/ What’s Cooking In India’s Food & Beverage Industry?
/ What’s Cooking In India’s Food & Beverage Industry?
The Food and Beverage industry is one of the largest and fastest-growing industries in India. It makes up around 3% of the country’s GDP and nearly 2/3rd of the country’s entire retail market.
The industry currently has a market size of USD 269.22 billion and it is targeted to reach USD 504.92 billion by 2027. Experts believe that the Indian F&B industry is likely to project robust growth with an impressive CAGR of 11.05%, which is a healthy sign for the industry.
The Indian Food and Beverage industry is anticipated to experience substantial growth in the foreseeable future, thanks to a multitude of factors that are expected to positively impact the industry. Therefore, foreign companies aiming to tap into India’s food and beverage industry should thoroughly investigate these latest market developments to ensure unparalleled returns on their investment.
Let us throw some light on the growth drivers and recent trends shaping the future of the F&B industry in India.
Growth Drivers of the F&B Market
The rapid growth in the India Food and Beverage market is fuelled by several factors, including the availability of a large raw material production base, growing urbanization, rising household spending rates and increasing demand for convenient and healthy food options among millennial population. The rising affluence of the expanding working population, coupled with an increase in disposable income, is also a significant driver of growth in the F&B market.
The rapidly surging demand is also supported by the growth of e-commerce and online food delivery services thus catering to mass needs.
Government initiatives fueling F&B market
The Indian government is actively advocating for the development of alternative methods to strengthen the food and beverage industry. To bolster the outbound shipments in both quantity and value and secure a stronger foothold in the most sought-after items in global trade, the Indian government is devising a strategy for diversifying its export portfolio.
The government is taking active measures to facilitate trade in the food and beverage sector by establishing 60 Agri-Export Zones (AEZs), 42 mega food parks, and 128 cold chains to boost agricultural and food processing exports.
The significant growth of the food and beverage market in India can be attributed to various factors, including the Pradhan Mantri Kisan Sampada Yojna initiative and the Indian government’s planned infrastructure investment of one trillion dollars.
Additionally, the government allows 100% foreign direct investment (FDI) in the food processing sector through the automatic route.
Budget 2023: Government supportive measures
In Budget 2023-2024, the government announced several supportive measures for the F&B industry and tourism and hospitality industry which indirectly plays a crucial role in the F&B industry. The government has announced the allocation of around USD 24 billion to the food and allied sector. Additionally, an estimated Budget outlay of approximately USD 186.80 million has been announced for the Production-Linked Incentive (PLI) Scheme for the food processing industry.
Furthermore, the government has taken a significant step towards improving the transportation network for several industries including the food grains industry by identifying 100 crucial transport infrastructure projects. These projects will have a total investment of approximately USD 9.2 billion and will focus on enhancing the first and last mile of the supply chain, ensuring the efficient movement of goods.
Emerging Trends Shaping the F&B Industry in India
India has a huge geographical advantage as it is aptly positioned as the center of South East Asia which offers great potential as a trading hub in the food and beverage sector.
India’s F&B industry is experiencing significant growth and change, with the dairy, bakery, and hot drinks sectors all seeing strong growth. There is also a rising demand for healthy ingredients, with the nutraceutical market set to expand significantly in the coming years. Additionally, there is a growing interest in plant-based alternative foods to replace meat products, with consumers seeking environmentally friendly products. The market in India is also growing for new products such as breakfast cereals, pasta, infant food, foreign liquor, and different types of oils and sauces.
These trends are creating opportunities for investment in the F&B industry, particularly with the support of favourable government policies and incentives. Many international organizations have established manufacturing infrastructure in India and are studying the market in depth.
Key Takeaway
India’s food and beverage industry presents significant opportunities for foreign investment due to its growing market size, increasing exports, and proximity to key export destinations. However, to succeed, foreign companies must develop market-centric strategies and partner with local experts to navigate regulatory and logistical challenges. With the right approach, the Indian food and beverage industry can offer unmatched growth and profitability.
How Can M+V Altios Help?
Looking to expand your business in India? Look no further than M+V Altios. Our team of experts understands the market dynamics and challenges that foreign companies face when entering India. We offer a range of services including market analysis, finding the right partner, distributor or supplier search and assessment, industrial cluster analysis, location search, and even manufacturing set-up. Our goal is to help you identify and approach potential customers while maximizing your profitability.
Let us help you navigate the complexities of the Indian market and achieve success. Contact us today to learn more.
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