Tuesday, September 4, 2012

India- Food Basket for the World

India- Agriculture

Agriculture is the backbone of Indian economy. Most of the rural population in India lives on agriculture and farming. Today India ranks second in the world for the overall agricultural production and number 1 in the production of dairy products. Agriculture and allied sectors like forestry and fisheries accounted for 16.6% of the Gross Domestic Product (GDP) in 2009 and about 50% of the work force in India are supported to agriculture and related businesses. In India 52% of the overall area of lands are cultivatable when compared to 11% of the whole world. India has all the different climatic conditions and 46 varieties of soils out of 60 in the world are present in India.

India's position in World's Production

The data mentioned below are collected from www.indianbusiness.nic.in (Web page of Indian Government)
  • Largest producer of milk in the world (105 million tonnes per annum)
  • Largest livestock population (485 million tonnes per annum)
  • Second largest producer of fruits and vegetables (150 million tonnes per annum)
  • Third largest producer of food grain (230 million tonnes per annum)
  • Third largest producer of fish (7 million tonnes per annum)
  • 52% cultivable land compared to 11% world average
  • All 15 major climates in the world exist in India
  • 46 out of 60 soil types exist in India
  • 20 agri-climatic regions

Food Processing in India

Inspite of huge production of agri products India ranks below 10th in agri products export. Food processing industry in India is in the growing phase and it employs almost 13 Million workers in India. It is growing at a rate of 7% per annum. Main products of Indian food processing industry include meat, milk and sea foods.

Almost only 9% percent of the overall agri production is processed in India and 42% of food processing is done unorganised in India.

Major players in Indian Food Processing Sectors includes
  1. ITC Limited
  2. Parle Products Pvt. Ltd
  3. Agro Tech Foods
  4. Amul
  5. Perfetti India Ltd.
  6. Cadbury India Ltd.
  7. PepsiCo India Holdings
  8. Nestle India Pvt. Ltd.
  9. Britannia Industries Ltd.
  10. Hindustan Lever Limited
  11. Milkfood
  12. MTR Foods Limited
  13. Godrej Industries Limited
  14. Gits Foods Products Pvt. Ltd.
  15. Dabur India Ltd.
  16. Nissin Foods

Plans to Improve Indian Food Processing Industry

Indian Ministry of Food Processing is taking several actions to improve the food processing sector in India. The eleventh 5 year plan which is an continuation of tenth five year has improved by restructuring certain schemes so that this new plan has an integrated approach not on financial assistance for food processing process but also on 
  • Skills development
  • Entrepreneurship
  • Investment
  • Institutional development
  • Providing a policy environment which stimulates growth
Strategic intervention with redesigned schemes and strong implementation arrangements at certain areas of food processing industry is one of the main objective of 11th five year plans. Some of the branches of the food industry focused currently by ministry of food industries in India are, Food parks, abattoirs, cold chains, street foods, wine policy, testing and certification labs. Also more focus is given to the cold chain infrastructure development for the development of food transport and food exports sections.

Ministry of Food Industries- India allows 100% Foreign Direct Investments on Food processing sectors. They also encourage local entrepreneurs by providing subsidies and easily available loans. Food processing industries are prioritised sector for business loans in India. Some other schemes of Food Processing Industry includes

  • Full exemption from excise duty has been give to specified equipments for preservation, storage or transport of apiary, horticultural, dairy, poultry, aquatic and marine produce and meat and processing thereof
  • Project imports status, with concessional rate of basic customs duty of 5% has been granted to the initial setting up or substantial expansion of a cold storage, cold room for preserving or storage or an industrial unit for processing of agricultural, apiary, horticultural, dairy, poultry, aquatic and marine products and meat
  • Truck Refrigeration units manufacturing refrigerated vans/trucks have been fully exempted from basic customs duty
  • Exemption from service tax has been provided to services relating to Erection, Commission or Installation of - Mechanised Food Grain Handling Systems etc., Equipment for setting up or substantial expansion of cold storage; and machinery/equipment for initial setting up or substantial expansion of units for processing of agricultural, dairy, poultry, aquatic, marine or meat products.
  • The scope of exemption of service tax has been expanded to include food grains and pulses in addition to fruits, vegetables, eggs and  milk 
Please refer directly the web page of Indian Ministry of Food Industries to know about the their schemes  through this link: http://mofpi.nic.in/default.aspx

You can also directly refer this page to know about how to invest on food processing in India: http://mofpi.nic.in/ContentPage.aspx?CategoryId=95

SWOT analysis 


  • Vast availability of Raw materials
  • Less cost of production
  • Available cheaper Human Resources compared to other parts of the world


  • High investment on cold chain infrastructure
  • Heavily bureaucratic investment process, government inefficiency and corruption
  • Lack of grading and standard food laws
  • Poor distribution channels and government regulations on food transport


  • Increasing consumption of processed foods
  • Large available markets in the form of middle class society with changing lifestyle through urbanisation
  • Less number of competitors and types of food products available in Indian market
  • Government funding, 100% FDI, tax exemptions and encouragement from Ministry
  • Highly profitable with regards to the future forecasts


  • Gradual decrease in the number of farmers in India
  • FDI investment is a threat to the local food processing industries
  • Traditional and cultural food habits preferring fresh foods

Food Export Opportunities

The concept of the Agri Export Zone attempts to take a comprehensive look at a particular produce/products located in a contiguous area for the purpose of developing and sourcing the raw materials, their processing and packaging, finally exporting them. Thus, the entire effort is centred on a cluster approach of identifying the potential products, the geographical region in which these are grown and adopting an end to end approach of integrating the entire process, right from the stage of production till it reaches the market. The government helps in sourcing for raw materials, the setting up of processing facilities, providing finance at low interest rates and even matching with international buyers. The export zones mooted by the Agricultural and Processed Food Products Export Development Authority (APEDA) to increase international trade in agri-commodities are an attempt to take a holistic approach to encouraging trade in specific commodities located in contiguous areas. For instance, in Tamil Nadu, the AEZs would focus on grapes, mangoes and chikkoo, in Kerala -- vegetables, in Punjab and Haryana -- kino, wheat and rice, Karnataka -- vegetables and flowers, Maharashtra -- mangoes, grapes and flower, Gujarat -- bananas, mango, castor and garlic, and in Uttaranchal -- litchi and medicinal plants. 

Take a look at the web page http://www.apeda.gov.in/apedawebsite/index.asp for information on agri products export from India. 

We can conclude that Indian food processing sector when managed properly can be a food basket for the whole world but only in course of time since Indian infrastructure and food regulations have to be improved.


1 comment:

Being Chinmay said...

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