The food processing industry, currently the fifth largest sector in India?s economy, is showing potential for massive expansion, particularly in the export market, a report by FICCI and Bain & Co says. Costs of processing and packaging food can be up to 40% lower in India, than parts of Europe, making it an attractive venue for investment. Several multinational players are bringing in new products to capitalise on the growing demand for packaged goods.
The report, which was launched at the ?Food World India 2012 Convention,? pegged the packaged food industry at R1 lakh crore, the majority of which is accounted for by dairy and biscuits. Analysts predict growth rates for the packaged food sector anywhere from 9%-13% for the next 5-6 years. The past few years have also seen increases in investment, through joint ventures, foreign institutional investment and private equity (PE). Between 2008 and 2011, PE investment in the food and agriculture sector totaled $650 million .
In the coming years, the Indian government has set an investment target of $20 billion in food-related infrastructure from the private sector. By 2017, 50 Food Parks are expected to be built across the country, providing accessible transport and processing facilities to even small farmers.
Growth is expected to be faster in relatively newer categories such as flavored milk and instant noodles, as compared with categories like bread and spices that are large today. Across segments consumers are increasingly willing to try new brands, rather than remaining loyal to one .
The report cheers reforms by the government in retail, expecting it to ?greatly transform the industry, opening up new possibilities of partnership and bringing increased investment.?