Indo-China

“Business Prospects for Food Processing in

India – Kolhapur District”
State-Maharashtra, India
Presented By,

Mr. Rohit Pawar*

Director & CEO
Nutrastarch Foods & Agro Pvt. Ltd
“INTRODUCTION”
Investment Prospects for food processing in
India
INTRODUCTION
 India’s vast agricultural resources creates huge potential for
investments in its food processing and equipment industry.
Major areas holding scope for value added processing are in
the canning, packaging, dairy and food processing, frozen
food, and thermo-processing industries. Currently, food
processing accounts for almost one-third of the total food
market in India.
 The food processing industry is valued at US$258 billion, and
is the fifth largest industry domestically in terms of
production, consumption, export, and expected growth in the
country. It contributes to around 14 percent of manufacturing
Gross Domestic Product (GDP) and 13 percent of India’s total
food exports.
INTRODUCTION
Driven by growth in organized retail, changing consumer
behavior, and increasing consumerism in tier II and tier III
cities, the country’s food processing industry is expected to
reach US$482 billion by 2020,
Overall, less than 10 percent of the total food produced is
processed into value added products in India. In
comparison, the US and China process 65 percent and 23
percent of their produce, respectively. Similarly, other
developing countries such as Thailand, Philippines, and
Brazil process as high as 30, 78, and 70 percent of their
produce, respectively. 
KEY DRIVERS OF GROWTH IN FOOD PROCESSING

Consumer Spending on Food

The Indian food and grocery market is the world’s sixth

largest, with retail contributing to 70 percent of the total
sales. On average, Indians spend 31 percent of their total
earnings on food and grocery. In contrast, consumers in the
US spend only 9 percent, while in Brazil and China, the
expenditure on food is 17 percent and 25 percent,
respectively.
KEY DRIVERS OF GROWTH IN FOOD PROCESSING

Change in Consumer Taste and Preference

With growing awareness, better health consciousness, need

for convenience, and improving lifestyles, the share of
processed food is gradually and steadily increasing on
consumer plates across the world. In India, this change is
bolstered by rising per capita income, a large young
population (60 percent below 35 years of age), deeper retail
penetration, and a growing number of nuclear families.
India’s demands for processed food is, therefore, expected
to increase to about 8.5 percent by the end of 2020. 
KEY DRIVERS OF GROWTH IN FOOD PROCESSING

Growth in Food ExportsChange in Consumer Taste and

Preference
There is a rise in the demand for Indian processed food in
the international market. In addition to changing consumer
tastes in foreign markets, approximately 30,843,419 16
people of Indian origin live abroad (Ministry of External
Affairs, India). According to government’s estimates, Indian
exports of processed food and related items rose at a
compound annual growth rate (CAGR) of 11.74 percent
during 2011-16, reaching US$16.2 billion.
KEY DRIVERS OF GROWTH IN FOOD PROCESSING

Availability of cheap workforce

India has a relatively cheaper workforce that can be
effectively utilized to set-up a low production base for the
domestic and export market. Production costs in India are
lower by about 40 percent in comparison to most developed
and developing countries.  
 GOVERNMENT SUPPORT
Foreign Direct Investment (FDI)

India has a relatively cheaper workforce that can be

effectively utilized to set-up a low production base for the
domestic and export market. Production costs in India are
lower by about 40 percent in comparison to most developed
and developing countries.  
 GOVERNMENT SUPPORT
Fiscal Benefits

 The government offers several fiscal incentives to small and

medium enterprises for setting up food processing facilities.
incentives include capital subsidies, tax rebates, and reduced
customs and excise duties. Additionally, the government has
constituted a fund of US$312 million (Rs 2000 crore) with the
National Bank of Agriculture and Rural Development
(NABARD) to provide concessional loans to mega food parks
and units established therein.  
 GOVERNMENT SUPPORT
Increased Focus on Infrastructure
The government has established 60 fully equipped Agri-
Export Zones (AEZs), in addition to 42 mega food parks
and 128 cold chains, to boost agricultural and food
processing exports. Under the 2016-17 Union Budget, the
federal government allotted US$19.65 million for
developing mega food processing parks. Moreover, in
November 2016, the Food Safety and Standards Authority
of India (FSSAI) launched a major scheme to upgrade food
testing laboratories in India.
 GOVERNMENT SUPPORT
Increased Focus on Infrastructure
The government has established 60 fully equipped Agri-
Export Zones (AEZs), in addition to 42 mega food parks
and 128 cold chains, to boost agricultural and food
processing exports. Under the 2016-17 Union Budget, the
federal government allotted US$19.65 million for
developing mega food processing parks. Moreover, in
November 2016, the Food Safety and Standards Authority
of India (FSSAI) launched a major scheme to upgrade food
testing laboratories in India.
 GOVERNMENT SUPPORT
Revamped National Mission on Food Processing
The government is taking steps to launch a new scheme –
SAMPADA or Scheme for Agro-Marine Processing and
Development Of Agro-Processing Clusters by 2019-20. The
overall mission will involve the launch of three separate
schemes – creation and expansion of food processing and
preservation capacities, new agro-processing clusters, and
establishing backward and forward linkages. SAMPADA
will have an outlay of US$935 million (Rs 6000 crores).
Thank You