FOREWORD

Under the leadership of Prime Minister Narendra Modi, India has spearheaded a range of efforts to introduce fundamental and modernizing changes to the economy such as increasing digital transactions, cutting red tape, increasing efficiency, introducing the Goods and Services Tax, among others. This rethinking and restructuring of the economy created room for growth and improvement in areas such as food and product retail.

India’s food processing sector is one of the largest in the world and its output is expected to reach $ 535 Bn by 2025-26. It lies at the heart of the Government of India’s Make in India initiative and resonates with Prime Minister Modi’s call for ‘vocal for local’.

New initiatives like a planned infrastructure spend of around INR 100 lakh crore (around $1 Trn) and INR 25 lakh crore to boost the rural economy have put the food processing sector on a high growth trajectory. The Pradhan MantriKisanSampadaYojna, for example, is a comprehensive package whichshall create modern infrastructure with efficient supply chain management from farm to retail outlet. More recently, boosting Prime Minister Modi’s AtmanirbharBharat vision,thescheme of Formalizationof Micro Food Processing Enterprises (FME) is being rolled out with an outlay of INR 10,000crore.

Buoyed by such actions, India’s food sector attracted $ 4.18 Bn in foreign direct investment between April 2014-March 2020. India is one of the largest producers of a range of agricultural products and as the global population grows, demand for made in India food is ever rising.

This report will give you a detailed overview of why the food processing sector in India is so exciting and I hope you will enjoy reading it.

- Deepak Bagla, CEO & MD Invest India

OVERVIEW OF THE INDIAN FOOD PROCESSING SECTOR

With India moving from a position of scarcity to surplus in terms of food production, the opportunities for increasing food processing levels are innumerable. India’s food processing sector, in recent years, has been known for its high-growth and high-profits, thus, increasing its contribution to the world food trade every year.

Currently, India is processing less than 10 %¹ of its agricultural output, thus, presenting immense opportunities for increasing these processing levels and leading to investments in this sector. With agriculture and its allied sectors being the largest source of livelihoods in India, 70 %² of its rural households still depend primarily on agriculture for their livelihood. Thus, this sector provides a huge employment generation potential as well. The food processing sector has been acknowledged as a high priority industry by the government of India and is currently being promoted with various fiscal reliefs and incentives.

With the government’s focus and a favourable policy ecosystem, the food processing sector has been growing at an Average Annual Growth Rate (AAGR) of around 8.41 %³ between 2014-18. The sector constitutes 8.83 %⁴ and 10.66 %⁵ of gross value added in manufacturing and agriculture sector respectively.

The Indian food industry’s output is expected to reach $ 535 Bn⁶ by 2025-26. Rising household incomes, urbanization and the growth of organized retail are currently some of the major drivers of this market.

According to the latest Annual Survey of Industries (2016-17), food processing accounted for⁷:

• 15.95 % of the total number of factories 
• Employment to 11.36 % of the workforce
• 14.09 % of the output 
• 16.78 % of the operational factories

The Indian market is fast evolving and has seen some major changes in terms of changing consumption patterns due to urbanisation, changes in the gender composition of the workforce, and growing consumption rates. The growing consumption of food is expected to reach $ 1.2 Trn by 2025-26⁸, owing to these factors.

India exports agricultural/horticultural products and processed foods to more than 100 countries/regions with major exports to the Middle East, Southeast Asia, SAARC countries, the European Union (EU) and the US. During 2018-19, India's exports of agricultural and processed food products totalled $ 38.49 Bn⁹.

Currently, India’s total agricultural export basket is a little over 2%¹¹ of the world agricultural trade. Additionally, agricultural exports contribute about 2%¹² to India's Gross Domestic Product (GDP).

India has many key advantages in the sector and thus, provides opportunities for ramping up production and supply. Presently, India‘s share of high value and value-added agricultural produce within the export basket stands at less than 15%, however, India has a strategic geographical location which gives it a unique advantage when it comes to exports. The country has convenient connectivity to Europe, Middle East and Africa from the western coast, and Japan, Singapore, Thailand, Malaysia, Korea, Australia and New Zealand from the eastern coast. Further, due to factors like lack of uniformity in quality, standardization and its inability to curtail losses across the value chain, India in not currently exporting much of its horticulture produce.

INDIAN FOOD PROCESSING MARKET: DRIVERS

India not only has the advantage of a huge domestic market but also with abundant raw material, is a large sourcing hub for agriculture products. The increase in the size of the food processing market can be attributed to changing consumption patterns due to urbanization, changes in the gender composition of workforce, and growing consumption rates. Additionally, more than two-thirds of India’s 1.3 Bn people are young with growing incomes which also creates a large market for food products.

In terms of statistics, India has one of the largest working populations in the world and, with a rise in disposable incomes, this segment of the population is also becoming the biggest consumer of processed foods in the country.

With an increase in urban working culture and fast-paced lifestyles, there is limited time available for cooking and meal preparation. Thus, processed foods such as ready-to-eat products and snacks have become quite popular, particularly in urban areas. By 2030, Indian annual household consumption is set to treble, making India an opportune market for consumption of processed foods.

The increasing penetration of organized food retail outlets are offering a wide range of options to consumers. These outlets provide consumers access to diverse products, usually with attractive discounts.

Further, the proportion of working women in the industry has been increasing continuously both in the urban and rural regions.

Four major factors play a role in the growth of the food processing sector:

• Strong domestic demand: Changing lifestyle and food habits due to increased disposable income
• Supply side advantages: High level of agricultural production - large livestock base, wide variety of crops, inland water bodies and a long coastline, that help increase marine production
• Export opportunities: Proximity to key export destinations, greater integration with the global economy
• Proactive government policy and support

FRUITS AND VEGETABLES

Overview

The diverse agricultural climatic zones in India make it a great location to grow a wide range of varieties of fruits and green vegetables. India is the largest producer of fresh vegetables globally. It accounts for about 15 %¹³ of the world’s total production. Among vegetables, the country is the largest producer of ginger and okra and the second largest producer of potatoes, onions, brinjal, cauliflowers and cabbages. India also ranks first in the production of fruits like bananas (25.7 %)¹⁴, papayas (43.6 %)¹⁵ and mangoes (40.4 %)¹⁶.

As of 2018-19, India’s total horticulture production stood at 313.85¹⁷ Million (Mn) Tonnes.

