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Market and Objective |
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On February 12th 2004 the Associated Chambers of
Commerce and Industries of India organised a seminar
on „Economic Growth Structure“ for India. For financial
year 2003 - 2004 a GDP growth of 8,1 % is expected
by the Central Statistical Organisation (CSO).
The Government of India has expressed confidence in
sustaining this strong growth. „The growth rate in GDP
is most certainly sustainable. The kind of steps and
economic initiatives taken by the Government in the
budget and the various packages announced are aimed
at making sure that the growth is sustained“ Dr. Narayan,
Economic Advisor in the Prime Minister’s Office, said.
One of the fastest growing sectors will remain the food
industry: About 5.000 rural clusters have been identified
to become so called growth clusters which will speed up
food processing industry as well as food retail industry.
New Delhi, February 14th. 2004
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The Food Processing Industry sector in India is one of the largest in terms of production, consumption, export and growth prospects. The Government has accorded it a high priority, with a number of fiscal reliefs and incentives to encourage commercialization and value addition to agricultural produce; for minimizing pre/post harvest wastage, generating employment and export growth.
The industry in the organized sector has over 516 flourmills, 418 fish freezing / processing, 5198 fruit/vegetable processing units, and 171 meat-processing units. While India is the world's second largest producer of fruits and vegetables, but hardly 2% of the produce is processed. Known worldwide as the land of spices, India produces many varieties worth over Rs. 35 billion (US $ 900 million) amounting to 25-30% of world production, which is processed for value addition and export. It grows 22 million tonnes of oilseeds covering most of the varieties. Other important plantation products include tea, coffee, cocoa and cashew.
The large marine product and processing potential with varied fish resources stretches along the 8041 km. long coastline, 28000 km. of rivers and millions of hectares of reservoirs & brackish water. India's livestock population is the largest in the world with 50% of world's buffaloes and 20% of cattles. But only about 1% of total meat production is converted into value added products. India is also known as the largest milk producer in the world and about 15% of the total milk production is processed through the organized sector. Size of the semi-processed and ready to eat packaged food industry is over Rs. 40 billion (US $ 1 billion) and is growing at over 20%.
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The important items manufactured in the country are fruit pulps particularly of tomatoes & mangoes, ready to serve juices, canned fruits, jam, pickles, squashes, etc.. The installed capacity of fruits and vegetable processing industry has been increasing steadily. Recently, items like frozen fruits, pulps, dehydrated & freeze-dried vegetables, canned mushrooms etc. are also being produced. While in the coming years new items like carbonated fruit drinks, dehydrated and freeze dried fruits, fruit juice concentrate etc. are expected to be manufactured
The utilization of fruits and vegetables for processing in the organized and the unorganized sectors is expected to be around 2% of the total production. The domestic consumption of the processed fruit and vegetable products is low as compared to the consumption of primary processed food and fresh fruits and vegetables. Another reason for the inadequate development of the domestic market is the smallness of the units and their inability for effective market promotion. Several incentives from governmental institutions are on the way to start solving these problems.
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India has one of the largest livestock population in the world. Dairy development in India has been acknowledged the world over as one of modern India's most successful development programme. India's milk production is expected to touch 81 million tonnes during 2002-03 from 78 million tonnes during the previous year.
Organized dairy industry accounts for less than 15% of the milk produced in India. The share of organized industry is expected to rise rapidly, especially in the urban areas.
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India has a livestock population of 470 million that includes 205 million cattle and 90 million buffaloes. The country produces about 800 million broilers and 35billion eggs annually. Animals that are generally used for production of meat are cattle, buffalos, sheep and goats, pigs and poultry.
a) Meat
The total meat production in the country is to the tune of 4.5 million tonnes per annum. This includes meat products also. The slaughtered rate in relation to the population of animals is about 6% in the case of cattle, 10% in the case of buffalo, 99% in case of pigs, 30% in case of sheep and 40% in case of goat. The production of value added meat and meat products are also steadily increasing.
b) Poultry
With the growth of poultry in the country, there has been a sharp rise in the availability of egg and broilers. With the increase in availability of eggs in the country and a rising demand for egg products in Europe, Japan and other countries, six egg-processing units were established from the year 1994 to 1996. These units have started exporting egg products like egg powder, albumin powder and frozen yolk. Though initially there was a boom in the export of egg products but in 1997, a sudden downfall occurred in the demand of egg products. The export has got a setback and only three units in the country are running with 25% capacity.
