India’s food retail market to grow at 9.23% CAGR
New Delhi : India’s food retail market is expected to touch USD 827 billion by 2023, up from USD 487 billion in 2017, growing at a compound annual growth rate (CAGR) of 9.23%, with recent reforms making the sector more competitive and market oriented, according to an ASSOCHAM-TechSci Research consulting joint study.
In line with Prime Minister Narendra Modi’s vision to double farmers’ incomes by 2022, the growth in India food processing industry in value terms is expected to be more than in volume terms over the coming years, which clearly indicates the increase in prices for Indian commodities across the globe. This highlights a great opportunity for small-scale farmers, who can associate with the leading exporters to boost their earnings by carrying out either contract farming or increasing the production by using technologically advanced equipment, noted joint study on ‘Food Value Chain: Partnerships in India’.
Northern (29.56%), western (25.39%) and southern (27.19%) regions account for the major share in India food retail sector whereas Eastern region (17.86%) has a relatively low market share, owing to the presence of seven sister states, Bihar and Jharkhand, where the concentration of big retail companies is only limited to 4-5 cities, according to the study conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) jointly with consulting firm TechSci Research.
Consequently, companies are focusing on two major factors namely price control and attracting customers with big offers. Only way to control the price is to source the products directly from manufacturers, which requires the need for world-class logistics services including storage and warehouse facilities, highlighted the study.
In addition to these, major equipment/technologies imported in India for the food processing sector are control unit for automation, fluid control equipment, hygienic & ultrapure fittings for installation material, analytical instruments for instrumentation process and tank mixing educators for the mixing equipment.
Due to increasing trend of e-tailing, need of personalized spaces are expected ‒ a one stop farm from where a retailer picks everything to save the cost of sourcing it from different places, especially in one state. Hence to sustain the cost, contract farming is expected to pick up pace. The partnership between retailers and individuals/companies involved in contract farming will increase.