Processed Fruits and Vegetables

With large capacities, India has a highly decentralized fruit and vegetables processing industry. Currently, the industry’s retail sales see a 12 % value growth and a seven % volume growth as compared to 2018 numbers. The industry was valued at INR 15.4 Bn¹⁸ ($ 204 Mn) and exhibited a production of 62,900¹⁹ tonnes in 2019.

Export potential

As per 2018-19 data, the Indian fruits and vegetables industry exported fruits and vegetables worth INR 10,236.93 crores ($ 1,469.33 Mn)²⁰. Of this, fruits comprised of exports worth INR 4,817.35 crores ($ 692.01 Mn)²¹ and vegetables comprised of exports worth INR 5,419.48 crores ($ 777.25 Mn)²². Additionally, India exported 3,39,606.58 MT²³ of other processed fruits and vegetables globally worth of INR 2,804.99 crores ($ 402.47 Mn)²⁴ during the year 2018- 19.

The country’s total export of processed food was valued at INR 31,111.90 crores ($ 4.121 Bn)²⁵ in 2018-19 which included dried and preserved vegetables and mango pulp.

Key opportunities

• Technology transfers to reduce wastage: Initiatives that help reduce wastage levels, including adequate infrastructure (cold chains, processing infrastructure), research and development for processed food and packaging, innovation in farm preservation systems and skill development/post-harvest infrastructure.
• Aqua- horticulture: Wetlands present the opportunity to grow various horticulture crops such as foxnuts. Such wetlands have been created in Andhra Pradesh in India. Using GIS database technology, opportunities in aqua- horticulture can be explored by understanding the ecology and economy of certain crops.
• Fruits and vegetable processing: The fruit and vegetable processing industry provide a huge opportunity. The current processing levels in fruit and vegetables stand at a mere two. The opportunity can be explored in the form of frozen (IQF), canned, pulp, puree, paste, sauces, snacks, dressings, flakes, dices, dehydration, pickles, juices, slices, chips, jams and jelly.
• Processed fruit-based ingredients: Catering to the increasing demand for healthy alternatives, some fruit-based components for condiments have a vast opportunity. This also includes fruit-based ingredients for ice creams, yogurt and beverages.
• Export potential of processed fruits and vegetables: While India only has a one %²⁶ share in the global market, the acceptability of Indian horticulture products is rising due to concurrent developments in the areas of state-of-the-art cold chain infrastructure and quality assurance measures. This presents a huge opportunity for harnessing the export potential.
• Canning, dehydration, pickling, provisional preservation and bottling: A large part of the fruits and vegetables produced in India often go to waste. In order to reduce this waste and increase shelf life of fresh produce, opportunities in canning, dehydration, pickling, provisional preservation, and bottling can be explored.

MEAT AND POULTRY

Overview

India boasts of the world’s largest population of livestock and is currently the third largest egg producer in the world, as per FAO (Food and Agriculture Organisation) in 2016. Additionally, India is also the fifth largest producer in broiler production. However, India currently processes only 6 % of poultry and 21 % of meat.

In 2018-19, India produced 103.32²⁷ Bn eggs while the total meat production stood at 8.11²⁸ Mn tonnes. India had an availability of 79²⁹ eggs per capita per annum. Significant growth in egg production was seen in the case of Rajasthan, Odisha, West Bengal, Andhra Pradesh and Madhya Pradesh.

Export potential

India exported 12,36,638.39 MT³⁰ of buffalo meat products globally, which was worth INR 25,168.31³¹ crores ($ 3608.72 Mn), while the export of poultry products stood at INR 687.31³² crores ($ 98.42 Mn) during the year of 2018-19.

• Meat traceability: In recent years, meat traceability has become an important benchmark for quality assurance in the meat value chain. This allows problems such as microbial contamination amongst others to be quickly pinpointed and brought under control. Additionally, it helps companies to establish the bona fides of a variety of quality claims like organic and natural, or meat specific claims like grass-fed, free-range and humanely-raised.
• EC farms and Infrared Beak Treatment (IRBT) technology: With the advent of the modern machinery being used in IRBT which provides subcutaneous injections in the neck, there is scope for great reduction of the human error associated with hand or individual injectors. Additionally, with increasing awareness and changing preference of the Indian consumers towards clean, safe and hygienic meat and meat products, farm automation abattoirs, logistics, processing and point of sale cold storage infrastructure present a vast opportunity in India.
• Frozen and ready-to-eat products: India currently showcases a rising demand for frozen and ready-to-eat products. However, the current processing levels in India remain low at 6%. Therefore, collaboration in value-added products including Indian ethnic products and snacks present vast opportunities.

MARINE/FISHERIES

Overview

India has a rich and diverse fisheries resources such as deep seas, lakes, ponds and rivers. They account for more than 10 % of the global biodiversity in terms of fish and shellfish species. India’s vast potential in the sector can be seen in its long coastline spanning 8,118 kilometers apart from the inland waterways.³³

India ranks 2nd in terms of production of fish and is also the 2nd largest aquaculture nation in the world as of 2018-19³⁴. The country’s fish production stands at 13.7³⁵ Mn MT as of 2018-19. The sector exhibits an average annual growth rate of 7 % and has a 1% contribution to the overall GDP³⁶. Processing levels of marine food in India are currently at 23 %.³⁷

Export potential

Exports of fish and fish products emerged as the largest group under agricultural exports and export of marine products for the year 2018-19, at 13, 92, 559³⁸ metric tons and was valued at INR 46,589³⁹ crores ($ 6.73 Bn). This rapid increase in the growth of seafood exports can be been mainly attributed to the boom in brackish water aquaculture. India was also one of the key suppliers of frozen shrimp and fish internationally in the year 2019.

