The market potential for the food processing industry in India is huge, and supportive Government policy makes India an exciting place for foreign investment. The domestic food market will reach US$ 258 billion by 2015 and total food production in the country is likely to double in the next 10 years. There is huge potential in this growth for both importing and exporting and large food manufacturers are already planning intensified investments in refrigerated warehousing, storage facilities, and machinery for processing and packaging.
A growing middle class and high population density provide a promising framework for the industry’s development. Increasing incomes, coupled with aspirations for luxury and Western lifestyles, lead to changes in consumer behavior – in particular amongst young people. This is reflected in the demand for foreign foods where imports have increased from $ 1.3 billion in 2003 to $ 6.1 billion in 2013, which makes India an even more important market for the food processing and packaging industries.
India is one of the largest food manufacturers in the world. Its strategic geographic location and proximity to food-importing nations give India natural markets for the export of processed foods; while the cost of skilled manpower is relatively low which facilitates work. Accounting for about 32 per cent 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 government has declared the development of the food processing industry as a priority and plans to invest in the next few years $960 million in the sector. According to the National Agricultural Research Institute (ICAR), the market volume of the industry in 2013/14 was $130 billion and expected to increase to $194 billion by 2015/16.
The government has permitted 100% foreign direct investment in the food processing sector without prior Governmental approval. In the agricultural processing industry companies will be awarded 100% tax exemption for five years and 25% remission for the next five years. In addition, an excise tax exemption will be granted for the installation of cold stores. The body responsible for food processing, Ministry of Food Processing Industries has sanctioned 42 “Mega Food Parks” through Public Private Partnerships (PPP), the most recent 17 were allocated in March 2015.
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