Food processing

Food processing

Herbs, Fruits and Vegetable processing, Cold Storages, Packaging, Millets and organic products, Health foods

About the Industry:

Food processing industry is an SME intensive industry, pegged over $121 bn (Rs. 840,000 crores)1 employing around 6 million people2 The industry is clustered in the agrarian states of Andhra Pradesh, Gujarat, Karnataka, Maharashtra, Punjab and Uttar Pradesh. The key segments include grain processing, dairy, edible oil, fruits and vegetable processing and meat/marine products.

  • The opportunities for this industry are growing, due to changing food habits (leading to a rise in consumption of ready to cook/ready to eat products), favourable government policies and rising opportunities in exports. Some of the emerging trends are:

    • Segments such as organic food, health food are rapidly growing, as millennials are choosing to eat healthy. The market for organic products estimated at Rs. 4000 crores3 , expected to grow at a CAGR of 20% in the medium term. Related to this, the market for non-plastic/environment friendly packing is also expected to grow.
    • New investment opportunities are emerging in contract farming, and in setting up agriculture infrastructure including farm level processing, storage and logistics to bring farm produce to consumers.
  • The following are the major constraints for this industry:

    • Lack of adequate safety/quality infrastructure is a road block for the industry, as it limits them to sell their goods locally. For example, while processed tamarind is in demand, supermarkets find it difficult to find manufacturers who have food safety compliant infrastructure.
    • While new companies are mushrooming in this industry, several existing companies are finding it difficult to survive, due to lack of availability of working capital or inability to differentiate their products.
    • Agrarian crisis – which means farmers are resorting to crops that will give them profits rather than growing healthy grain such as millets etc

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