Key opportunities

• Traceability technology: Traceability technology can be applied in processed fish and fish products to ensure quality assurance and food safety. 
• Infrastructure for mariculture and advanced inland fisheries such as ocean farming, cage culture.
• Value addition and product development for items such as ready-to-cook, ready-to-eat, canned and frozen goods.
• Deep sea fishing vessels and related infrastructure development
• Modern infrastructure for harbors and landing centers
• Advanced technology for post-harvest: Currently, India faces post-harvest losses of 20-25 %. Advanced technology for handling and processing can be used to reduce the post-harvest losses to less than 10 %.⁴⁰
• Investment in live fish-vending centers, refrigerated vehicles, modernization of cold storages.
• E-platform for e-trading and e-marketing of fish and fisheries products

DAIRY

Overview

The Indian dairy market is amongst the largest and fastest growing markets in the world. India has attained the top position in milk production (and maintained it for 18 years) globally, owing to a huge bovine population. However, the full potential of Indian milk herd is yet to be realised and there is potential for diversification and growth. As of 2018, India is the leading milk producing country in the world, accounting for 19 %⁴¹ of the global market share. The total milk production in India reached 187.74 MMT in 2018-19. The milk processing industry is expected to expand with an annual growth rate (CAGR) of 14.8 %⁴² between FY 2018 and FY 2023, and is projected to reach INR 2,458.7⁴³ Bn ($ 32.57 Bn) in FY 2023.

Within India, Uttar Pradesh is the largest dairy and milk-producing state because it is home to the highest buffalo population and the second-highest cattle population in the country. Most of the rural population in this state is engaged in livestock rearing and dairying. Gujarat has numerous cooperative dairy milk unions, private dairy plants, and primary milk cooperative societies, which play crucial roles in the production of milk in the state. Being one of the primary dairy consumables, the increase in demand for milk in the country can be linked to an increasing population.

A point of concern as well as room for technological expansion is that as of 2018, 81.1 %⁴⁴ of the dairy and milk processing market was part of the unorganized sector. The industry needs organisation and significant infrastructure and capital infusion to boost hygiene and nutrition levels. Investment in the infrastructure required to change this ecosystem to an organized and hygienic one would be tapping into unrealised potential for supply and distribution logistics as well as a huge customer base. Additionally, quantum of milk processing is high in India at a level of almost 35 %⁴⁵, thus, offering many opportunities in the sector.

India's export of dairy products was 1,13,721.70⁴⁶ MT to the world, worth INR 2,422.85⁴⁷ crores ($ 345.71 Mn) during the year 2018-19.

Key opportunities

• Apart from milk, the revenue of the Indian dairy and milk processing industry is generated from value-added products such as butter, curd, paneer, ghee, whey, flavored milk, ultra-high temperature (UHT) milk, cheese, and yogurt.
• Flavored milk drinks had the strongest retail current value growth of 25 %⁴⁸ in 2019. The main drivers of growth for this segment is the rising health consciousness among consumers. Consumers are moving away from carbonated drinks towards healthier options that creates large growth potential for this area. Flavored milk is expected to register a CAGR of 23.6 %⁴⁹ in the period between 2019-2024. Examples of players in the flavored milk segment are ITC, who made an entry with the launch of Wonderz Milk, and Coca-Cola, who entered this category with “Vio”, a flavored milk drink in 180ml Tetra Pak with two flavors.
• Yoghurt and sour milk products recorded a retail current value growth of 26 %⁵⁰ to reach INR 248.4 Bn ($ 3.29 Bn⁵¹) in 2019. Mishti Doi and Shrikhand, which are the Indian versions of flavored yoghurt, contributed significantly to sales. Examples of brands with products catering to consumer tastes are those such as Nestlé, which launched Karela Raita and Banglar Mishti Doi, adding traditional, savory and contemporary products to their existing flavored yoghurt portfolio.
• Investments in technologies like Bulk Milk Coolers (BMC) can be encouraged to reduce time taken to collect milk as well as in high pressure processing technologies.
• New veterinary technology and cattle diagnos tics services to increase milk yield are also emerging in the Indian market which also creates opportunities in the cattle feed segment.

FOOD RETAIL

Overview

The growth of the Indian food retail sector has been significant due to the evolving consumer preferences and increased convenience associated with the sector. Modern grocery retailers are developing new marketing strategies to attract these households to their stores. Due to evolving lifestyles and purchasing habits, more consumers are choosing to shop at modern retail stores (hypermarkets and supermarkets) on a weekly or monthly basis, instead of shopping at traditional grocers daily. This developing pattern is encouraging modern retailers to expand their product range and invest in innovative product displays, in-store food service, and other comforts to enhance the consumer’s shopping experience. Modern retail outlets are becoming one-stop shops, providing goods from farm to table. Moreover, these outlets have begun to provide organic, natural and vegan grocery options to their customers as part of an ongoing healthy eating trend emerging in India.

Over the past three years, the food services sector has observed a tremendous development. The sector witnesses growth of 11 %⁵² CAGR during 2015-16 to 2018-19. In 2018-19, the sector was estimated at INR 4,23,865⁵³ crore ($ 56.11 Bn) and is projected to reach INR 5,99,784⁵⁴ crores ($ 79.40 Bn) at a CAGR of 9 %⁵⁵ by 2022-23.

The organised segment holds a share of 35 %⁵⁶. This segment witnessed a CAGR of 13 %⁵⁷ during 2015-16 to 2018-19 which is estimated to reach a CAGR of 15 %⁵⁸ by 2022-23. The sector was estimated to have a market size of INR 1,48,353⁵⁹ crores ($ 19.64 Bn) in 2018-19 and is expected to reach INR 2,57,907⁶⁰ crores ($ 34.14 Bn) in 2022-2023.

The unorganised sector holds a share of 65 %⁶¹ in the overall food service market. The segment witnessed a CAGR of 10 %⁶² during 2015-16 to 2018-19 and is expected to grow at a CAGR of 6 %⁶³ by 2022-23 to reach a value of INR 3,41,877 crores⁶⁴ ($ 45.26 Bn). The organised segment consists of standalone and chain restaurants. With a share of 75 %⁶⁵, the organised standalone market had an estimated size of INR 1,10,534⁶⁶ crores ($ 14.63 Bn) in 2018-2019 and has grown at a CAGR of 11 %⁶⁷ between 2015-16 and 2018-19. The rest of the 25 %⁶⁸ share within the organised sector is attributed to the chain format. This segment had an estimated size of INR 37,819 crores⁶⁹ ($ 5.01 Bn) in 2018-19 and has grown at a CAGR of 23 %⁷⁰ from 2015-16 to 2018-19.

