What are the problems affecting the growth of food processing sector in India? Sameer Barde, Director of Confederation of Indian Food Trade & Industry says the food-processing sector needs to address the impediments in the form of regulations at state levels. CIFTI is a national body associated with the Federation of Indian Chamber of Commerce and Industry.
In an exclusive interview to Commodity Online Special Correspondent Abhijit Roy, Barde says the food processing sector should create an enabling environment for drawing private investment so that it becomes the prime mover of the processed food revolution in India.
What are the micro issues that are confronting food-processing industry?
The issues at micro level, confronting the growth of processed food industry are production and procurement of quality raw materials for processing, use of traditional (obsolete) technologies; incurring huge per unit operational cost, poor economies of scale and fragmented processing capacities. Moreover, non-compliance of GMP (Good Manufacturing Practices) in the processing plants, less awareness about the quality certifications like HACCP, ISO and are considered as serious impediments to the industry and its export prospects.
FICCI has been relentlessly involved in addressing some of these issues, through a series of training programmes on GMP, GHP & HACCP organized in various sectors viz: confectionary, infant foods, meat & poultry sector, across the country since 2005. FICCI-CIFTI is also engaged in various programmes with an objective to build capacity and focus on market development initiatives of SME's in this sector.
How does the industry body look at the present scenario in-terms of market size?
Among the emerging business avenues and growth options in the diverse Indian agribusiness sector, the food-processing sector is particularly promising and is undoubtedly one of the largest potential markets for processed foods. The segments with the largest growth potential for processing are dairy, fruits and vegetables, wine, confectionary and poultry. Products that have growing demand in the export market are pickles, chutneys, fruit pulp, canned fruits and vegetables, concentrated pulps and juices, dehydrated vegetables and frozen fruits and vegetables along with processed animal based products.
The market size for the processed foods is bound to increase from INR 4,600 bn ($102 bn) to INR 13,500 bn($ 330 bn) by 2014-15, assumed to grow at 10%, and the share of the value added products in processed foods would grow from INR 2800 bn($44 bn) to INR 5700 bn, growing at the rate of 15%. The growth witnessed by the sector in the last decade and further improvement in growth rate expected in the years to come, presents innumerable opportunities for investment in processed F&V sector with the estimated market size of about INR 40 billion. The growth rate for many product categories such as juices has been in excess of 25 per cent in the recent past.
The dairy sector has an estimated consumer demand for milk and milk products at INR 1400 billion, growing at about 8 per cent per annum. Poultry meat is estimated to have production of 1.8 million tones, growing at a CAGR of 11 per cent. Besides, ready-to-eat (RTE) industry, still nascent in India, is estimated to be about INR 5 billion growing at 30 per cent a year and expected to cross INR 15 billion by 2010.The wine sector, which has grabbed the attention of corporate doyens, in the immediate past, is growing at about 50 per cent per annum is expected to have a market size of INR 20 billion by 2010.
The government says around one lakh crore of investment is needed in this sector, out of which bulk of investment will be from private sector. How is the Indian industry going to meet this challenge?
The investments of one lakh crore, as estimated by the government will, undoubtedly, catapult the growth of this sector, and put it at the higher growth trajectory. The government needs to invest in infrastructure development viz: the railways, road network, transport facilities and electrification. The government has to provide institutional infrastructure viz: State Agricultural Marketing Boards, Government Organizations and regulations (both formal and informal) to further argument the initiatives of the private sector.
The Indian industry is very much excited to invest in cold chain infrastructure, establishment of terminal markets, retail setup, establishment of world class processing units, packaging and grading units. However, there are certain areas where public private partnership is inevitable, for the amount of investments. The industry is ready to meet the challenges, provided the government, not only acts as a facilitator by providing the infrastructure support mentioned but also works toward providing the conducive regulatory and fiscal regime for sustainable growth and development of processed food industry.
The government has proposed slew of fiscal measures to attract investment but nothing much has happened and industry has not yet responded, why?
The extensive reforms initiated by the government to remove legislative barriers, is a welcome gesture; thus catalyzing private sector activity in food and agribusiness sector. However, there are issues, yet unresolved, and are the major reasons for reluctance from private players towards investments.
The Supply Chain Issues, such as lack of farmer –processors linkages, poor quality of infrastructure, fragmented retail distribution and regulatory hurdles, have affected inflows of investments in food processing. The tax incentives as presently provided; are not sufficient enough to encourage entrepreneurs to invest in the cold chain infrastructure, where huge investments are required, and gestation period is long. Moreover, the procedural bottlenecks which require multiple approvals, together with delays in obtaining approvals leads to cost overruns and impacts investors' confidence. The stage of obtaining
clearances is a bottleneck, as there is duplication of procedures of the central and the state governments.
FICCI has launched codex cell. Can you elaborate on it?
Codex is the international standard to be complied for export and import of processed foods. This is an excellent platform for us to introduce standards for our indigenous products and protect the interests of developing countries by preventing setting of trade barriers. Considering this FICCI along with Ministry of Food Processing Industries established a Codex Cell.
FICCI-CIFTI, Codex Cell is a platform for Indian Food Processing industries to meet, share, discuss and become more aware of Codex activities and international activities which will in turn enable FICCI-CIFTI to assist the National Codex Committee in their negotiations at Codex Alimentarius meetings.
The cell performs through a Core Committee of Experts drawn from industry that meet to:
- Discuss the agenda of the forthcoming meetings of Codex in advance.
- Undertake an input driven exercise to produce output for the stand to be taken by India in the Codex meetings.
- Nominate industry representative, if any for the main Codex Meeting
The FICCI-CIFTI Codex Cell started functioning in Sept 2004. Since, then the Cell has been actively enriching Indian comments in Codex Meetings.
