulated to accelerate growth of food
processing industry in the country
• Mega
Food Parks provides state-of-the art
infrastructure facility – to enable setting up of food
processing units
• Cluster based approach for ensuring backward and
forward linkages: “Hub & Spoke” model with CPC at
the core and networked by PPCs and CCs.
• Projects to be implemented by a Special Purpose
Vehicle (SPV) as private led initiative
• 30 Mega Food Parks have been approved.
Cold Chain – Potential Impact
• Cold Chain Infrastructure:
Reduces wastages , aims at longer shelf life and
provides long term market etc.
• “Creation and Management of cold chain infrastructure”
for agriculture has been identified as thrust area by the
Hon’ble Prime Minister of India
Cold Chain Status - India
• Cold chain by its definition is negligible for
horticulture in India
 Synonymous with cold storage in India
 Individual components like CA, Pre-cooling, Packhouses, Reefers etc exist in isolation
• Highly fragmented with more than
companies in the whole value system
3,500
• Around 5,000 Cold Stores with a capacity of
21mn MT currently exists in the country
85% for potatoes
Isolation cold stores
Only 0.2 % for F&V other than potatoes
Around 90% in private sector, 7% in Co-ops
Cold Chain Status - India
• A study by the National Spot Exchanges Ltd. has estimated cold
storage requirements of 61.13 million MT, as against the present
capacity of cold storage of 23.51 million MT.
• The cold storage gap of about 38 million MT has been worked
out on the basis of peak season production and highest
arrival/harvesting of storable fruits and vegetables in a mouth.
• Seasonal Utilization of capacity – March to September peak
capacity utilization – 80-88%, rest around 20%
International participation in cold
chain - examples
Supply of equipment for cold
chain development
• Ingersol and Rand
• Frick India
• Alfa Laval
• Yakult (Japan)
International players dealing with • Mac Cain (Canadian)
products that require c
• PepsiCo , Unilever, Nestle
• Snowman with Mitshubishi
Operating cold chains in JV with • MJ Logistic with Eredene Capital (UK based)
Indian Partners
Fiscal Incentives to the cold chain sector
• Capital investment for modern storage capacity eligible for
viability gap funding schemes.
• External Commercial Borrowings available for cold storage
• Project import status at concessional customs duty of 5 per cent,
with full exemption from service tax to:
 Setting up of mechanized handling systems and pallet racking
systems in ‘mandis’ or warehouses for food grains and sugar.
 The initial setting up and expansion of Cold storage
• Full customs duty exemption to refrigeration units required for the
manufacture of refrigerated units or trucks.
• Central excise exemption to specified equipment for
preservation, storage and processing of agriculture and related
sectors and exemption from service tax to the storage and
warehousing of their produce.
India-Israel bilateral
trade and co-operation
in
Food Processing
sector
India-Israel Trade Scenario

In 2011, India was the 8th largest trader partner of Israel in
the world and 3rd largest trade partner in Asia.
 India Israel two-way trade in 2011 increased by 8.8% from
US $ 4.73 Billion to US $ 5.15 Billion.
 Major exports from India to Israel include precious stones
and metals, chemical products, textile and textile articles,
plants and vegetable products, mineral products, rubber
and plastic products, base metals and machinery.
 India is the 5th largest export destination of Israel
(including diamonds) and 7th largest excluding diamonds
(Jan-Dec 2011).
Areas of possible collaboration : India & Israel
 Opportunities for investments in India:i) Indian food retail chain,
ii) Mega Food Park, Cold Chain & Abattoirs Infrastructure.
 Israel investments in India’s FPI sector would not only
serve the fast growing Indian domestic market, but also
the Middle East and Far East Asia.
 Israel is having core strength in area of the technology
transfer in the field could be a major area of collaboration.
 Boosting of two-way trade in food sector by promoting
business to business contact through BSM/participation
in Fairs.
THANK
YOU