Key opportunities

• Grocery marketplaces are improving their category margins by launching premium labels in organic and superfood categories. Companies manufacturing such categories of food have a growing market to dip into as the demand for these superfoods is increasing steadily. There are opportunities in the niche/upcoming categories where currently there is low penetration of existing brands and new companies can come in by offering differentiated assortments of mass consumer categories.
• The demand for ready to eat products has increased significantly in the past few years, especially during the current pandemic. People are choosing convenient and safe food and hence, companies can explore opportunities to expand in this segment.

NUTRACEUTICALS

Overview

Malnutrition and dietary risks associated with diseases remain prevalent globally, including in India. In addition to this, rapid urbanization, changing lifestyles and lack of awareness with respect to the required nutrition intake have led to a greater need for health supplements and nutraceuticals in the Indian market. Ensuring safe and nutritious food for over 1.3 Bn Indian citizens on pan-India basis calls for massive outreach efforts.

Currently, the USA, Japan and Europe account for more than 90 %⁷¹ in 2019 at a CAGR of eight per⁷² by 2023, increasing at a CAGR of 21 per⁷³ By 2023, India is expected to hold at least 3.5 %⁷⁴ market share of the global market.

India is witness to a spate of changes in lifestyles and rise in lifestyle diseases like diabetes, blood pressure, obesity, cardio-vascular problems among others, which has increased the demand for supplements to nutrition among the upper and supplements to nutrition among the upper and middle class. In such a scenario, nutraceutical intake is growing in popularity as consumers are looking for products to boost energy and enhance physical perseverance, mental sharpness and to become more dynamic and conscious. Dietary supplements in the form of tablets, capsules, powders, liquids, soft caps and soft gels are available and market for these products in continuously increasing.

There are a host of factors which will drive growth of nutraceutical industry in India. Notable among them are:

1. Consumer awareness on health problems and their urge to take preventive steps
2. Fitness intent – which is increasing at a fast pace
3. Healthcare cost
4. Low incidence of health insurance in India – large population still uncovered
5. High incidence of diabetes, hypertension, cardio-vascular ailments, Osteo-arthritis, Osteoporosis.

India represents a vast market for nutraceuticals as almost every segment has a need for some form of nutraceuticals. Some segments have a more pronounced need for nutraceuticals among others, such as:

1. Growing children need functional food and beverage supplement to be able to perform well in academics and extracurricular activities
2. Younger age-groups: between 15-25 years and 25-35 years are stronger targets either due to active lifestyle or specific needs
3. Pregnant and lactating mothers need to supplement their nutritional need
4. People who are older than 60 years are specifically vulnerable to diabetes, bone-related diseases and other ailments and such people need special preventive protection through nutraceuticals.

Food companies, such as Nestlé, Danone, Unilever, Kellogg, and Yakult, are more active in functional foods and beverages, with a few exceptions such as GlaxoSmithKline’s Horlicks and Viva or Abbott’s long standing commitment to child-, adult- and medical-nutrition brands such as PediaSure, Ensure or Glucerna.

Key opportunities

• Within the nutraceutical industry certain segments have higher potential such as functional beverages. Indian consumers exhibit strong beverage consumption habits and are consciously trying to change from carbonated drinks to juices, healthy tea, milk and water. Some examples could be ginseng tea, vitaminized water, juices fortified with curcumin (polyphenol – anti-carcinogenic).
• The government of India encourages the personal use of healthier ingredients as well as urges companies to increase the nutrient value in their products. To this end, the government has offered tax incentives under the GST regime such as beverage manufacturers using real juice must pay a lower tax rate.
• Personalized healthcare is also a driver for nutraceutical products. Investments in technology to deliver personalized services and products such as medicines can be looked at as opportunities.
• Opportunities for pharmaceuticals companies exist to make their products more consumer-oriented, and for food producers to create brands with a medical image. This convergence of medicine, food and technology is, therefore, giving impetus to the food processing industry as well as the retail sector in India, which are slated to rise to over $ 958 Bn by 2025 and $ 1.7 Trn by 2026, respectively.

GOVERNMENT INITIATIVES

FDI POLICY

• 100 % FDI permitted for food processing
• 100 % FDI under government approval route for trading, including the same through e-commerce, with respect to food products manufactured and/or produced in India

PRADHAN MANTRI KISAN SAMPADA YOJNA (PMKSY)

Scheme for Mega Food Parks

• Mega Food Parks are based on ‘cluster’ approach and focus on creation of state-of-the-art support infrastructure in a well-defined agri/horticultural zone for setting up of modern food processing units in the industrial plots provided in the park with well-established supply chain.
• Grant-in-aid – at 50 % of eligible project cost in general areas and at 75 % of eligible project cost in NE Region and Difficult Areas [Subject to maximum of INR 50.00 crores ($ 6.62 Mn) per project]

Scheme for Cold Chain and Value Addition Infrastructure

• It covers creation of infrastructure facilities along the entire supply chain viz. pre-cooling, weighing, sorting, grading, waxing facilities at farm level, multi product/ multi temperature cold storage, CA storage, packing facility, IQF, blast freezing in the distribution hub and reefer vans, mobile cooling units for facilitating distribution of horticulture, organic produce, marine, dairy, meat and poultry.
• Grant-in-aid for storage infrastructure such as ripening chamber, pack houses, pre-cooling units - at 35 % for general areas and at 50 % for northeastern states, Himalayan states, Integrated Tribal Development Project (ITDP) areas and islands
• Grant-in-aid for value addition and processing infra including frozen storage – at 50 % for general areas and at 75 % North East states, Himalayan states, ITDP areas and islands
• Grant-in-aid for irradiation facilities – at 50 % of eligible project cost in general areas and at 75 % of eligible project cost in the northeast region and difficult areas (North East including Sikkim and J&K, Himachal Pradesh and Uttarakhand).

[All are subject to maximum of INR.10.00 crores ($ 1.32 Mn) per project]

Scheme for creation/ expansion of Food Processing and Preservation Capacities

• Creation of processing and preservation capacities and modernization/ expansion of existing food processing units with a view to increasing the level of processing, value addition leading to reduction of wastage.
• Grant-in-aid – at 35 % of cost of plant and machinery and technical civil works in general areas and at 50 % of cost of plant and machinery and technical civil works in northeastern states and difficult areas (North East including Sikkim and J&K, Himachal Pradesh and Uttarakhand).

