Indian food processing sector has potential to attract US$ 33 billion of investment and generate employment of 9 million persons days by FY 2024, said an ASSOCHAM-Grant Thorton Research paper.
The food processing is a key contributor to employment generation in India. The policymakers have identified food processing as a key sector in encouraging labour movement from agriculture to manufacturing. By 2024, food processing sector is expected to employ 9 million people in India and expected to generate about 8,000 direct and 80,000 indirect jobs in the state, the ASSOCHAM-Grant Thornton joint study on ‘Food Retail: Investment: Infrastructure’ noted.
According to the study, Indian food processing industry is pegged close to US$ 121 billion to US$ 130 billion. With the second largest arable land in the world, it is the largest producer of milk, pulses, sugarcane and tea in the world and the second largest producer of wheat, rice, fruits and vegetables.
Despite the massive production, the degree of processing is low and ranges between 2 to 35 percent for different produce. India is one of the top rankers in the production of bananas, guavas, ginger, papaya etc., although processing levels in the country remain limited. This indicates an extensive opportunity in the food processing sector, adds the paper.
According to the joint study, Indian food and retail market is projected to touch US$ 482 billion by FY 2020 from the current level of US$ 258 billion in 2015, adds the paper.
With globalisation and increasing trade across the borders approximately about 460 million tons of food valued at US$ 3 billion is traded annually. India has thus, a great potential for global trade in agricultural and processed food products. The share of food processing exports in total exports was around 12 percent in the last few years. During FY 2011-15, India’s exports of processed food related products have been growing at a CAGR of 23.3 percent.
The unorganised sector accounts for 42 percent of India’s food processing industry. The sizeable presence of small-scale industries points to the sector’s role in employment generation. As per the study, though the market falls under the unorganised sector in the country, the organised sector has a larger share in the secondary processing segment than the primary one.
Food and grocery constitute a substantial part of India’s consumption basket accounting for around 31 percent share in the total. In contrast, consumers in other countries spend a much lower proportion of their income on food and grocery—9 percent in the United States (US), 17 percent in Brazil and 25 percent in China. Food and grocery is the largest segment in India‘s retail sector, with a share of more than 60 percent in India‘s total retail market in 2014.
India is the world‘s second largest producer of food after China. The arable land area of 159.7 mn hectares (394.6 mn acres) is the second largest in the world (after the US). India has a strong raw material base for the food processing industry. India is one of the largest producers of certain fruits, vegetables, pulses, cereals and dairy products such as mangoes, papaya, potatoes, onions, ginger, check peas, rice, wheat, groundnuts, milk and eggs among others.
Strong demand growth
• Demand for food processed food rising with growing disposable income, urbanisation, young population and nuclear families
• Household consumption set to double by 2020
• Changing lifestyle and increasing expenditure on health and nutritional foods
Food processing hub
• Indian benefits from large agriculture sector, abundant livestock and cost competitiveness
• Investment opportunities arise in agriculture, food infrastructure and contract farming
• Diverse agro-climatic conditions encourage cultivation of different crop
• Govt. expect US$ 21.9 bn of investment in food processing infrastructure by 2015
• Investment including FDI would rise with strengthening demand and supply fundamentals
• Launch of infrastructure development schemes to increase investment in food processing infrastructure