Better news for those willing to delight the Indian food-lovers is the fact that expenditure on food items account for the largest chunk of expenditure for Indian households; they spend 31% of their incomes on it. By 2015, the Indian food industry is expected to clock turnover figures of $258 billion, from $181 billion registered in 2008. In India, increase in food consumption has happened more due to an increase in per capita expenditure, rather than an increase in the number of mouths being fed. And the urban-rural divide is visible here too. Economic liberalization causing a growth in the urban middle class and their disposable incomes has taken urban food consumption far ahead of rural India.
But, in stark contrast to the developed world and even some of our developing counterparts, India’s total food processing output is estimated at $70-75 billion – just 40% of value of the entire food industry. It is presently growing at a CAGR of 15%, but is predicted to leapfrog at 35% per annum in the future. From mind crunching numbers to headcount, the sector employs an estimated 15 million people. According to an analysis by Dr. J. S. Bedi, “without any replacement of labour, the employment intensity in the organised food processing sector per million rupees of investment currently stands at 1.8 directly and 6.4 indirectly.” As far as the unorganised section of the food processing industry is concerned, there the employment intensity is estimated to be approximately 10 for both direct and indirect employment per million rupees of investment. However, there are concerns as whenever Indian agriculture goes into a state of disarray, farm processing runs into a rough patch. A sneak peak into the economics & dynamics of the sector, and you realise that it scores just a tad better than agriculture, which in India, still remains largely subjected to the vagaries of the weather!
What are the roadblocks and challenges going ahead? Currently, the food processing industry is both nascent and highly fragmented. In sharp contrast to developed countries and even China where food retailers are much larger than food processors and producers, India’s packaged and processed food makers are much larger than food retailers, largely because of the 100% level of FDI allowed (as compared to zero FDI allowed in food retailing where many brands are sold).
But, in stark contrast to the developed world and even some of our developing counterparts, India’s total food processing output is estimated at $70-75 billion – just 40% of value of the entire food industry. It is presently growing at a CAGR of 15%, but is predicted to leapfrog at 35% per annum in the future. From mind crunching numbers to headcount, the sector employs an estimated 15 million people. According to an analysis by Dr. J. S. Bedi, “without any replacement of labour, the employment intensity in the organised food processing sector per million rupees of investment currently stands at 1.8 directly and 6.4 indirectly.” As far as the unorganised section of the food processing industry is concerned, there the employment intensity is estimated to be approximately 10 for both direct and indirect employment per million rupees of investment. However, there are concerns as whenever Indian agriculture goes into a state of disarray, farm processing runs into a rough patch. A sneak peak into the economics & dynamics of the sector, and you realise that it scores just a tad better than agriculture, which in India, still remains largely subjected to the vagaries of the weather!
What are the roadblocks and challenges going ahead? Currently, the food processing industry is both nascent and highly fragmented. In sharp contrast to developed countries and even China where food retailers are much larger than food processors and producers, India’s packaged and processed food makers are much larger than food retailers, largely because of the 100% level of FDI allowed (as compared to zero FDI allowed in food retailing where many brands are sold).
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