[Both subject to maximum of INR.5.00 crores ($ 657.07 thousand) per project]

Scheme for creation of backward and forward linkages

• Provide effective and seamless backward and forward integration for processed food industry by plugging the gaps in supply chain in terms of availability of raw material and linkages with the market, financial assistance provided for setting up of primary processing centers/ collection centers at farm gate and modern retail outlets at the front end along with connectivity through insulated/ refrigerated transport.
• Grant-in-aid – at 35 % of eligible project cost in general areas and at 50 % of eligible project cost in the northeastern region and difficult areas.

[Subject to maximum of INR 5.00 crores ($ 657.07 thousand)per project]

Scheme for Food Safety and Quality Assurance Infrastructure

• Various aspects of Total Quality Management (TQM) such as quality control, quality system and quality assurance should operate in a horizontal fashion. In the interest of consumer safety and public health, need to ensure that the quality of food products manufactured and sold in the market meet the stringent parameters prescribed by the food safety regulator.
• Setting up/Up-gradation of Quality Control/ Food Testing Laboratories
  • Central/State government and their organizations/Government universities (including deemed universities) eligible for Grant-in-aid at 100 % of cost of equipment
  • Other implementing agencies/private sector organizations/ universities (including deemed universities) eligible for grant-in-aid: at 50 % of cost of equipment in general areas and at 70 % of cost of equipment in North East and difficult areas
• HACCP/ISO Standards/Food Safety/Quality Management Systems
  • Grant-in-aid given in the form of reimbursement of expenditure towards implementation of HACCP/ISO Standards/Food Safety/Quality Management Systems: at 50 % of eligible project cost in general areas [Subject to maximum of INR 17.00 lakhs ($ 22.34 thousand)] and at 75 % of eligible project cost in the northeastern region and difficult areas (North East including Sikkim and J&K, Himachal Pradesh and Uttarakhand) [Subject to maximum of INR 22.00 lakhs ($ 28.91 thousand)]

Scheme for Human Resources and Institutions

• Research & Development in food processing sector
  • Extending financial assistance to undertake demand driven R&D work for the benefit of the food processing industry in terms of product and process development, efficient technologies, improved packaging, value addition etc. with commercial value along with standardization of various factors viz. additives, coloring agents, preservatives, pesticide residues, chemical contaminants, microbiological contaminants and naturally occurring toxic substances within permissible limits.
  • For the government organizations/ universities/ institutions eligible for Grant-in-aid for at 100 % of cost of equipment, consumables, expenditure related to salaries for project staff for a maximum period of three years, grant released in three installments.
  • For private organizations/ universities/ institutions eligible for Grant-in-aid, released in three installments at 50 % of cost of equipment in general areas and at 70 % of cost of equipment in the northeastern region and difficult areas.

Scheme for Promotional Activities, Advertisements, Publicity, Studies, & Surveys

• For promotional activities, organizing all India level seminars, workshops, fair for food processing sector, grant-in-aid at 50 % of cost of event or maximum INR 5.00 lakhs ($ 6.57 thousand) provided. If sponsored by the Ministry or where the ministry is participating through any designated apex agency / institutions, limit will not apply.
• For studies/surveys, grant-in-aid decided on merits of the proposal or through bid process.
• For advertisement and publicity, financial assistance provided on actual cost basis, cost determined by following due procedure.

Skill Development

• Assistance for creation of infrastructure facilities for skill training centers, grant-in-aid provided at 50 % of cost of plant & machineries required for training modules. [Subject to maximum of INR 15.00 lakhs ($ 19.71 thousand) per training module, limited to two training modules per training center]

Strengthening of Institutions

• Institutions such as National Institute of Food Technology, Entrepreneurship, and Management (NIFTEM) and Indian Institute of Food Processing Technology (IIFPT) have received a total allocation of INR 175.00 crores ($ 23.17 Mn) during the period of the scheme.

Operation Greens

• Price Stabilization Measure

Grant:

50 % of the subsidy on the following components through NAFED:

• Transportation of Tomato, Onion, Potato (TOP) crops from production to storage
• Hiring of appropriate storage facilities for TOP crops.

Eligible organizations:

• State marketing federation, co-operative federation, FPOs/FPCs/ farmer group/ grower associations/ aggregators, central/ state PSUs (such as CONCOR), private transportation/agri-logistics/ warehouse operators, supply chain operators etc. engaged in transportation/warehousing/ marketing of TOP crops, based on transportation criteria, for transporting and hiring of appropriate storage at production and consumption centres.

Eligibility conditions:

• Direct procurement from farmers at the price higher than preceding 3 years average market price in the corresponding period at the time of harvest
• Only transfer with minimum distance of 250 kilometres will be considered (except procurement from farmers by mega food projects, in which case, the minimum distance would be 100 kilometres)
• Storage should be near the consumption centres in the deficient area.
• Integrated value chain development projects

 Grant:

• 50 % of the eligible project cost in all areas, subject to a maximum of INR 50 Crores ($ 6.62 Mn) per project, When PIA is/are FPOs and SC/ST, the grant in aid will be at the rate of 70 % of the eligible project cost in all areas, subject to maximum of INR 50 Crores ($ 6.62 Mn) per project.

Eligibility conditions:

• The project should preferably have all these components:
  • Capacity building of FPOs and their consortium
  • Quality production
  • Post-harvest processing facilities
  • Agri-logistics
  • Marketing/ Consumption points

Eligible organizations:

• State agriculture and other marketing federations, farmer producer organizations (FPO), cooperatives, Self Help Groups, companies, food processors, logistic operators, service provider, supply chain operators, retail and wholesale chains and central and state governments and their entities/organizations will be eligible to participate in the program and to avail financial assistance. Any organization or group of organization or individual undertaking any activity with financial assistance under the program will be called the ‘Project Implementing Agency’

NATIONAL HORTICULTURE BOARD

• Capital investment subsidy scheme for construction/expansion/modernization of cold storage and storages for horticulture produce
• Subsidy at 35 % of the capital cost of project in general areas and 50 % in case of North East, hilly states and scheduled areas for a storage capacity above 5,000 MT up to 10,000 MT

DEPARTMENT OF FISHERIES- MINISTRY OF FISHERIES, ANIMAL HUSBANDRY AND DAIRYING

• Department of Fisheries, Government of India has launched a special scheme called the Pradhan Mantri Matsya Sampada Yojna with an aim to enhance the fish production to 22 Mn MT by 2024-25 along with doubling fisheries export to INR 1,00,000 crores ($ 13.25 Bn) by 2024-25

DEPARTMENT OF ANIMAL HUSBANDRY AND DAIRYING

Government of India is making efforts for strengthening infrastructure for production of quality milk, procurement, processing and marketing of milk and milk products through the following dairy development schemes:

• National Programme for Dairy Development (NPDD): NPDD Provides subsidy for the installation of bulk milk coolers; milk processing plants; milk powder plants and, rehabilitation of milk unions/ federations.
• Dairy Entrepreneurship Development Scheme (DEDS): The main objective of the scheme is setting up modern dairy farms and infrastructure for production of clean milk along with upgradation of technology to handle milk on a commercial scale. The scheme aims to provide value addition to milk through processing and production of milk products.

