Something about Food-Processing

• India’s food-processing sector, though still developing, contributes 14% to the manufacturing GDP (5.5% of aggregate GDP), produces goods worth Rs. 2.8 trillion ($64 billion), and employs 13 million people
• According to the Ministry of Food-processing Industries (MFPI), the food-processing industry over the last decade has grown at an average annual rate of 7.1%
• The growth is projected at around 7.3 percent per annum over the next five years.  Of the estimated total food sales of rupees 8.6 trillion ($198 billion) in 2003/04, processed food consumption was valued at Rs. 5.3 trillion ($122 billion), with the share of value-added foods (juice, jams, pickles, cheese, butter, ghee, processed meat, confectionary and chocolate, alcoholic beverages, aerated beverages, malted beverages, food services, etc.) estimated at 37 percent.
• Food accounts for about 49% of the consumers’ total expenditure
• Some of the multinational food flavour, ingredient, and machinery companies in India; are IFF, Danisco, Chr. Hansen, AB MAURI, The Solae Company, and Fine Organics.
• India annually imports vegetable oils valued at over $2.6 billion and pulses valued at $560 million. 
• Imports of food ingredients were valued at $170 million in 2003/04, and include mostly spices and condiments, dairy products, cocoa products, fish and fish products, fruit juices, and other ingredients (yeasts, sauces, soft drink concentrates, flavouring materials, soy protein concentrates and isolates, etc.).
• Unorganized, small players account for more than 70 percent of the industry’s output in volume and 50 percent in value terms.
• The government’s policy of reserving the food-processing sector for small-scale units, effective until 1991, discouraged large-scale domestic and foreign direct investment in the food-processing sector.
• Food Processing Industry:

o    Processed fruits and vegetables: Market Size, Organized: 17,200 and Unorganized: 18,450 Million Rs.

o    Dairy Products: Market Size, Organized: 255,000 and Unorganized: 906,000 Million Rs.

o    Cooking Oil: Total annual sales around: 50 Billion Rs. and growth of 7-8 percent. Branded oil count 9% at volume and 17% in value

o    Non-alcoholic beverages: India is the largest tea producing country with 860,000 tons of manufacturing and most of the part is going for the export.

o    With annual 300,000 tons of production of coffee, India is a competitive exporter of it.

o    Alcoholic beverages: Whisky, mostly low-priced, accounts for about 55 percent of the Indian spirit consumption, followed by rum, brandy, and vodka.

o    With the take-over of Shaw Wallace’s liquor business by the UB Group, the latter has emerged as the world’s second largest liquor producer. 

o    Confectionary: Size around Rs. 26 billion.

o    Sugar confectionary accounts for 61 percent of this market, with the balance being chocolates, mints, and gums

o    Market growth in last 5 years: 6%, gums: more than 10%

o    Milling and baking:

o    75% of India’s wheat goes in for milled in to wheat flour, mostly in small chakkis (un organized sector)

o    Branded atta produce around 1 million ton flour every year growing  7-9 % year

o    Grain based snacks is having share around Rs. 29 billion in which 15% is at organized sector

 

Sources:

Food-processing Policy 2005, Ministry of Food-processing Industries, GOI; http://mofpi.nic.in/fpipolicy.htm

USDA Foreign Agricultural Service, GAIN Report.

GAIN – Global Agriculture Information Network

Number: IN5031