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Indian food processing sector can generate employment of 9 million by ’24
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Tuesday, 21 February, 2017, 08 : 00 AM [IST]
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Our Bureau, New Delhi
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The Indian food processing sector has the potential to attract $33 billion of investment and generate employment of nine million persons by financial year (FY) 2024.
This was stated by an Associated Chambers of Commerce and Industry of India (ASSOCHAM)-Grant Thornton research paper on Food Retail: Investment: Infrastructure.
Food processing is a key contributor to employment generation in India. The policymakers have identified food processing as a key sector in encouraging labour movement from agriculture to manufacturing.
“By 2024, the food processing sector is expected to employ nine million people in India and expected to generate about 8,000 direct and 80,000 indirect jobs in the state,” the joint study noted.
According to the paper, the Indian food processing industry is pegged to be between $121 billion and $130 billion.
With the second largest arable land in the world, it is the largest producer of milk, pulses, sugarcane and tea in the world, and the second largest producer of wheat, rice, fruits and vegetables.
Despite the massive production, the degree of processing is low and ranges between two and 35 per cent for different produce.
“India is one of the top rankers in the production of bananas, guavas, ginger, papaya, etc., although processing levels in the country remain limited. This indicates an extensive opportunity in the food processing sector,” added the paper.
According to the joint study, the Indian food and retail market is projected to touch $482 billion by FY 2020 from the 2015 level of $258 billion.
With globalisation and increasing trade across the borders, approximately 460 million tons of food, valued at $3 billion, is traded annually.
India, thus, has a great potential for global trade in agricultural and processed food products.
The share of food processing exports in total exports was around 12 per cent in the last few years.
Between FY 2011 and 2015, India’s exports of processed food-related products have been growing at a compounded annual growth rate (CAGR) of 23.3 per cent.
The unorganised sector accounts for 42 per cent of India’s food processing industry. The sizeable presence of small-scale industries points to the sector’s role in employment generation.
As per the study, though the market falls under the unorganised sector in the country, the organised sector has a larger share in the secondary processing segment than the primary one.
Food and grocery constitute a substantial part of India’s consumption basket accounting for around 31 per cent share in the total.
In contrast, consumers in other countries spend a much lower proportion of their income on food and grocery — nine per cent in the United States, 17 per cent in Brazil and 25 per cent in China.
Food and grocery is the largest segment in India’s retail sector, with a share of more than 60 per cent in India’s total retail market in 2014.
India is the world’s second largest producer of food after China. The arable land area of 159.7 million hectares (394.6 million acres) is the second largest in the world (after the United States).
India has a strong raw material base for the food processing industry. India is one of the largest producers of certain fruits, vegetables, pulses, cereals and dairy products such as mangoes, papaya, potatoes, onions, ginger, chickpeas, rice, wheat, groundnuts, milk and eggs, among others.
Strong demand growth
- Demand for food processed food rising with growing disposable income, urbanisation, young population and nuclear families
- Household consumption set to double by 2020
- Changing lifestyle and increasing expenditure on health and nutritional foods
Food processing hub
- Indian benefits from large agriculture sector, abundant livestock and cost competitiveness
- Investment opportunities arise in agriculture, food infrastructure and contract farming
- Diverse agro-climatic conditions encourage cultivation of different crop
Increasing investment
- Government expect $21.9 billion of investment in food processing infrastructure by 2015
- Investment, including foreign direct investment (FDI), would rise with strengthening demand and supply fundamentals
- Launch of infrastructure development schemes to increase investment in food processing infrastructure
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