Even as the food processing sector has outpaced agriculture in the last two years, export is likely to remain subdued this financial year due to slowdown in global demand, a Dun and Bradstreet report has said.
According to D&B report, "The food processing sector is poised for exponential growth with the government setting a target of doubling processing levels to 20 per cent by 2019, from the current 10 percent."
It said, the share of Food Processing Industries (FPI) in manufacturing value added is expected to increase, which aligns with the objective of 'Make in India, which provides an opportunity for companies to capitalise on the potential that the industry has to offer.
However, exports of FPI related commodities declined by 18 per cent (year-on-year) to USD 29.7 billion during FY16, which was in line with the declining trend in the country's overall shipments, it said.
While total cereal exports in FY17 would be close to last year's level due to tighter availabilities and moderation in demand, going forward we can expect a partial recovery as few countries have now opened their markets to Indian rice.
The report said that meat exports are also likely to increase only marginally with demand stemming from the Middle East, South Asia and Africa.
Food quality and safety standards stand as barriers to food exports in key markets such as the US and the European Union, it added.
Food exports, it said, are likely to be subdued in 2017 due to slowdown in global demand and the share of FPI related commodities to total exports could moderate marginally below the FY16 level of 11.3 per cent.
Lack of adequate infrastructure poses a major bottleneck to the growth of the food processing sector as India suffers from significantly high harvest and post-harvest losses, it said.
"The present cold storage capacity falls significantly short of the required capacity. Logistics cost also remains elevated due to multi-tier transportation in the absence of end-to-end logistics service providers. These constraints translate into low level of food processing in the country." the report added.
Rising awareness among consumers would largely define product offerings and food items will increasingly reflect healthy lifestyle trends where food transparency will no longer be optional but the norm, the report said.
Hence, there will be increased scope for players to tap new segments such as nutraceuticals and organic products.
Growing demand for clean labels food free from artificial colours, flavours and preservatives will prompt manufacturers to hunt for the next healthy ingredient, it said.
The foreign direct investment (FDI) in the food processing sector rose 24 per cent in 2017-18 to USD 904.9 million, according to an official data. FDI inflow into the sector stood at USD 727.22 million during 2016-17 financial year.
The sector attracted FDI worth USD 505.88 million and USD 515.86 million in 2015-16 and 2014-15 respectively, the data showed.
The government had in July last approved American e-commerce major Amazon's proposed USD 500 million investment in retailing of food products in India.
At present, 100 per cent FDI in food processing sector is allowed through automatic route. In 2016, the Centre allowed 100 per cent FDI through approval route for retail trading, including through e-commerce, in respect of food products manufactured and produced in India.
Food Processing Minister Harsimrat Kaur Badal had in February this year said FDI in the sector could touch USD 1 billion in 2017-18.
The sector would attract an investment of USD 14 billion over the next 2-3 years as committed by the domestic and foreign investors during the world food summit, she had said.
The World Food India 2017, organised by the ministry, attracted participation from 61 countries, 60 Global CEOs and more than 200 global companies.
Uttar Pradesh Chief Minister, Yogi Adityanath dials Baba Ramdev to solve food park issue in Noida A day after Baba Ramdev's Patanjali Ayurved said that it's pulling out of its proposed Rs 6,000-crore mega food processing project in Noida, Uttar Pradesh government today sprung into action to resolve the controversy.
According to some reports, Patanjali food park controversy also saw Prime Minister Office intervention asking for the resolution of the issue.
Chief Minister Yogi Adityanath today spoke to Patanjali Ayurved Managing Director Acharya Balkrishna and officials have been asked to look into the bottlenecks and revert quickly.
"CM Yogi Adityanath has talked to Baba Ramdev. Land allotted was under name of Patanjali Ayurveda but later they wanted it under Patanjali Foods. There is no need to sign another MoU. It'll be brought before cabinet," Satish Mahana, UP Minister said.
Patanjali Ayurved said yesterday that it is pulling out of the project along the Yamuna Expressway in Uttar Pradesh due to non-cooperation from the state government.
"We are cancelling the project as we did not get required clearances from the UP state government," Patanjali Ayurved Managing Director Acharya Balkrishna said yesterday.
Citing the reason for pulling out of the state, he said, "We did not get any cooperation from the state government for this project. We have waited for a long time for the clearances but could not get from the state government. Now we have decided to shift the project."
