The Hindu Business Line : Retail boom fuels food processing industry

The Government has set an investment target of Rs 1,00,000 crore for the food-processing sector by 2015. This is expected to almost double the country’s presence in the global food trade to three per cent.

The move aims at increasing processing of perishable food from six per cent to 20 per cent and its share in global food trade from 1.6 per cent to three per cent.

“We regard the Indian market as having a tremendous growth potential. Processed and packaged foods are projected to expand exponentially,” said Mr Lee H Collison, Vice-President, Mafco Worldwide Corporation’s Magnasweet.

Mafco Worldwide Corporation’s Magnasweet products are multifunctional ingredients imparting sweetness, intensity and prolongation as well as enhancing additional desirable flavours.

Cumulative foreign direct investment in food processing has touched $1.276 billion in March 2007, which is about three per cent of the total FDI inflow of $15.7 billion.

“India is the second largest producer of fruits and vegetables, while its processing level is estimated to be around 2 per cent, compared to about 80 per cent in Malaysia, 30 per cent in Thailand, and 60-70 per cent in the UK and the US,” said Mr M Gandhi, Managing Director, UBM India Pvt Ltd.

The US-based private equity fund, New Vernon Private Equity Ltd (NVPEL), has decided to invest $11 million in Kochi-based masala major, Eastern Condiments, the flagship company of Eastern Group.

America’s largest chocolate and confectionery-maker Hershey has recently invested $54 million to acquire controlling stake in Godrej Beverages and Foods.

The new wave in the food industry is not only about foreign companies arriving here attracted by the prospective size of the market, but also about the migration of the ‘Made in India’ tag travelling abroad.

“Indian food brands and fast moving consumer goods (FMCGs) are now increasingly finding prime shelf-space in the retail chains of the US and Europe.

“These include Cobra Beer, Bikanervala Foods, MTR Foods’ ready-to-eat food stuff, ITC’s Kitchen of India and Satnam Overseas’ Basmati rice,” said Mr Bipin Sinha, project director, CMP/UBM India.

Multi-national companies such as Coca-Cola, PepsiCo, Britannia, Danone, Nestle, Cadbury, Lever’s Kelloggs, Heinz, International Best Foods, Walls, Perfetti and Van Melle have made their presence felt in India.

Despite these low volumes, the processed food industry ranks fifth in size in the country, representing 6.3 per cent of GDP. It accounts for 13 per cent of the country’s exports and 6 per cent of total industrial investment.

Analysts estimate the industry size at $70 billion, including $22 billion of value-added products.

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