The Cabinet will soon take up the proposal to permit 100 per cent foreign direct investment (FDI) in food processing sector through the Government approval route.
The Department of Industrial Policy and Promotion (DIPP) had proposed to allow FDI in marketing of food products produced and manufactured in India after approval from the FIPB.
The move was made following fears that the food retail business may not attract the necessary funds required for backend infrastructure, which the country needs.
Finance Minister Arun Jaitley had said in his Budget 2016 speech, “100 per cent FDI will be allowed through FIPB route in marketing of food products produced and manufactured in India. This will benefit farmers, give impetus to the food processing industry and also create vast employment opportunities.”
The government will not impose any conditions on the foreign players investing in the sector. The government is also likely to permit business-to-consumer online selling of food products produced and manufactured domestically.
The government has said FDI in food processing will benefit farmers, reduce wastage of fruits and vegetables, give impetus to the industry and create vast employment opportunities.
Overview of Food Processing Industry
Food Processing Industry is one of the major employment intensive segments contributing 13.04 per cent of employment generated in all Registered Factory sector in 2012-13.
In 2013, India allowed 51 per cent FDI in multi-brand retailing with 30 per cent domestic sourcing norm. India ranked sixth in the World in exports of agricultural products in 2013. The share of food processing sector in GDP of manufacturing sector was 9.8 per cent in 2012-13
India-UK Collaborations and Investments in Food Supply Chain Report
Policy reforms like liberalisation of FDI in multi-brand retail and implementation of GST can attract investments from UK companies into the domestic food supply sector, according to a report titled, India-UK collaborations and investments in food supply chain, prepared by Dun & Bradstreet Tangram.
According to a report in PTI: “…government needs to hasten various policy and regulatory reforms like right compensation for land acquisition, liberalisation of FDI in multi-brand retail, implementation of GST and green channeling for agri produce,” said the report.
These measures will “push India-UK collaborations and investments in food supply sector where huge opportunities and potential remain to be tapped fully”, it said.
Unless FDI is allowed in multi-brand retail and the rigid conditions are removed, the food supply chain sector will not get the desired investments, the report added.
The study also emphasised that it is urgent for the government to implement GST since apart from creating a unified market across India, GST will help make India’s manufacturing competitive by cutting high logistics costs.
For better movement of agriculture products, the report said that government should establish ‘green channels’ along national highways and economic corridors to speed up the movement of trucks.
The report focuses on five areas of the food supply chain — storage and warehousing, cold-chains, packaging technology, skill development and R&D.
It was jointly released by former Agriculture Secretary Siraj Hussain and First Secretary, UK Trade and Investment, British High Commission, Anthony Cooper.
The report provides an overview of each of these segments in India and the UK, examines the regulations, identifies the areas of collaborations and the barriers faced by UK companies in India.