With an eye to boost the food processing sector, the ministry of food processing industries outlined Vision 2015 with the aim of trebling the size of processed food sector, increase the level of processing of perishables, and encourage retail.
As part of the effort, the government introduced a series of investment-friendly initiatives including strengthening and augmenting of road and rail network, modernisation of ports, and prioritisation of infrastructure for post-harvest management and logistics including cold chain.
India is one of the largest food producers of the world with the organised sector accounting for food output worth US$34,827 million. However, only a small percentage of its farm produce is processed into value-added products.
Even though the country is the second largest producer of fruits and vegetables, hardly two per cent of the production is processed. This underlines the enormous scope for investing in the processed food sector in the areas of infrastructure, packaging and machinery. India, in fact, needs US$28 billion of investment to raise its food processing levels by 8-10 per cent.
The overall potential in the food processing sector, coupled with the policy initiatives of the government, has facilitated the entry of leading global players with sizeable investments into the sector. Among them are Nestle, Pepsi, Coke, Kellogg’s, Conagra, Unilever, Perfetti, Glaxo Smithkline, Heinz, Wyeth, Ajinomoto, Nissin Met and Wal-Mart. Likewise, the leading Indian names in the business include ITC, Dabur, Britannia, Parle, Amul, Haldiram and Godrej. The entry of such major players is essentially a pointer to the opportunities and spin-offs offered by the sector for investments.
A huge and exponentially growing demand represented by a market of one billion people spending on an average about 50 per cent of household expenditures on food, coupled with a scenario of rapid urbanisation and changing lifestyles, is another factor that is engendering growth prospects for the sector.
A 30 million-strong upper and middle class segment of the total population consume processed and packaged food, with another 200 million people projected to shift to this group by 2010.