Guest author: Aman Mittal | Manager North | Leuze Electronic Private Limited

According to Ministry of Food Processing India, Food Processing Industry accounts for about 32% of the country’s total food market, the Food Processing Industry is one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth. The Indian Food Processing Industry has grown by 11% in the last decade and is expected to reach $480 billion by 2020.  The industry contributes to 14% of the country’s manufacturing GDP, 13% of exports and 6% of total industrial investment.

Initiatives by Government:

Under the ‘Make in India’ initiative, the food processing sector has been identified as a priority sector and has immensely boosted the investment opportunities which is expected to have double-digit growth in the near future. Mega Food Parks that have common utilities like road, electricity, water supply, sewage facility and common processing facilities for pulping, packaging, cold storage, dry storage, and logistics are being promoted in a big way. These parks are to provide fully developed plots and factory sheds to entrepreneurs on a long-term lease basis where they can set up food processing units. With the right infrastructure, food processing units will be able to provide a big improvement to the availability of processed foods in domestic consumption, especially for restaurants. Two mega food parks have already been set-up in the country and Sadhvi Niranjan Jyoti, Union Minister of State for Food Processing Industries, recently announced that eight new mega food parks will be operational by the end of the year.

Understanding the increasing manufacturing demand of this industry we at Leuze Electronic have developed various application-specific food grade and high-speed sensors for this industry. For more than 50 years, Leuze Electronic has stood for innovative and efficient sensor solutions in the area of factory automation worldwide. Our range of products extends from switching and measuring sensors, identification, and data transmission systems to intelligent image processing systems and solutions for safety at work. Our devices operate optically, inductively, with ultrasonics or via RFID, depending on which technology is appropriate for your application. With 18 of our own subsidiaries and 42 sales partners around the world, our customers can reach us quickly and easily everywhere. To accomplish this, we produce our sensors on four continents and can thereby always guarantee product availability.

The Food Processing sector in India received FDI worth around $6.82 billion during and the Confederation of Indian Industry (CII) estimates the industry to attract up to $33 billion of investment over the next 10 years. The Government of India allows 100% FDI under the automatic route in the Food Processing sector, in agri-products, milk and milk products, and marine and meat products. Automatic approvals are provided for foreign investment and technology transfer in most cases. Units based on agri-products that are 100% export-oriented are allowed to sell up to 50% in the domestic market. There is no import duty on capital goods and raw material for 100% export-oriented units. Earnings from export activities are exempt from corporate tax. Additionally, there is a 100% tax exemption for five years, followed by 25% tax exemption for the next five years, for new agro-processing industries. In addition to this, other exemptions on taxes are provided to this industry like nil excise duty on milk and milk products.

Indian Food Processing Industry has seen significant growth and changes over the past few years, driven by changing trends in markets, consumer segments and regulations. These trends, such as changing demographics, growing population and rapid urbanization are expected to continue in the future and, therefore, will shape the demand for value-added products and thus, for Food Processing Industry in India. The Government’s focus towards the Food Processing Industry as a priority sector is expected to ensure policies to support investments in this sector and attract more FDI. As per Prime Minister Narendra Modi, India’s Food Processing Industry is expected to increase almost five-fold in the next 10 years. India, having access to a vast pool of natural resources and growing technical knowledge base, has strong comparative advantages over other nations in this industry. The Food Processing sector in India is clearly an attractive sector for investment and offers significant growth potential to investors.

To read the latest news about the Indian Food Processing Industry, click Food Processing Industry Newsletter.