Under the scheme, a back-end capital subsidy at 25 % of the project cost for general category and at 33.33 % for SC/ST farmers is offered. The component- wise subsidy ceiling is subject to indicative cost arrived at by NABARD from time to time.

• Dairy Processing and Infrastructure Development Fund (DIDF): Financial assistance for milk chilling infrastructure, manufacturing facilities for value added products, modernization and creation of new milk processing facilities etc.

NIVESH BANDHU

A dedicated investors’ portal aimed at facilitating ease of doing business and presenting information on incentives and policies on a single platform.

E-NAM

National Agriculture Market (NAM) is a pan-India electronic trading portal that networks existing APMC mandis to create a unified national market for agricultural commodities.

INFRASTRUCTURE SUPPORT

• 37 Mega Food Parks – 18 operational
• 289 Cold Chain Projects – 192 operational

~ $ 280 MN FUND UNDER NABARD FOR FOOD PARKS AND UNITS THEREIN

INVESTMENT TARGETING AND FACILITATION DESK WITH INVEST INDIA

Dedicated Investment Targeting and Facilitation Desk (ITFD) at Invest India to assist potential investors in a structured manner and help frame policies/strategies to sensitise the investment community about opportunities as well as policies.

READY INFRASTRUCTURE AVAILABLE IN THE COUNTRY

KEY STAKEHOLDERS

GOVERNMENT DEPARTMENTS/ MINISTRIES

Ministry of Food Processing Industries (MoFPI)

MoFPI has a clear goal of attaining a strong and dynamic food processing sector thereby facilitating and acting as a catalyst to attract quality investments from within India and abroad into this sector with the aim of making food processing a national initiative. A strong and dynamic food processing sector plays a vital role in reduction in the wastage of perishable agricultural produce, enhancing shelf life of food products, ensuring value addition to agricultural produce, diversification and commercialization of agriculture, generation of employment, enhancing income of farmers and creating surplus for the export of agro and processed foods.

MoFPI works on the following clear objectives:

• Obtaining a strong and dynamic food processing sector
• Facilitate and act as a catalyst to attract quality investments from within India and abroad into this sector
• Make food processing a national initiative.
• Promotes the active participation of private, public and cooperative sectors.

Ministry of Agriculture and Farmers Welfare

The Ministry functions via the following two departments:

First, the Department of Agriculture, Cooperation and Farmers’ Welfare (DAC& FW):

This has 27 divisions, five attached offices and 21 subordinate offices spread across India for easier coordination with states and implementation of central schemes.

It is one public sector undertaking with nine autonomous bodies, 10 national level cooperative organizations and two controlling authorities.

Second, the Department of Agriculture, Research and Education (DARE):

This is a nodal agency for international cooperation in the area of agricultural research and education. It primarily liaises with foreign governments, the UN, CGIAR and other multilateral agencies. It works to coordinate admissions of foreign students in various Indian agriculture universities/ ICAR Institutes and promote agricultural research and education.

The department has 4 autonomous bodies under its administrative control namely: ICAR, Central Agricultural University (CAU), Dr. Rajendra Prasad Central Agricultural University, Bihar and Rani Laxmi Bai Central Agricultural University, UP.

Ministry of Fisheries, Animal Husbandry & Dairying

This Ministry functions via two departments:

First, the Department of Animal Husbandry and Dairying (AH&D):

This department is responsible for matters relating to livestock production, preservation, protection from diseases and improvement of stocks and dairy development. It is also concerned with matters relating to the Delhi Milk Scheme and the National Dairy Development Board.

Further it advises state governments/Union Territories in the formulation of policies and programs in the field of animal husbandry and dairy development.

Second, the Department of Fisheries:

This department is responsible for matters relating to the formulation of policy and schemes relating to development of inland, marine and coastal fisheries and fishery Institutes.

Agriculture and Processed Foods Export Development Authority (APEDA)

Established by the Government of India under the Agricultural and Processed Food Products Export Development Authority Act passed by the Parliament in December 1985, this department comes under the Ministry of Commerce and Industry, Government of India.

Its mandate includes the responsibility of export promotion & development of fruits, vegetables, meat and meat products, poultry and poultry products, dairy products, confectionery, honey, jaggery, cocoa and chocolates of all kinds, alcoholic and non- alcoholic beverages, cereals, nuts, guar gum and floricultural as well as medicinal plants and monitor the import of sugar.

Additionally, APEDA is also the Secretariat for the National Programme for Organic Production (NPOP) specifying the accreditation and certification programs for organic production.

Marine Products Export Development Authority (MPEDA)

Set up by an act of Parliament during 1972, this department comes under the Ministry of Commerce and Industry, Government of India. It is responsible for promoting the marine products industry with special importance given to exports from the country.

The Act empowers MPEDA with the following:

• Regulate exports of marine products and take all measures required for ensuring sustained, quality seafood exports from the country.
• Authority to prescribe for itself any matters which the future might require for protecting and augmenting the seafood exports from the country.
• Empowered to carry out inspection of marine products, its raw material, fixing standards, specifications, and training as well as take all necessary steps for marketing the seafood overseas.

The focus of MPEDA is on Market Promotion, Capture Fisheries, Culture Fisheries, Processing Infrastructure and Value addition, Quality Control, Research and Development. In addition to this, it conducts extension and awareness activities, trainings through Network for Fish Quality Management and Sustainable Fishing (NETFISH) and National Centre for Sustainable Aquaculture (NaCSA).

