India's
seven export-worthy food sectors
Food:
One of India's most FDI-worthy sectors
Intermediate
food products market in India
Did
you know?
From a
starving nation in 1947 when it won political independence, India today
is one of the world's major producer of foodgrains.
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Compiled
by Amitabha
Sen
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The
industry requires about Rs 29,000 crore in investment over the next
five years to 2005 to create necessary infrastructure, expand production
facilities and state-of-the-art-technology to match the international
quality and standards.
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The
Indian palate is accustomed to traditional foods, mostly wheat and
rice-based, rather than potato and corn-based western palate. In
marketing perspective, this is considered an important factor for
foreign marketers.
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The
USDA report says initially consumer-ready food products may have
to be tailored to include Indian spices and traditional ingredients.
In addition to traditional tastes, there are other social factors
which affect consumption in India. Hindus account for approximately
80 per cent of India’s population, and while only 25 or 30 per cent
are strict vegetarians, beef slaughter is prohibited in all but
two states (Kerala and West Bengal) and consumption of other meats
is limited. Incidentally, India is the only country where the US-based
MacDonalds sells its burgers without any beef content and even offers
purely vegetarian burgers.
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India’s
middle class segment will hold
the key to success or failure of the processed food market in India.
Of the country’s total population of one billion, the middle class
segments account for about 350-370 million. Though a majority of
families in this segment have non-working housewives or can afford
hired domestic help and thus prepare foods of their taste in their
own kitchens, the profile of the middle class is changing steadily
and hired domestic help is becoming costlier. This is conducive
to an expansion in demand for ready-to-eat Indian-style foods.
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India’s
food processing sector covers fruit and vegetables; meat and poultry;
milk and milk products, alcoholic beverages, fisheries, plantation,
grain processing and other consumer product groups like confectionery,
chocolates and cocoa products, Soya-based products, mineral water,
high protein foods etc.
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According
to latest official statistics, India exported processed fruits and
vegetables worth Rs 5240 million in 1997-98. The horticulture production
is around 102 million tonnes. Foreign investment since 1991, when
economic liberalisation started, stood at Rs 8,800 crore. Products
that have growing demand, especially in the Middle East countries
include pickles, chutneys, fruit pulps, canned fruits, and vegetables,
concentrated pulps and juices, dehydrated vegetables and frozen
fruits and vegetables.
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Another
potential processed food product is meat and poultry products. India
ranks first in world cattle population, 50 per cent of buffalo population
and one-sixth of total goat population of the world. Buffalo meat
is surplus in India. There is vast scope to set up modern slaughter
facilities and cold store chains in meat and poultry processing
sector. India’s current level of meat and meat-based exports is
around Rs 8,000 million. In last six years foreign investment in
this segment stood at Rs 5,000 million which is more than 50 per
cent of the total investment made in this sector.
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Compared
with meat, poultry industry has registered significant growth. India
ranks fifth in the world with annual egg production of 1.61 million
tones. Both poultry and egg processing units have come in a very
big way in the country. India is exporting egg powder, frozen egg
yolk and albumin powder to Europe, Japan and other countries. Poultry
exports are mostly to Maldives and Oman. Indian poultry meat products
have good markets in Japan, Malaysia, Indonesia and Singapore. While
meat products registered a growth of 10 per cent, eggs and broilers
registered 16-20 per cent growth.
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There
are about 15 pure line and grand parent franchise projects in India.
There are 115 layer and 280 broiler hatcheries producing 1.3 million
layer parents and 280 million broiler parents. They in turn supply
95 million hybrid layer and 275 million broilers, day-old chick.
Presently there are only five egg powder plants in India which is
considered insufficient in view of growing export demand for different
kind of powder - whole egg, yolk and albumen. The scope of foreign
investment and state-of-the-art technology in this field is therefore
tremendous.
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Milk
and milk products is rated as one of the most promising sectors
which deserves foreign investment in a big way. When the world milk
production registered a negative growth of 2 per cent , India performed
much better with 4 per cent growth. The total milk production is
around 72 million tonnes and the demand for milk is estimated at
around 80 million tonnes.
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By
2005, the value of Indian dairy produce is expected to be Rs 1,000,000
million. In last six years foreign investment in this sector stood
at Rs 3600 million which is about one-forth of total investment
made in this sector. Manufacture of casein and lactose, largely
being imported presently, has good scope. Exports of milk products
have been decanalised.
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Grains
could emerge as a major export earner for India in coming years.
India’s food grains production is now at around 225-230 million
tones. These include rice, jawar, bajra, maize, wheat,
gram and pulses. Indian basmati rice enjoys command in the
international market. Besides growing Middle east market for basmati
rive, many other countries are showing interest for this food grain.
In 1998-99 export of basmati and non-basmati rice
stood at Rs62000 million. There is a total rice milling capacity
of 186 million tones in the country.
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Among
plantation, tea emerged as major foreign exchange earner. India
is the largest producer and exporter of black tea. However, the
most worrying factor for Indian tea industry is that from early
next year with the implementation of tea imports into the country,
India tea may face a stiff competition within the country as well,
specially threat of Sri Lanka’s presence in the Indian market is
looming large.
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The
current year’s tea export prospect is not that very good in terms
of forex earnings because international prices has fallen significantly
this year . India exports between 150-170 million kilogram’s of
tea per annum. Of course, the scope of foreign investment in this
sector is good and the multinational tea companies would either
be trying for marketing joint ventures with the Indian producers
or acquire stakes in Indian tea companies. There is strong possibilities
of third country exports through such joint venture as quality wise
still Indian teas are ruling the international market.
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Alcoholic
beverages is another are where India witnessed substantial foreign
investment. Foreign investment in this sector stood at Rs 7000 million
which about 70 percent of the total investment made so far. The
IMFL (Indian Made Foreign Liquor) primarily comprises wine, vodka,
gin, whisky, rum and brandy. Draught beer is a comparatively recent
introduction in the Indian market. The Indian beer market is estimated
at Rs7000 million a year. One of the major advantages for any investor
eyeing the Indian liquor market is that India offers enough raw
materials like molasses, barely, maize, potatoes, grapes, yeast
and hops for the industry.
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Yet
another catchy investment sector is fisheries.
There is growing canned and processed fishes from India. The marine
fish include prawns, shrimps, tuna, cuttlefish, squids, octopus,
red snappers, ribbon fish, mackerel, lobsters, cat fish etc. In
last six years there was substantial investment in fisheries to
the tune of Rs 30,000 million of which foreign investments were
of the order of Rs 7000 million. The potential could be gauged by
the fact that against fish production potential in the Exclusive
Economic Zone of 3.9 million tones, actual catch is to the tune
of 2.87 million tones. Harvesting from inland sources is around
2.7 million tones.
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Without
a strong and dependable cold chain vital sector like food processing
industry which is based mostly on perishable products cannot survive
and grow. Even at current level of production, farm produce valued
at Rs 70,000 million is being wasted every year only because there
is no adequate storage, transportation, cold chain facilities and
other infrastructure supports. Cold chain facilities are miserably
inadequate to meet the increasing production of various perishable
products like milk, fruits, vegetables, poultry, fisheries etc.
Food: One of India's
most FDI-worthy sectors
India's seven export-worthy food sectors
Intermediate food products
market in India
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