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Food Industry the Indian Food Market is Estimated at Over US

Food Industry the Indian Food Market is Estimated at Over US

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Published by VIKASH KUMAR
Food industry in india
Food industry in india

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Published by: VIKASH KUMAR on Nov 29, 2009
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Food industry
The Indian food market is estimated at over US$ 182 billion, andaccounts for about two thirds of the total Indian retail market. Further, according toconsultancy firm McKinsey & Co, the retail food sector in India is likely to grow fromaround US$ 70 billion in 2008 to US$ 150 billion by 2025, accounting for a largechunk of the world food industry, which would grow to US$ 400 billion from US$ 175billion by 2025.Exports of agricultural products from India are expected to more than double to topUS$ 20.6 billion in the next five years, according to the commerceministry.According to estimates by the Agricultural and Processed Food ProductsExport Development Authority (APEDA), the share of India's farm product exports inthe global trade will grow from 2 per cent now to over 5 per cent.Exports of freshand processed vegetables, fruits, livestock and cereals rose 10 per cent to US$ 8.67billion in 2008-09.SpicesDespite a global slowdown, Indian spice exports are growing. India exported470,520 tonnes of spices valued at US$ 11.68 billion—an all-time high—in 2008-09.During the previous financial year, 444,250 tonnes valued at US$ 11.01 billionwere exported.Compared with last year, the export had shown an increase of 19 percent in rupee value and six per cent in dollar terms.Food ProcessingThe food processing industry is presently growing at 14 per centagainst 6-7 per cent growth in 2003-04. The industry received foreign directinvestments (FDI) totalling US$ 143.80 million in 2007-08 against US$ 5.70 millionin the previous fiscal. The cumulative FDI received by the industry from April 2000-August 2009 stood at US$ 878.32 million.However, India’s share in exports of processed food in global trade is only 1.5 per cent; whereas the size of the globalprocessed-food market is estimated at US$ 3.2 trillion and nearly 80 per cent of agricultural products in the developed countries get processed and packaged.Inorder to further grow the food processing industry, the government has formulateda Vision-2015 action plan under which specific targets have been set. This includestripling the size of the food processing industry from around US$ 70 billion to aboutUS$ 210 billion, raising the level of processing of perishables from 6 per cent to 20per cent, increasing value addition from 20 per cent to 35 per cent, and enhancingIndia’s share in global food trade from 1.5 per cent to 3 per cent. This would requirean investment of US$ 20.6 billion.According to an Ernst and Young (E&Y)presentation, the food processing industry in India will grow 30-40 per cent asagainst the present 15 per cent in the next 10-years.Prime Minister Dr ManmohanSingh on October 6, 2009 laid out a blueprint for rapid growth in the country’s foodprocessing sector. The Prime Minister said that this can be achieved by simplifyingthe tax structure, formulating a National Food Processing Policy and improving ruralinfrastructure.
 
Snacks and ConfectioneryThe Indian market holds enormous growth potential forsnack food, which is estimated to be worth US$ 3 billion, with the branded snackmarket estimated to be around US$ 1.34 billion, growing at 15-20 per cent a year.While the growth rate of the US$ 1.56 billion unorganised sector is 7-8 per cent. To pump up volumes in the US$ 1.89 billion branded biscuits market, the threelargest food companies—ITC, Parle Foods and Britannia—plan to spend big onlaunches, re-launches and retail activities.Health Food Recognising the growth potential of the branded health food sector inIndia, fast moving consumer goods (FMCG) majors are foraying into this sector in abig way. As Hindustan Lever Ltd (HUL) is test marketing its health food brand,Kissan Amaze, in three southern states in India, Godrej Hershey Foods & BeveragesLtd (GHFBL), a joint venture between Godrej Beverages & Foods Ltd and HersheyCompany, is planning to introduce select brands from its international portfolio inthe domestic market. ITC Foods is also planning to extend the product portfolio of its health food brand in the next few months.Dairy According to Dairy India 2007 estimates, the current size of the Indian dairysector is US$ 62.67 billion and has been growing at a rate of 5 per cent a year. Thedairy exports in 2007–08 rose to US$ 210.5 million against US$ 113.57 last fiscal,whereas the domestic dairy sector is slated to cross US$ 108 billion in revenues by2011.Beverages According to industry experts, the market for carbonated drinks in Indiais worth US$ 1.5 billion while the juice and juice-based drinks market accounts forUS$ 0.25 billion. Growing at a rate of 25 per cent, the fruit-drinks category is one of the fastest growing in the beverages market. Sports and energy drinks, whichcurrently have a low penetration in the Indian market, have sufficient potential togrow.The market for alcoholic beverages has been growing consistently. 'The Futureof Wine', a report on the state of the wine industry over 50 years, suggests that themarket for wine in India was growing at over 25 per cent per year.Retail Landscape: Food Chains and Restaurants The food and grocery market inIndia is the sixth largest in the world. Food and grocery retail contributes to 70 percent of the total retail sales. According to industry estimates, the segment isgrowing at a rate of 104 per cent and is expected to grow to US$ 482 billion by2020.According to a BMI forecast, India is likely to see a huge 443 per cent increasein mass grocery retail (MGR) sales during the 2007-2012 period.Major investments Private investment has been one of the key drivers for growth of the Indian food industry. The 'India Food Report 2008', reveals that the total amountof investments in the food processing sector in the pipeline for the next three yearsis about US$ 23 billion.
 
* The government has received around 40 expressions of interest (EoI) for thesetting up of 10 MFPs with an investment of US$ 514.37 million.* Reliance Industries Ltd has invested US$ 1.25 billion in a dairy project.* PepsiCo is doubling its investment in its Indian beverage business for calendar2009. The company will invest over US$ 220 million to increase the capacity of thebusiness.* Gujarat Co-operative Milk Marketing Federation (GCMMF), which owns andmarkets Amul brand, has come up with a long term plan, which envisagesincreasing the turnover of all its member dairy co-operatives to US$ 5.72 billion by2020 from current level of US$ 2.12 billion. GCMMF plans to pump in around US$550.6 million to achieve its mission.* Direct selling company Modicare Ltd has entered the food & beverage marketwith the launch of a tea brand called ‘Fruit of the Earth.* Geneva-based food service chain Global Franchise Architects (GFA) aims toopen 250 stores around the world by March 2010, of which 100 will be in India.Government Initiatives The new trade policy places increased focus on agro-basedindustries.* Food processing industries have been put in the list of priority sectors for banklending.* The government has also started work on 10 Mega Food Parks, and is planningto increase the number to 30 by 2015.* Fruit and vegetable processing units have been completely exempted frompaying excise duty.* Automatic approval for foreign equity up to 100 per cent is permitted for mostof the processed food items.* Items like fruits and vegetables products, condensed milk, ice cream, meatproduction have been completely exempted from Central Excise Duty.* Excise duty on ready to eat packaged foods and instant food mixes has beenbrought down to 8 per cent from 16 per cent.* Excise duty on aerated drinks has been reduced to 16 per cent from 24 percent.* The Ministry of Food Processing Industry would assist in the setting up of morefood processing units so that the industry could create 10 million jobs by 2015,according to Mr Subodh Kant Sahai, Union Minister for Food Processing.

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