Definition and scale of sector
Why the sector was chosen in the West Midlands
Food processing is a key industrial sector for India. It accounts for a gross output of Rs.1.12 trillion (US$23 billion), representing 6.3% of GDP, and accounts for 6% of total industrial investment, 13% of exports, and employs 18% of India's industrial labour force. Yet, the bulk of the sector consists of primary products such as milled grains and pulses, raw milk, meat and fruits and vegeTables, which are consumed with little or no further processing. As a result, less than 15% value addition takes place in the organised food processing industry.
Food accounts for 53% of final consumption expenditure in Indian households. In 1999, domestic expenditure on foodwas estimated to be Rs.6 trillion, representing a per capita expenditure of Rs. 6,000 per year. Cereals, fruit, vegetables and milk together account for more than one-third of total household consumption expenditure. Packaged processed food, estimated to be Rs 300 billion in market size, represents just 5% of final consumption.
India is amongst the top three producers in the world of: rice, wheat, liquid milk, poultry products, fruits and vegetables, coconut, tea, spices, marine and fresh water products including fish and shrimp. Currently grain production alone is over 200 million tonnes; however it is estimated that India will need to import over 40 million tonnes of food grains by 2020 to feed its growing population.
Agriculture sector provides 25% of GDP, 64% employment, and accounts for 18% of India's exports. 7% of raw agri produce is value added. Indian agriculture is also seen to have tremendous potential to be able to supply a growing world market for fresh produce including vegetables, tropical fruits, flowers, herbal products for cosmetic and pharmaceutical use, nutraceuticals products based on plants etc. 30% of India's agriculture relies on traditional methods of farming, thus the potential for organic produce exports to the developing countries is very high.
As a substantial contributor to the Indian economy, and since 70% of the population is dependent on agriculture in one form or the other, agribusiness and food processing sectors in India are being given substantial support by industry and government. Infrastructure facilities for processing agriculture products in Food Parks and Agriculture / herbal produce Parks in designated regions have been provided. Major thrust of all these initiatives is to tap the growing world demand. As a result modern concepts of agri processing including: post harvest management, cold storage, warehousing, bulk grain storage, handling and transportation; packaging, irradiation, modern abattoirs, meat and poultry hygiene, cold chain etc are all being established.
Contract farming is increasingly being used by the private and the cooperative sector industry to overcome the challenge of small land holdings of Indian farmers. Large corporates and international companies use contract farming to produce a consistent quality crop for processing; some recent projects have been in growing tomato, cotton, tobacco, gherkins, grapes, sun flower seed, chillies, flowers, banana, ginger, herbs etc.
In the Agriculture sector, when considering potential partners it is essential to look for companies with an established track record with distribution in the local market and if applicable companies exporting to the developed markets. It is also worthwhile considering companies registered as members of the national trade associations: APEDA, CIFTI, FICCI, CII and ASSOCHAM or other recognised trade bodies.
Contract farming is being used by the processing industry to ensure quality and consistency of raw material availability; some products such as sugarcane, tobacco, milk, few fruits and vegetables etc. have been processed under this scheme.
The Indian government also provides token financial assistance to contract farming projects to encourage wider use of this system. Trade controls imposed by the Central and State governments restrict direct private sector operations in rice and wheat storage have been lifted. However improved rice and wheat milling and packaging equipment is likely to be in demand by the private sector to cater to the growing domestic demand.
Source: UK Trade and Investment
Requirements are likely to be for supply of technology, products, equipment and consultant services in:
Development business opportunities span nearly every market in the world (only OECD member states, bar Mexico, Cuba and Korea, are excepted) and cover most sectors.
Aid-funded Business was launched in September 1998 in order to raise greater awareness of UK firms to the substantial opportunities that exist in aid-funded business. It also aims to help firms tap into such business, which emanates from the World Bank, the European Commission, the UN agencies and some bilateral development programmes.
Source: UK Trade and Investment
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