Food Safety and Standards Authority of India (FSSAI)

Established under the Food Safety and Standards Act, 2006, this department comes under the Ministry of Health and Family Welfare, Government of India.

It was created with the aim of laying down science-based standards for articles of food and to regulate their manufacture, storage, distribution, sale and import to ensure availability of safe and wholesome food for human consumption. To this end, it has notified various regulations covering quality and safety parameters of various food products.

It launched FoSCoS (Food Safety Compliance System) as an enhanced version of Food Licensing & Registration System (FLRS) for issuance of pan-India FSSAI licenses and registration and is conceptualized as the umbrella system which is integrated with FSSAI’s other existing IT platforms such as:

• Food Safety Compliance through Regular Inspection and Sampling (FoSCoRIS)
• Food Safety Connect-Complaints Management System
• Online Annual Return platform
• Food Import Clearing System (FICS)
• Indian Food Laboratory Network (InFoLNet)
• Audit Management System (AMS)
• Adjudications and penalties
• Food Safety Training and Certification (FoSTaC)
• Food Safety Mitra (FSM)

EDUCATIONAL INSTITUTES

National Institute of Food Technology Entrepreneurship and Management (NIFTEM)

Setup by Ministry of Food Processing Industries (MoFPI), Government of India, the institute caters to entrepreneurs, the food processing industry, exporters, policy makers, government and existing institution. It is an apex institution in the field of food technology and management and in a bid to develop new technologies and commercialize them, NIFTEM has setup pilot plants within its campus covering the following sectors:

• Pilot Plant for Fruits and Vegetable Processing
• Pilot Plant for Meat and Poultry Processing
• Pilot Plant for Milk and Dairy Products.
• Pilot Plant for RTE and Traditional Food.

These Pilot Plants serves as incubation centers for existing food industries as well as for new entrepreneurs to incubate their ideas and to facilitate ‘Hands on Training’ to students, progressive farmers as well as the potential investors.

Indian Institute of Food Processing Technology (IIFPT)

An autonomous academic cum research institution, it comes under the Ministry of Food Processing Industries, Government of India. Focused on teaching, research and extension in the areas of food processing, it employs NABL, the accredited food quality testing laboratory in its main campus at Thanjavur. Additionally, AICTE approved teaching laboratories are attractively designed, and most updated equipment are in place.

The Indian Council of Agricultural Research (ICAR)

An autonomous organization under the Department of Agricultural Research and Education (DARE), Ministry of Agriculture, Government of India, it is also the apex body for coordinating, guiding and managing research and education in agriculture including horticulture, fisheries and animal sciences in India. 

Through its research and technology, the council played a pioneering role in ushering the Green Revolution and subsequent developments in agriculture in India. It has also focused on the importance of excellence in higher education in agriculture and engaged in cutting edge areas of science and technology development. Scientists from this department are internationally acknowledged in their fields.

Central Food Technological Research Institute (CFTRI)

A research institute under the aegis of the Council of Scientific and Industrial Research, it aims to promote in-depth research and development in the areas of food science and technology.

The main areas of its research focus are:

• Engineering Sciences
• Technology Development
• Translational Research
• Food Protection and Safety

Central Marine Fisheries Research Institute (CMFRI)

This is the leading tropical marine fisheries research institute globally and its research focuses on the estimation of marine fisheries landings and effort, taxonomy of marine organisms, the bio-economic characteristics of the exploited stocks of finfish and shellfish, sea farming, coastal mariculture, marine finfish farming and biotechnology and biodiversity, amongst others.

The Institute's multidisciplinary approach to research in marine capture and culture fisheries has won it recognition as a premier institute comparable to any well-established marine laboratory in the world.

MINISTRY OF FOOD PROCESSING INDUSTRY (MOFPI) RESPONSE TO COVID

COVID 19 outbreak has affected 213 countries with impacting more than 69 lakh (6900 thousand) people round the globe (as on 8th June 2020, WHO). COVID 19 pandemic has significantly impacted the global economy, trade, supply chain disruptions, commodity market and logistics.

MoFPI along with the Investment Facilitation Desk, Invest India launched a grievance redressal cell on 26th March 2020 for food and food related industries to ensure hassle free operations and un-interrupted supply of essential goods during the lockdown. In all, 585 queries were looked at by the cell out of which, 581 were resolved.

On 30th March 2020, first video conference (VC) was chaired by minister Harsimrat Kaur Badal to discuss the issues being faced by industry due to the imposition of the lockdown. This saw major participation from industry organizations [The Associated Chambers of Commerce and Industry (ASSOCHAM), Federation of Indian Chambers of Commerce & Industry (FICCI) , Indian Chamber of Commerce (ICC) , PHD Chambers, Federation of Industries and Commerce of North-Eastern Region (FINER), All India Food Processors' Association (AIFPA) and Confederation of Indian Industries (CII)] representing industry players across various sub-sectors in the food industry. Some major industry players like ITC, Nestle, HUL, MTR Foods, Baggry’s India Ltd., Britannia, and Mondelez participated in this. Post this, on 4th April 2020, second VC was chaired by minister Harsimrat Kaur Badal as a follow up with the industry on the progress of steps taken by the government to resolve issues. A major initiative announced was that the Ministry of Home Affairs (MHA) has made several exemptions through addendums to its earlier order, which has benefitted the agri-food industry. Soon after, on 8th April 2020, the third VC was chaired by minister which witnessed participation of all Presidents of major Industry Associations of India to chart out a short and medium-term strategy for economic revival post COVID-19. The 4th VC was organized on 9th April 2020 and was chaired by minister with exporters of agriculture and marine products, APEDA and MPEDA to address challenges, take suggestions for the revival and strengthening of food exports. MoFPI has also released an awareness video for food businesses focusing on responsibility of food business owners/managers during COVID-19. Additionally, the minister Harsimrat Kaur Badal has also been interacting with promoters of cold chain projects and promoters of unit scheme to discuss & address the issues being faced by them amidst the COVID-19 crisis.

COVID-19: SCHEMES AND IMPACT

ANNOUNCEMENTS MADE UNDER AATMANIRBHAR BHARAT ECONOMIC PACKAGE FOR FOOD PROCESSING AND RELATED SECTORS:

Following reforms have been announced by the Finance minister along with the measures taken by Reserve Bank of India to give a boost to agriculture and allied activities, animal husbandry and allied activities, food processing sector and allied activities, fisheries and MSMEs in the mentioned sectors-

INR 10,000 crores ($ 1.32 Bn) scheme for formalization of Micro Food Enterprises (FME)

With a vision to promote Prime Minister's vision 'vocal for local' with global outreach, the Government of India launched the FME scheme.

