India A Big Trade Mart For The Food Industry

By Author: Mayur Dicosta
Total Articles: 12
Comment this article

The Indian food industry is hailed as the sunshine industry of India. The current market size of Indian food market is around US$ 182 billion, and as per latest reports, the Indian food industry comprises nearly two thirds of the total Indian retail market.

Growing economy, surplus food, shift in consumer consumption pattern, have put the Indian food industry on the fast track.

According to consultancy firm McKinsey & Co, the retail food sector in India in 2008 was worth US$ 70 billion, which will reportedly scale up to around US$ 150 billion by 2025. The world food industry would grow to US$400 billion from US$ 175 billion. This means, India's food industry will form a major part of the world food industry.

RNCOS, an industry research firm, sometime back had released a new market research report titled Indian Food, Beverages and Tobacco Market Forecast till 2011.

The key findings of the report are as follows:

Consumer spending on food, beverages and tobacco in India is estimated to grow at a CAGR of 12.2% during 2007 ...
... to 2011.

The continually expanding Indian processed food market will catch the attention of foreign companies.

Street hawkers will face stiff competition from fast-food outlets. Consumption of soft drinks will accelerate from 11% during 2002 to 2006, to 12% during 2007 to 2011.

Production of branded snack food is estimated to grow at an annual rate of 20% in upcoming 2-3 years

The country has evolved into a big mart for whisky, so India will be significant global spirits market in the next 3-4 years.

India a Big Mart for Spices

Despite the so called recession, Indian spice producers are laughing their way to the banks, with spice exports from India being valued at over $11 billion, in 2008-09. India exported spices and spice products valued at US$ 1.02 billion. In 2007-08, India exported spices and spice products worth US$ 1.10 billion.

India a growing Trade Mart for Food Processing Industry

The food processing industry is steadfastly growing at 14 per cent as compared to 6-7 per cent growth in 2003-04. Moreover, the industry has reportedly received foreign direct investments (FDI) totaling US$ 143.80 million in 2007-08.

Notwithstanding its growth, India's share in the exports of processed food in global trade is meager 1.5%; while the size of the global processed-food market is around US$ 3.2 trillion. This indicates that both investors and exporters are yet to cash in on from the Indian food and processing industry.

Such being the situation, India has charted out stimulating strategies to double its processed food production by 2015, and therefore will be establishing 10 food technology parks in an attempt to achieve this.

A Mega Food Park under the Ministry of Food Processing has already been unveiled at Shirwal near Pune.

India a Big Mart for Snacks and Confectionery industry

The Indian Snacks and Confectionery industry is estimated to be worth US$ 3 billion. Segregated into organized as well as unorganized sector, the organized sector of the snack market is currently registering a growth rate of 15-20%, while the growth rate of the unorganized sector is around 7-8%.

India a Big Mart for the Dairy industry

As per 2007 estimates, the Indian dairy sector is worth US$ 62.67 billion. The sector has been growing at a rate of 5 per cent a year. The dairy exports in 2007-08 clocked US$ 210.5 million against US$ 113.57 last financial year, while the domestic dairy sector might cross US$ 108 billion by 2011.

India a Big Mart for the Beverage industry

Taking into consideration India's speeding beverage mart, cold drinks giant Pepsico is gunning for India. As per the latest reports, the company plans to invest over $220 million to enhance its existing capacity.

The market for carbonated drinks in India is worth US$ 1.5 billion, while the juice and juice-based drinks market is worth US$ 0.25 billion. Fruit-drink market is growing at the rate of 25%. It is the one of the fastest growing in the beverage market. Sports and energy drinks too have a good market in India.

The market for alcoholic drinks has been growing consistently.

India a big mart for Food Chains and Restaurants

The food and grocery market in India is reportedly the sixth largest in the world, a prospect inspiring enough for big retail food chains to scale up their operations in India. As per the latest reports, McDonald's is planning to open 40 new outlets across the country in Mumbai, Chennai and Hyderabad. At present, the company operates 160 outlets.

Food and grocery retail comprises 70 per cent of the total retail sales. And the good news is that this segment is growing at an unbelievable rate of 104 percent.

Even today, ninety nine of these segments are unorganized and therefore there is massive scope for growth especially for the organized sector. The organized food retail market comprises restaurants, fast food outlets, coffee houses etc.

Private funding in the food industry

As per the latest reports the total amount of private investment in the food processing sector for the next three years will be around US$ 23 billion.

* Adani Wilmar, the owner of Fortune edible oil brand, plans to invest close to US$ 199 million in soya and mustard oil projects.

* Reliance Industries Ltd will probably invest US$ 1.25 billion in a dairy project.

Government Initiatives to boost India's prospect at the global level

* Food processing industries have been listed as one of priority sectors for bank lending.

* Zero excise duty on fruit and vegetable processing units

* Foreign equity up to 100 per cent is permitted for most of the processed food items

. * Zero excise duty on items like fruits and vegetables products, condensed milk, ice cream, meat production.

* The excise duty on ready to eat packaged foods and instant food mixes has been brought down to 8 percent from 16 percent.

* Excise duty on aerated drinks has been brought down to 16 per cent from 24 per cent.