Growing leaps and bounds

The Indian Food Processing Industry is one of the largest in the world with respect to production, consumption, export and growth prospects and the Packaged Food sector is the fifth largest industry in India.

 Being the second largest Packaged Food market in Asia, India is behind only USA, China, Brazil and Mexico in the world ranking. With increasing population and changing lifestyle trends around the world, increased consumption of processed & packaged food and beverage is observed.

At present, India’s Food Packaging Industry is evaluated at around $12 billion and is likely to reach $18 billion soon. Study shows that in the period from 2012 to 2016, the growth of the Food Packaging sector in India has doubled to 13.7%.

 A promising sector with huge potential  

 India’s Packaged Food Industry is still at a nascent stage (with a per capita consumption of only 24 kg annually) and has tremendous scope of growth. What are the factors that support the growth of the Food Processing & Packaging Industry in India?

According to a recent survey, by 2017 the market of Processed and Packaged Food in India had reached $50 billion, and consumption increased by 11% annually to reach 829 million tonne. The amount spent on Packaged Food per household in India has increased by 32.5% and is expected to reach 35% soon. Out of 899 billion litres of beverage consumption around the world in 2015, India consumed 22 billion litres, and the demand for beverages in India increased by 80% by 2017.

 Flexible versus rigid packaging

 Flexible Packaging is currently the preferred choice for food products over rigid packaging due to the ease of handling, storing, disposing and at the same time it is more economic and keeps food fresh for a longer period. However, flexible packing uses materials that are not suitable for recycling and reuse, and plastic waste management has been a rising concern in India. The Government of India this year recently notified a new policy for plastic waste management to address this issue in a more sustainable way.

With the new policy and the Government’s focus on a cleaner India through campaigns like ‘Swachh Bharat’, it is now a propitious time to introduce improved and innovative technologies into India. Global companies like Dow and Bosch are making efforts to produce special packaging solutions (like the all-polyethylene (PE) solutions – such as Innate and Retain) which are easy to recycle in order to overcome the challenges faced by the flexible packaging industry in India.

Policy stands hand-in-hand with growth potential

The Indian Government has approved Joint Ventures, 100% export oriented units, foreign collaboration and industrial licenses with investment worth $3 billion in the Food and Beverage Packaging Industry, of which foreign investments is over $1.4 billion. Moreover, apart from the Indian Government’s recent FDI revolution that permits 100% FDI in the Food Processing sector through automatic route, the Government has permitted 100% FDI in trading and e-commerce for food products manufactured and produced in India through approval route. Additionally, the Indian Government has also reduced the excise duty  on Food Processing & Packaging machinery from 10% to 6%.

The Indian Government in its 12th Five Year Plan (2012-2017), presented a Scheme for Technology Upgradation, Establishment, and Modernisation of Food Processing Industries under the National Mission on Food Processing (NMFP) with the aim of increasing food processing & value addition, reducing wastage, increasing exports, as well enhancing the income of farmers. The Scheme envisions an increase in FDI in the Food Processing Industry in India, which will be advantageous for the overall development of the industry and in turn also generate employment opportunities in India. With the help of more industry-friendly policies, the Government wants to ensure that India captivates modern technology in this sector. However, the major challenges for the Food Processing & Packaging Industry in India are a lack of skilled labour and food safety, which is motivating the industry to now invest more in automation.

 Opportunity galore for foreign investors

 With the Indian Government’s focus on and offer to hand-hold and facilitate foreign investors interested in investing in the Food Processing Industry, there is immense scope for foreign companies looking at  investing in India. Union Minister Harsimrat Kaur Badal, at a recent industry event, stated that the Indian Food Processing Industry is expected to treble in the coming years. In this regard, the Ministry of Food Processing Industry (MOFPI) is planning to develop a special package for the sector to promote exports

Conclusion

In view of the anticipated growth and the industry’s inclination towards modernization, a boost in demand for equipment and machinery for Food Processing & Packaging is certain. Multinational companies interested in India should not miss this opportune time to invest in such a huge consumer-based market.