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“Exempt food processing sector from purview of APMC Act”
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Tuesday, 27 January, 2015, 08 : 00 AM [IST]
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fiogf49gjkf0d  The food processing industry in India is consistently growing, and has witnessed dramatic changes in consumer trends and packaging concepts, and launches of new products in the last few years. The ready-to-cook (RTC) and ready-to-eat (RTE) segments are booming, with the fastest growth being registered by Indian masalas, sweets and whole meals.
M A Tejani, joint managing director, Gits Foods, and immediate past president, All India Food Processors’ Association (AIFPA), shared his views on the food processing industry in the country, and spoke about the challenges faced by it, including cold chain, transportation, food wastage, the Agriculture Produce Market Committee (APMC) Act and exports, with Harcha Bhaskar. Excerpts:
What is the size of the Indian food processing industry? What is its growth rate and position in the global market?
As per the Indian Brand Equity Foundation (IBEF) report, the Indian food industry presently stands at approximately $135 billion with a compound annual growth rate (CAGR) of 10 per cent. It is expected to touch the $200-billion mark by 2015.
Out of the total processed foods market, the combined size of the RTC (cooking mixes) and the heat-and-eat (ready meals) segment is worth Rs 600-700 crore. It is expected to grow at around 25 per cent.
What changes have taken place in the RTE sector in the last five years, and what trends is it likely to witness in the next five years?
Over the past five years, there has been an increase in the consumption of RTE products in India due to various social changes, including the rise in disposable incomes, the number of dual-income families, and the scarcity of domestic helps, especially in the metropolitan cities.
Is your company’s current product range completely Indian? Are any new launches in the pipeline? Would you be involved in any mergers and acquisitions (M&As)?
Yes. Currently all our products are focussed on Indian cuisine. While we do not have any M&A plans, we could be exploring other cuisines in the near future, to expand into newer segments.
What kinds of additives are used to preserve RTE foods? How do they help increase the shelf life of the product?
Our products do not contain any additives, be it colours or preservatives.
Our ready meal offerings are preserved through a carefully-monitored sterilisation process and consist of completely natural ingredients.
What are the recent trends that have been observed in the food processing industry?
Consumers have become more health-conscious, hence brands such as Gits do benefit, as we have always been a no-preservative brand.
All our products are produced from the freshest and finest natural ingredients, as our founding policy is simple - We do not sell what we are not willing to eat ourselves.
What are the current challenges faced by the food processing industry, in regards to production, storage and cold chain regulations and exports?
The challenges include an underdeveloped supply chain, which includes insufficient cold chains, warehouses, poor roads, the high transportation cost, poor handling, APMC costs, high wastage etc.
All concerned in the Central and state governments are aware of the issues, and are trying to address them.
But solutions cannot be arrived at overnight. They require massive resources
and time.
Regulatory matters also need to be streamlined.
Looking at the current year's rainfall, can a shortage of food or inflation be expected in 2014-15?
Unfortunately, yes. There would, of course, be seasonal variations in the rate of food inflation, which would affect the overall rate of inflation.
Is Gits into the export of processed foods? If yes, to which countries? What is the share of exports in the RTE market?
Gits is a pioneer in the convenience food segment in India. We have been exporting since the 1960s.
Today, we export to over 40 countries. The United States, the United Kingdom, the Middle-East, Canada and Australia are our largest export markets.
Currently, 35 to 40 per cent of our turnover is from export sales.
What kind of encouragement or help is expected from the government to boost the food processing industry and exports?
We expect the government to abolish import duty on raw materials, packaging material and plant and machinery.
Due to the adverse exchange rates with the world’s hardest currencies (the US dollar and the British pound), it is extremely difficult to import any of the above items. And when import duty (levied at 35 per cent) is added, it becomes almost impossible.
The existing procedures of export promotion capital goods (EPCG) and advance authorisation are quite burdensome, and many units suffered a great deal, because they could not comply.
APMC adds about 10 per cent to the procurement costs. Hence, the food processing industry should be exempted from the purview of the APMC Act, and allowed to source raw materials directly from producers anywhere in India.
The advance release of financial assistance for overseas publicity by the Agricultural and Processed Food Products Export Development Authority (APEDA), instead, present the procedure of first obtaining sanction and then incurring the expenditure and claiming reimbursement.
The financial assistance ceilings are insignificant, as were fixed many years ago. Continuing high inflation requires the limits to be substantially enhanced.
Are India’s foodgrains, like rice, wheat, jowar and dal, sufficient for primary consumption and processing, or are we dependent on imports? How are farmers benefiting from food processing companies?
At this juncture, the food processors’ output is sufficient to meet the needs of the population. It may be recalled that the Supreme Court directed the government to distribute foodgrains free to the poor, when it found that the stored grain was rotting and being eaten by rats and other pests.
If the government takes upon itself the objective of ensuring that no citizen of India goes hungry to bed at night, there would be a shortage of foodstuff, including milk, fruit and vegetables and edible oil.
As of now, the farmers are not receiving the best prices for their produce. A lot of it is lost in transit and storage, and middlemen take a chunk.
Because of the perishable nature of produce and the non-availability of cold chain, they are compelled to sell the produce in distress.
What is your opinion on food safety in India? Are we at par with the global standards?
As far as food safety is concerned, India has a long way to go. A change of mindset is required, which would take generations of sustained efforts.
Recently, there was a ban by Russia on several European fruit, vegetable, frozen foods and dairy products. What are the possible reasons for it? Is there any lesson that Indian farmers and food processing firms could learn from the same?
The Russian ban and the embargoes in the United States and Europe are all for political reasons, and not on account of quality issues.
Russia has already started searching for suppliers of dairy products in India. Trade delegations from that country have been visiting various factories across India.
What are the various steps to be taken to increase India’s exports of food in general, and RTE products in particular?
Exports need to be further incentivised and transaction costs reduced through elimination and simplification.
Some official committees have already carried out studies and made recommendations. Rapid implementation is required.
How is India's food e-tailing segment growing? How are food processing companies and farmers benefiting from it?
Food e-tailing is still at a nascent stage in India. Players like Big Basket and Local Banya are making efforts to kick-start the segment. We are supporting them to promote e-tailing, as it has a good potential in our time-constrained lifestyles.
Big e-commerce players, such as Amazon, have just start selling packaged food on their portals, and we believe that others would follow suit. This could become a prominent new sales channel for us over the forthcoming years.
What was the turnover of the company for the year 2013-2014?
We are expecting a growth of over 30 per cent on turnover this year.
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