Day 34 – Q 2. India’s demography and the changing lifestyle patterns make India a high potential destination for investments in the food processing sector. Elucidate. What incentives has the Government provided to attract foreign investment to this sector? Discuss.
2. India’s demography and the changing lifestyle patterns make India a high potential destination for investments in the food processing sector. Elucidate. What incentives has the Government provided to attract foreign investment to this sector? Discuss.
भारत की जनसांख्यिकी और बदलते जीवन शैली के पैटर्न भारत को खाद्य प्रसंस्करण क्षेत्र में निवेश के लिए एक उच्च संभावित गंतव्य बनाते हैं। स्पष्ट करें। इस क्षेत्र में विदेशी निवेश को आकर्षित करने के लिए सरकार ने क्या प्रोत्साहन दिए हैं? चर्चा करें।
India ranks second in terms of availability of arable land with 127 diverse agro-climatic zones, having a share of 11.2% of the total arable land in the world. In addition, the resource-rich country has the sixth largest food and grocery market and fifth largest retail market globally. Thus, India can provide a perfect blend of traditional and hygienic food, processed and packaged according to modern technology.
India as one of the biggest food producers of the world is in an advantageous position to become the hub for food processing industry. In any agricultural commodity, India is in 1,2or 3 position. Now the Indian agriculture is being modernised and it has to be ensured that the farmers’ produce gets a good market at fair price to keep up the agriculture productivity. It means not only consumption of main cereals but also that the surplus food output has to be converted into food processing snacks for domestic consumption as well as exports.
Reasons to invest
- The Food processing industry in India is indigenous because simple home-based techniques such as fermentation have resulted in the creation of worldwide acknowledgment of Indian pickles, papads, chutneys and murabba.
- The Gross Cropped Area accounting for around 60.3% of the total geographical area stands at 198.4 mn ha, as per the land use statistics (2014-15). In a similar period, the net sown period is 140.1 mn ha, with a cropping intensity of 141.6%.
- The total area sown under Rabi crops in 2017-18 stands at 63.23 mn ha.The total area sown under Kharif crops in 2017-18 stands at 21.08 mn ha, whereas, the area under wheat and rice stands at 30.59 and 43.20 mn ha.
- Benefiting from such a geographical advantage, India is the largest producer of milk, bananas, mangoes, guavas, papaya, ginger, okra, second largest producer of wheat, rice, fruits, vegetables, tea, sugarcane and cashew nut and the third largest producer of cereals, coconut, lettuce, chicory, nutmeg, mace, cardamom and pepper globally.
- India is also globally acknowledged as the leading producer of agriculturally allied products. As of 2018, India is the leading milk producing country in the world, accounting for ~19% of the global market share.
- India is the second largest fish producer in the world with a total production of 13.7 million metric tonnes in 2018-19 of which 65 per cent was from inland sector. More than 50 different types of fish and shellfish products are being exported to 75 countries around the world. Fish and fish products have presently emerged as the largest group in agricultural exports from India.
- The Horticulture sector has recorded a production of 313.85 mn tonnes in 2018-19, which is 0.69% higher than the horticulture production of 311.71 million tonnes in 2017-18.
- India has a geographical advantage from the viewpoint of trade, as it has close connectivity with Europe, Middle East & Africa from the western coast, and Japan, Singapore, Thailand, Malaysia, Korea, Australia and New Zealand.
As per the National Agricultural Research Project (NARP), India has been divided into 127 agro-climatic zones. Out of the total 42 Mega Food Parks sanctioned, 17 Food Parks have been operationalized as on May 2019.
Government incentives provided to attract foreign investment to the food processing sector:
- 100% FDI in trading including through e-commerce, in respect of food products manufactured and / or produced in India.
- World Food India, a mega food event, The purpose of which is to transform food economy and realize vision of doubling of farmers’ income by establishing India as a preferred investment destination and sourcing hub for the global food processing industry. The first event took place in November 2017, brought together 75,000 business visitors, from 61 countries, 75 International & National policymakers and Heads of State, 60 Global CEOs and 100 Indian CEOs; resulting in 5,000 B2B meetings over a span of three days. It helped India showcase itself as a preferred investment destination, with MoU’s worth $13.56 Bn signed by domestic & foreign investors. At present, Global industry players such as GEA Group, Tetra Laval, Buhlar, Alfa Laval, Heat and Control and HRS process are reaping the benefits.
- Nivesh Bandhu, an investor-friendly portal launched by GoI brings together Central and State Government policies and incentives provided for the food processing sector. It is a one-stop platform for all stakeholders of the industry, including farmers, processors, traders, and logistics operators. To further help an investor make strategic decision, the portal also includes a Food Map that can help investors take decision relating to the project location.
- An Investor tracking and facilitation desk has also been set up with a dual objective to identify new potential investors and help the Ministry to organize trade shows both on domestic as well as the international front. Such an initiative will help India to meet its investment needs.
- Private Sector participation has been on a continuous rise in many segments of the value chain. There exist huge opportunities for investments in the fields of contract farming, raw material sourcing and creation of agri linkages. Many international companies have gained a major foothold in contract farming initiatives.
- Under the scheme of Mega Food Parks, Government has sanctioned 42 parks, and out of these 17 have been made operational so far. Additionally, under the scheme of Integrated Cold Chain and Value Addition Infrastructure, the Ministry is presently assisting 228 such projects , and in 2017, 16 projects got operationalized, creating an additional capacity of 0.24 MMT of cold storage, 210.75 metric tonnes per hour of individual Quick Freezing (IQF), 3.45 mn litres per day of milk of processing/ storage and 472 reefer vans during 2014 – 2017.
- Food Safety & Standards Authority of India (FSSAI), the apex regulatory body has taken wide steps aiming to simplify product approval along with the creation of a single-interface portal, “The Food Regulatory Portal” for effective and transparent implementation of the food safety laws in the country.
- Product-specific developments are also being undertaken, for example, setting up of a Common Food Processing Incubation Centre for Shallots in Perambalur.
- Sector-specific Skill Development Initiatives are also being taken up, with National Institute of Food Technology, Entrepreneurship and Management (NIFTEM) and Indian Institute of Food Processing Technology (IIFPT) being recognized as Centres of Excellence.
- Special Fund of Rs. 2000 crore in NABARD to make available affordable credit at concessional rate of interest to designated food parks and agro processing units.
- Food and agro-based processing units and cold chain infrastructure have been brought under the ambit of Priority Sector Lending (PSL) to provide additional credit for food processing activities and infrastructure.
India has about 40 billion worth food processing market. There is a need for diversification of crop pattern because most of farmers are concentrating on few farm products like rice and wheat only. India is importing about 22 billion dollar food processing products. So if there is diversification and substituting the imports, there is huge scope for second green revolution.