• Scheme will help 2 lakh (200 thousand) micro food enterprises attain above goals.
• Existing micro food enterprises, farmer producer organizations, self-help groups and cooperatives would be supported under this scheme.
• Scheme will be based on a cluster-based approach (e.g. Mango in UP, Kesar in J&K). Expected outcomes- improved health and safety standards, integration with retail markets, improved incomes.
• Will also help in reaching untapped export market

INR 20,000 crores ($ 2.65 Bn) for fisherman through Pradhan Mantri Matsya Sampada Yojana (PMMSY)

To address the critical gaps in fisheries value chain, PMMSY will focus on integrated, sustainable, inclusive development of marine and inland fisheries. Cage culture, seaweed farming, ornamental fisheries as well as new fishing vessels, traceability, laboratory network will be key activities.

Animal Husbandry Infrastructure Development Fund – INR 15,000 crores ($ 1.99 Bn)

Aim to support private investment in dairy processing, value addition and cattle feed infrastructure. Incentives to be given for establishing plants for export of niche products.

Beekeeping initiatives - INR 500 crores ($ 66 Mn)

The government will implement a scheme for infrastructure development related to Integrated beekeeping development centres, collection, marketing and storage centres, post-harvest and value addition facilities etc. Implementation of standards and developing traceability system, capacity building with thrust on women, development of quality nucleus stock and bee breeders.

This will lead to increase in income for 2 lakh (200 thousand) beekeepers and quality honey to consumers.

From ‘TOP’ to TOTAL - INR 500 crores ($ 66 Mn)

Due to disruption in supply chains and farmers not being able to sell their produce in the market, there was a need to prevent distress sale and reduction of price of perishable produce at the farm level. Government of India will be extending Operation Greens from Tomatoes, Onion and Potatoes (TOP) to all fruits and vegetables (TOTAL)

Scheme features will be as follows:

• 50 % subsidy on transportation from surplus to deficient markets.
• 50 % subsidy on storage, including cold storages.

Possible impact of agriculture reforms amendments to the Essential Commodities Act.

Reform: Agriculture food stuff including oilseeds, pulses, onions, potato, cereals and edible oils to be regulated.

Impact-

• Attract private sector investments in warehousing and storage infrastructure and capacity expansion of food processing industries, retail food-chains
• Improve effectiveness of flow of commodities from surplus areas to markets with higher demand
• Minimizing price volatility- smoothen consumption of agri-horticulture produce throughout the year
• Potentially will encourage commodity derivatives market
• Reduction in the subsidy cost -will reduce the excessive stocks currently held by the government

Possible impact of agriculture marketing reforms

Reform: New central law to be introduced that will remove all barriers to inter-state trade and introduce a framework for e-trading of agriculture produce-

Impact-

• Help farmers earn a larger portion of the ultimate sale price of their produce
• Enable better markets and price discovery with no geographical limitations on the available markets
• Help match demand and supply better in the long run
• Another step towards attaining free market operations in the sector

Possible impact of agriculture reforms: Farm-gate infrastructure

Reform: Financing facility of INR 1,00,000 crores ($ 13.24 Bn) will be provided for funding agriculture infrastructure projects at farm-gate and aggregation point to develop affordable and financially viable post-harvest management infrastructure

Support for aggregators

• With relaxation of the APMC laws, aggregators will play a major role in securing alternate buyers for farmers
• Currently, India has only 249 pack-house (near-farm aggregation points where fresh harvest is brought for processing) against a requirement of over 70,000 (National Centre for Cold Chain Development)

Employment generation

• Such infrastructure development will also have a positive impact on creation of village level employment. For e.g.: creation of above mentioned 70,000 pack-houses has a potential to create 2.8 Mn village level jobs.

Possible impact of agriculture reforms

Reform: Pradhan Mantri Matsya Sampada Yojna: INR 20,000 crores ($ 2.65 Bn) have been associated with the scheme in the recent reforms

• As per Department of Fisheries, Government of India –there will be an additional fish production of 70 lakh tonnes (7 Mn tonnes) over 5 years: employment to over 55 lakh (5.5 Mn) people and double exports to INR 1,00,000 crores ($ 13.24 Bn)
• Private investments in the field of cold storage and processing infrastructure can be attracted
• Access of affordable credit to farmers for self-development of infrastructure
• Marketing infrastructure will also enable farmers to earn better prices

Reform: Extending operation greens scheme to all fruits and vegetables

• Efforts under the scheme will reduce price volatility for horticulture products
• Subsidy on transportation between markets will help avoid hoarding situations and match demand supply better within the country

Possible impact of beekeeping initiatives reform:

• Increases yield and quality of crops through pollination 
• This will lead to increase in income for two lakh (200 thousand) beekeepers and quality honey to consumers
• Provides honey and other beehive products like wax

CONSUMER TRENDS AND THE WAY FORWARD

The food processing industry in India is a monolithic ecosystem that is opening itself up to technological and social reinvention. Due to the global outbreak of novel coronavirus, supply chains have been questioned for their durability and efficiency and consumer behaviour has changed significantly to incorporate new social norms such as social distancing practices and lockdowns. An example of this changing dynamic is in the post-COVID scenario, whereby the food and farming sector is projected to get attention from the premium investor community to promote organically grown food for the masses, while incorporating the ‘delivery at home’ model.

Further, as consumers remain wary of the hygiene behind products they consume as well as how they consume them, more so due to coronavirus, there will be a focus on contactless delivery and general social distancing. Thus, building on technological integration, consumers will be more apprehensive of purchasing unverified consumables online, which may lead to an increase in dependence on blockchain verified products with Radio Frequency Identification tags that verify the life of a product and the flow of its entire supply chain from production to delivery. While the coronavirus affects short term planning for the food processing industry, there are certain trends such as the shift to hyperlocal marketplaces that have long term strategies in mind.

Opportunities for investment in such segments are now expected to increase once infrastructure and reliability of supply chains and distribution patterns evolve past the challenges of novel coronavirus.