Opportunities in the Food Sector [Part II – Investments]December 19, 2016
How to plan your mealsDecember 21, 2016
The most alluring factors of any industry revolve around the volume of business growth possible within its market and the varied levels of interests depicted by other businesses in the market in forms of investments. The Government of India has achieved to cover both of those aspects wonderfully and has etched India’s food sector at a position of high significance. However, the Government of India seemed pretty devout to its prospective and estimates, and for that reason it introduced various initiatives of its own to ensure the gradual and sturdy growth of the food sector in India.
The Ministry of Food Processing Industries took a firm stand to promote food processing industries, exploit the potential of the international and the domestic market for processed food products, and increase the level of processing through the Vision Document 2015. The document envisages tripling the size of investment within the processed food sector through increasing the level of processing of perishables from 6% to 20%, the share in international food trade from 1.5% to 3%, and the value addition from 20% to 35%. These envisaged estimates surely depict the government’s upstanding motives to develop the processed food industry by quite a few yards. According to the Ministry, a total investment of about US$ 14.67 billion would be required to achieve the aforementioned targets. The Government of India also spread its girth by relaxing foreign direct investment [FDI] norms for the sector by allowing up to 100% FDI in the e-commerce of food product through automatic route.
The major initiatives that have been taken under action by the Government of India to improve the food processing sector in the nation are mentioned below.
- The Government of India has allocated US$ 225.7 million by announcing various measures under the MEIS [Merchandise Exports from India Scheme]. It also included establishment of agencies for fisheries and aquaculture in coastal states and export incentives for marine products.
- The Union Budget for the term period of 2016-17 has proposed 100% FD through Foreign Investment Promotion Board [FIPB] route in marketing of food products that are produced and manufactured within the country.
- Digitization of all the ration cards in India, along with 42% of the digitized ration cards linked directly to the respective Unique Identifications [UID] or Aadhaar Cards.
- After Parag Milk Foods and Schreiber Dynamix got approved for their products by the inspection authorities of Russia, the Government of India allowed these two dairy companies to export milk products to Russia for a period of six months.
- The first of its kind, Mega International Food Park, situated at Dabwala Kalan, Punjab, was inaugurated by Ms. Harsimrat kaur Badal, Union Minister for Food Processing Industries. The entire project is worth US$ 20 million. At the inauguration she expressed her confidence towards the decision of allowing 100% FDI in multi-brand retail along with 100% local sourcing condition. Her words explained the move as a catalyst for the food processing sector, thereby uplifting the condition of farmers, controlling inflation, and creating more jobs within the country.
- New rules have been issued by the Food Safety and Standards Authority of India for importing products, to relax labeling guidelines and address concerns over the entry of sub-standard items while simplifying the process of setting shelf-life norms.
- The Ministry of Food Processing Industries declared a scheme for Human Resource Development within the food processing sector. This scheme is being subjugated under the National Mission on Food Processing. The scheme comprises of the following components:
- Entrepreneurship Development Programme [EDP]
- Training at recognized institutes at National/State level
- Creation of infrastructure facilities for diploma/degree courses in food processing sector
- Food Processing Training Centers [FPTC]
- FSSAI issued new Food Safety and Standards Regulations on Food
Product Standards, Food Additives, Toxins, Contaminants, and Residues to prescribe a set quality and safety standard throughout the respective products.
- The Ministry of Food Processing Industries has taken certain new initiatives to further develop the food processing sector. It also stands affirm on helping to enhance export of processed and agro foods and increase the incomes of farmers.
- The Spice Board that has been set up by the Ministry of Commerce to promote and develop Indian spices worldwide targets spice exports of about US$ 3 billion by 2017.
- The Government of India has approved on establishing five Mega Food Parks in the states of Maharashtra, Chattisgarh, Punjab, Bihar, and Himachal Pradesh. The Government of India has plans to set up 42 such food parks across the country within the next three to four years.
- Within the Union Budget for the term period between 2015 to 2016, a corpus of US$ 293.44 million was sanctioned under NABARD [National Bank of Agriculture and Rural Development] to provide cheaper credit to the food processing industry.
- For plants and machineries used in packaging and processing, the excise duty levied has been trimmed down to 6% from 10%.
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