Food Processing Industry [FPI]

• FPI contributes around 9% of the manufacturing GDP.
• Food industry was valued at $ 39.71 billion in 2013.
• With a growth rate of 11 percent, food industry is expected to be valued at $ 65.4 billion by 2018.

Conditions that favor Food Processing Industry in India

• 25 billion population = large consumer base.
• Agricultural economy with readily available and cheap raw materials.
• Ready availability of both skilled and unskilled work force.
• High growth potential because of untapped resources at every stage.
• The sector is not yet fully liberalized. The market is still wide open for new players.
• Can easily attract investments as the industry is still in nascent stage.

How will Food Processing Industry Benefit the economy

• Greater value addition to farm produce.
• Boosting income of farmers.
• Reduce wastage of perishables.
• Control inflation and price volatility
• Generating more employment (Mega food parks).
• Advanced technologies that foreign investors would bring.
• FPI will encourage contract farming [Contract farming will be explained in detail in future posts].

Measures taken by the Government to propel Food Processing Industry

• India is the largest producer of milk and second largest producer of a variety of fruits and vegetables in the world.
• India’s farm output is second worldwide.
• However, food is being wasted at the harvest point and during transportation.
• The wastage levels in perishables is significantly high.
• Government is keen to bring in advanced technology into the supply chain thereby combating the losses incurred during the value chain.

FDI Policy Reform

• 100 % FDI permitted through government approval route for trading, including through eCommerce, of Food Products produced and/or manufactured in India.

Promoting FDI inflows

• $1 billion of FDI inflows into the country from April 2014 to March 2016.

Capacity Augmentation

• 32 Lac MT capacity of cold storage has been created within the last two years.

Boost to Infrastructure development

Over the last two years,

• 51 cold chain projects have been completed;
• 6 Mega Food Parks operationalized;
• 4 abattoirs (slaughterhouse) have been operationalized;
• 11 Quality Testing Food Labs commissioned and 8 upgraded; and
• Infrastructure status has been granted to Food Parks.

 Credit Support

• 2000 crore special fund created in NABARD for Mega and Designated Food Parks
• Priority Sector Lending subject to aggregate sanctioned limit of INR 100 crores per borrower, more credit support is available to investors.

Fiscal benefits to encourage investment

• 100 % Income tax exemption to food processing units on profits for the first five years of operation.
• Reduction of Excise Duty on refrigerated containers from 12.5% to 6%.
• Reduction of Basic Customs Duty from 10% to 5%.
• Service tax exempted on pre-conditioning, precooling, ripening, waxing and retail packing, labelling of fruits and vegetables.
• Service tax exemption for transportation of food grains including rice and pulses, flours, milk and salt by rail, vessels or road

Skill Development

• Food Industry Capacity & Skill Initiatives (FICSI), the sector skill council for Food Processing Industry, has trained 28k persons till date.

Ease of Doing Business Initiatives

• To facilitate imports and exports, Single Window Customs Clearance has been implemented whereby 6 Partner Government Agencies have been integrated allowing seamless exchange of information.

1. Department of Plant Protection Quarantine and Storage (DPPQ&S),
2. Food Safety Standards Authority of India (FSSAI),
3. Drug Controller (CDSCO),
4. Animal Quarantine (AQCS),
5. Wild Life Crime Control Bureau (WCCB) and
6. Textile Committee

• A Single Window Facilitation Cell for addressing queries is being setup.
• A Committee of Independent Monitors to hear grievances of investors/promoters and make recommendations for redressal of grievances is also setup.
• A Food Map identifying surplus and deficit areas of various agricultural produce has been developed and made available on the Ministry’s website. This will aid investors in identifying availability of raw materials in various regions.

New foreign and domestic investments in FPI

Foreign Investors

• Linde Group has invested USD 200 million in seafood segment in Andhra Pradesh.
• Mondelez International, the US-based food, and beverage major, has setup its manufacturing plant in Andhra Pradesh.
• Mars International India Pvt. Ltd, one of the world’s leading chocolate manufacturers, has invested USD 114.63 million in Chocolate manufacturing plant in Pune.

Domestic Investors

• Patanjali Ayurveda Ltd wants to setup Rs. 500 crore food processing unit at Dhar district in Madhya Pradesh.
• Balaji Wafers, based in Rajkot, Gujarat, in building a manufacturing plant for wafers and snacks in Indore, MP.
• Jain Irrigation Systems is setting up a Food Park in Andhra Pradesh.
• Jain Irrigation Systems is also setting up an orange processing point in Warud, Amravati district of Maharashtra.

Mega Food Parks

• The Government’s Scheme for Infrastructure Development provides State-of-the-Art infrastructure for Mega Food Parks.
• The scheme has a provision of Grants-in-aid @50% of the eligible project cost in general areas and @75 % in difficult areas subject to a maximum of Rs. 50 crore.
• Government has sanctioned 42 Mega Food Parks out of which 8 have been operationalized.
• Each mega food park is expected to create direct & indirect employment to about 5,000-6,000 persons and benefit approx. 25,000-30,000 farmers.

Source: http://goo.gl/zHpfeX