The poultry meat processing is still primarily in the unorganised sector. However, with a large increase in broiler production, a number of poultry processing plants have been established in Maharashtra, Andhra Pradesh, Karnataka, Banagalore, Madhya Pradesh, West Bengal etc.
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Over the last 50 years the infrastructure has been developed for processing of the marine products. At present there are over 402 freezing units with a daily processing capacity of 8500 tons and 485 frozen storages with a capacity of 109090 tons.
The marine products are exported to over 64 countries. Value added exports has not yet though gone to higher or greater percentages, Japan remains the most important market in terms of value followed by USA, South East Asia and European Union.
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The consumer food industry mainly consists of ready to eat or ready- to - cook products such as pasta products, cocoa based products, bakery products, biscuits, soft drinks, etc.
a) Bakery
Bakery industry in India is probably the largest among the processed food industries, production of which has been increasing steadily in the country. The two major bakery industries, viz., bread and biscuit account for about 82% of the total bakery products. The annual production of bakery products which includes bread, biscuits, pastries, cakes, buns, rusk, etc., most of which are in the unorganized sector, is estimated to be in excess of 3 million tonnes. The production of bread and biscuits in the country both in the organized and unorganized sectors is estimated to be around 1.5 million tonnes and 1.1 million tonnes respectively. Of the total production of bread and biscuits, about 35% is produced in the organized sector and the remaining is manufactured in the unorganized sector.
Another wheat-based product known by its generic name, pasta, comprising of noodles, vermicelli, macaroni and spaghetti is gaining popularity. The production of pasta products in the organized sector has registered a marginal increase, while the growth in the unorganized sector is comparatively higher.
b) Cocoa Products
There are 20 units engaged in the manufacture of cocoa products like chocolates, drinking chocolates, cocoa butter substitutes, cocoa based malted milk foods with a production of approximately 34 thousand tonnes.
c) Soft Drinks
The estimated production of soft drinks has increased from 6450 million bottles in 2000-01 to 6600 million bottles during the year 2002-03. It constitutes the third largest packaged food category which is regularly consumed after packaged tea and biscuits. The soft drinks industry in India comprises of over 100 plants across the country. At present, there are more than 7000,000 outlets in the country.
The soft drinks industry has attracted one of the highest foreign direct investments in the country amounting to around Rs. 47 billion. The total export earnings of the soft drinks industry is over Rs. 7 billion per annum.
d) Beer & Alcoholic Drinks
At present, there are 56 units manufacturing beer under license from the Government of India having a production capacity of 121.6 million doz. per annum. On the other hand, the production of alcoholic drinks from non-molasses sources is very small in the country compared to the total production of alcoholic drinks. However, with various foreign companies producing non -molasses alcoholic drinks such drinks are gaining popularity in the domestic market.
The wine industry has made a beginning in India and is establishing itself as a quality conscious industry. The estimated annual production of wine is over 1 million bottles.
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Packaged food products have been slow in penetrating the large potential presented by India's 250 million strong middle class. But due to growing urbanization and changing food habits, the demand has been rising at a good pace and there is enough latent market potential waiting to be exploited through developmental efforts.
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A huge potential exists for the export of processed fruits and vegetables from India. This along with the limitation of the domestic market in consuming the processed food products makes it important to increase the exports of processed food.
Export of processed food items
The total processed food exports are expected to be Rs. 146 billion in 2002-03. Export of animal products are estimated to be around Rs. 17.5 billion in 2002-03 as against Rs. 15 billion in the last year. Export of processed foods (Guar Gum, Ground nut, Alcoholic Beverages, Milled Products etc) is estimated to come down from Rs. 17.8 billion in 2001-02 to Rs. 16 billion in 2002-03. The exports of walnuts are also expected to register a fall to Rs. 1 billion from Rs.11.798 billion in the previous year.
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Technology in Indian food processing is taking new dimensions as more and more companies move upwards to meet norms set globally on quality and safety side. The supply chain management in this area has had drastic negative impacts owing to the hitherto existing low-end technologies predominantly engaged by the industry. Driven to a great extent by rising global market demands and this, sustained by mounting pressure- to which we cannot in any way remain oblivious to- comply to international processing standards, the Indian food processing industry is waking up to the realities. The scope for investments in machinery is huge- going by the projections made by the government that takes the figure to Rs. 920 billion for the 10th plan period.
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Copyright: CIFTI – Confederation of Indian Food Trade & Industry 2003
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