Food processing industry to contribute 6.5% to GDP by FY15
Updated: Nov 07, 2013 02:27:51pm
Hyderabad, Nov 7 (KNN) India's food processing industry is expected to touch Rs 4 lakh crore next fiscal from Rs 3.3 lakh crore in FY 12, says a FICCI-KPMG report.
The report, released at the inaugural session of FICCI's Food 360 here yesterday, said the opportunities in the food processing industry are significant and expected to reach a size of Rs 400,000 crore by FY15 contributing around 6.5 per cent to the GDP.
The sector attracted USD 1.97 billion worth FDI from April 2000 to July 2013.
Inaugurating the two-day FICCI conference, Secretary, Ministry of Food Processing Industries, Siraj Hussain, said the cold storage capacity in India was 25 million tonnes (mt) in 2010, while the requirement was around 61 mt. Since then, 10 mt capacity had been added but the deficit was still around 15 mt. The government was looking at investments from entrepreneurs to bridge this deficit without any subsidy.
On the other hand, he said, Indian exports of agricultural products stood at USD 30 million per annum and grew at 20 per cent on average in the last five years.
According to the report, ‘Enhancing Competitiveness of Indian Food Chain’, the Indian food value chain is on the verge of a great transformation - from one characterised by high wastage, low processing and low global contribution to one that is more streamlined, more integrated and more significant in the global trade.
"Opportunities in the food processing industry are significant. While there is very low level of food processing, domestic and export demand exist and are growing. Increasing urbanisation and rise in disposable incomes are expected to push demand for processed food further," said the report.
“Continuous financial and regulatory support from government, increasing participation of private and public corporates, and increasing exposure of foreign players are likely to spur investments in developing the infrastructure across the value chain right from farm inputs to the consumers,” KPMG India partner and retail head, Rajat Wahi, said.
Further, the report notes that the country's share in global food trade is still around 1.5 per cent.
"The domestic food processing industry requires about 5.3 lakh persons in the unorganised sector and about 1 lakh in the organised sector to handle various food resources from the farm to consumers," the report said.
It points out that organised retail penetration in the food sector has remained low in the country and organised sales account for just about 1 per cent of the total food and grocery spend.
The report also finds that nearly 30 per cent of food produce is wasted primarily due to the lack of adequate post-harvest infrastructure and poor supply chain management.
"It has been estimated that loss of primary produce before reaching the market due to lack of proper handling, cleaning, sorting, grading and packaging facilities at the village level is 30-40 per cent for grains, fruits and vegetables," the report said.
Stating that enhancing supply chain can help both the consumers and the producers, the report said, "unreasonably long supply chain results in a steep increase in the total cost owing to procurement, transit and other taxes and service charges levied at various layers."
"Due to such inefficiencies in the supply chain, it has been estimated that the price received by farmers is only in the range of 25-60 per cent of what the consumer pays. Strengthening supply chain can benefit both consumers as well as farmers by 20-25 per cent," it said.
ITC group head-agribusiness, S Sivakumar, said the food processing industry was growing twice as fast as agriculture. He also pointed out that the job multiplier of the food processing sector was much higher than any other industry. (KNN/SD)
The report, released at the inaugural session of FICCI's Food 360 here yesterday, said the opportunities in the food processing industry are significant and expected to reach a size of Rs 400,000 crore by FY15 contributing around 6.5 per cent to the GDP.
The sector attracted USD 1.97 billion worth FDI from April 2000 to July 2013.
Inaugurating the two-day FICCI conference, Secretary, Ministry of Food Processing Industries, Siraj Hussain, said the cold storage capacity in India was 25 million tonnes (mt) in 2010, while the requirement was around 61 mt. Since then, 10 mt capacity had been added but the deficit was still around 15 mt. The government was looking at investments from entrepreneurs to bridge this deficit without any subsidy.
On the other hand, he said, Indian exports of agricultural products stood at USD 30 million per annum and grew at 20 per cent on average in the last five years.
According to the report, ‘Enhancing Competitiveness of Indian Food Chain’, the Indian food value chain is on the verge of a great transformation - from one characterised by high wastage, low processing and low global contribution to one that is more streamlined, more integrated and more significant in the global trade.
"Opportunities in the food processing industry are significant. While there is very low level of food processing, domestic and export demand exist and are growing. Increasing urbanisation and rise in disposable incomes are expected to push demand for processed food further," said the report.
“Continuous financial and regulatory support from government, increasing participation of private and public corporates, and increasing exposure of foreign players are likely to spur investments in developing the infrastructure across the value chain right from farm inputs to the consumers,” KPMG India partner and retail head, Rajat Wahi, said.
Further, the report notes that the country's share in global food trade is still around 1.5 per cent.
"The domestic food processing industry requires about 5.3 lakh persons in the unorganised sector and about 1 lakh in the organised sector to handle various food resources from the farm to consumers," the report said.
It points out that organised retail penetration in the food sector has remained low in the country and organised sales account for just about 1 per cent of the total food and grocery spend.
The report also finds that nearly 30 per cent of food produce is wasted primarily due to the lack of adequate post-harvest infrastructure and poor supply chain management.
"It has been estimated that loss of primary produce before reaching the market due to lack of proper handling, cleaning, sorting, grading and packaging facilities at the village level is 30-40 per cent for grains, fruits and vegetables," the report said.
Stating that enhancing supply chain can help both the consumers and the producers, the report said, "unreasonably long supply chain results in a steep increase in the total cost owing to procurement, transit and other taxes and service charges levied at various layers."
"Due to such inefficiencies in the supply chain, it has been estimated that the price received by farmers is only in the range of 25-60 per cent of what the consumer pays. Strengthening supply chain can benefit both consumers as well as farmers by 20-25 per cent," it said.
ITC group head-agribusiness, S Sivakumar, said the food processing industry was growing twice as fast as agriculture. He also pointed out that the job multiplier of the food processing sector was much higher than any other industry. (KNN/SD)
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