The Ministry of Food Processing Industries had given Patanjali one-month extension till end of June to get the requisite clearances to start the project.
The Hairdwar-based company had proposed to invest up to Rs 6,000 crore for 425 acres plant at YEIDA to cater the domestic and export markets through its step-down firm Patanjali Food & Herbal Park.
Patanjali had claimed that its Yamuna Expressway-based plant would produce goods worth Rs 25,000 crore annually if it runs to its full capacity and creating 10,000 direct jobs, Patanjali had said.
It presently has mega food park projects in Nagpur (MP) and Tejpur (Assam).
India's food processing industry could attract an investment of USD 18 billion in the next four years as this sector provides great business opportunity with an annual growth rate of over 8 per cent, a top government official said today.
Addressing a PHD chamber conference, Food Processing Secretary J P Meena said “food processing sector has a great future and can generate huge employment opportunities, besides increasing farmers' income. the government received an investment committment of USD 12.5 billion in the food processing sector during the World Food India event held last month here. Government has launched a Rs 6,000 crore "SAMPADA' scheme to boost food processing sector and this programme would attract an investment of Rs 31,000 crore or USD 5 billion. If these commitments are grounded, we will have an investment of USD 18 billion over the next 3-4 years which is a huge investment. Ministry’s emphasis is to connect food processing industries to production centres and farmers. Food processing sector could play an important role in increasing farmers' income, but to achieve this, there is a need to connect farmers' demand for raw material with processing units. Country imports many fruits and vegetables even as there is enough domestic supply as processing units do not get varieties and quality they need. aThere is a great future for food processing. But we will have to connect with farmers. If we are able to do this, this will be a win-win situation for both farmers and processors. Government would soon launch a scheme to set up mini food parks across the country. Under this scheme, grant up to Rs 10 crore would be provided.”
A top Food Processing Ministry official has said that the Food Processing industry is unlikely to have any adverse impact in terms of taxation under the proposed GST regime as the sector will continue to be taxed at existing rates.
The industry has demanded the sector be levied with minimum tax under the GST regime to fuel growth and attract investments, he said. Addressing an international conference on 'India Farm 2 Fork 2016', Special Secretary in the Food Processing Ministry J P Meena assured the industry that there will not be any adverse impact of GST regime on the sector.
"The GST regime is unlikely to adversely affect this sector with higher taxation slabs, as the available indication suggests that it would continue to be taxed at existing rates even post GST," a statement issued by PHD Chamber quoted Meena as saying during the event.
The government has reduced significantly the taxes, particularly excise on food processing industries from 10 per cent to 6 per cent, Minister of State for Food Processing Sadhvi Niranjan Jyoti said.
In future, she said the government would take more initiatives to make this sector more vibrant and put on global map, she was quoted as saying in the statement.
On post-harvest losses of agri-produce, Meena earlier said the government is evolving policies to boost food processing and reduce agri-wastage by 50 per cent in the next 5-6 years.
He called upon the industry to manufacture quality processed foods which are accepted in global markets, besides asking the food safety regulator to streamline standards in this regard.
He also shared that foreign direct investment in the sector has been USD 500 per annum in the last three years and mega food parks are coming up in 42 locations.
Sadhvi Niranjan Jyoti, Union Minister of State for Food Processing Industries, while addressing the National Cold Chain Summit 2016, revealed that the Central Government will provide all the necessary support to scale up the growth of UP’s food processing industry.
During the summit which was jointly organised by Union Ministry of Food Processing Industries (MOFPI) and Indian Chamber of Commerce (ICC), the minister also revealed that a wide array of fiscal incentives was being offered in the food processing sector. Remunerative prices for farmers have become an imperative for sustainable growth of the country.
She stated further that this summit will act as a catalyst to the state and will open many opportunities for UP in food processing business. This one day summit was focused on promoting and harboring the cold chain market and services in UP and also to educate and make people aware about the opportunities available in this lucrative business.
A Research Paper on Cold Chain Market and Services in Uttar Pradesh was also released at the inaugural session where UP Minister for Horticulture and Food Processing Mool Chand Chauhan was also present. Sharing his views on the summit, Chauhan opined that the summit provided a great platform to discuss the issues, bottlenecks and required strategies for promoting faster growth of the food processing industry. Uttar Pradesh is an ideal place to catapult the success story of the food processing industry because of its natural resource base and demographic advantages.
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