The document provides an overview of the Indian food processing industry. It discusses that India is the world's second largest producer of food and has significant potential for growth in food processing. The industry is expected to grow by 40% by 2015 to $258 billion. It also outlines the various sub-sectors in food processing like grains, dairy, fruits and vegetables, and meat and poultry. The document notes that India's level of food processing is still low compared to developed countries and there is significant opportunity and demand for growth in food processing infrastructure like cold storage and warehouses.

1. November
2013
Indian Food
Processing Industry
A Synopsis

2. Table of contents & figures
Indian Food Processing Industry – A Synopsis
Page 2

3. 1. Executive summary
India is the world’s second largest producer of food next to China and has the potential of being the biggest in the World.
Domestically, the spending on food and food products amounts to nearly 21% of the gross domestic product of the country and
constitutes the largest portion of the Indian consumer spending more than a 31% share of wallet.
Going forward, the Indian domestic food market is expected to grow by nearly 40% of the current market size by 2015, to touch US
$258 billion by 2015.
Some of the key measures undertaken by the Government include: amendment of the agriculture produce marketing committee act
(APMC Act), rationalization of food laws, implementation of the national horticulture mission etc.
The government has also outlined a plan to address the low scale of processing activity in the country by setting up the mega food
parks, with integrated facilities for procurement, processing, storage and transport.
To promote private sector activity and invite foreign investments in the sector the Government allows 100% FDI in the food processing
& cold chain infrastructure. The recent budget has announced several policy measures, especially for the cold chain infrastructure, to
encourage private sector activity across the entire value chain.
A well developed food processing industry is expected to increase farm gate prices, reduce wastages, ensure value addition, promote
crop diversification, generate employment opportunities as well as export earnings.
This publication gives readers an opportunity to understand food processing industry in India better. It highlights various sectors and
subsectors of the Indian food processing industry and also provides with the status of each sub sector independently.
Indian Food Processing Industry – A Synopsis
Page 3

4. 2. Global food processing industry
Total estimated market value of food processing - US $4.4
billion.
19%
Food processing accounts for 3/4th of the total food
consumption.
Indian Food Processing Industry – A Synopsis
Europe
Asia Pacific
Rest of the world
Source: Global food processing report, FAO
USA
France
Thailand
Malaysia
Australia
Netherland
1.50%
25%
30%
70%
80%
Chart 2: Level of processing – country-wise
12%
Countries in the Sub-Sahara African region, Latin America
and parts of Asia are on the lower end of technology
competence in food items. However, Europe, North America
and Japan are in the higher-end of technology, with a
sharper shift towards convenience and diet foods.
USA
80%
The scenario of the food industry has changed drastically
due to the changing life style, food habits and change in
demand for healthy and high value food items along with
improved technology. Trade liberalization policies have
generated great growth opportunities in the food
processing industry.
10%
One of the largest food processing market in the Asian
region is Japan, though India and China are catching up
fast and are likely to grow more rapidly.
One of the most technically advanced food-processing
industry globally is Australia as the products produced are
of international standards and at comparatively lower prices
34%
37%
Chart 1 : Share in global food industry
India
Source: Rabobank
Page 4

5. 3. Indian Food Processing Industry
3.1 India as a emerging market for processed food -
Chart 3: Untapped potential
Nearly 1300 million people.
350 million strong urban middle class.
Increasing disposable income.
Fast changing lifestyles with ongoing urbanization.
Increasing Number of working women.
Health consciousness.
Increasing number of small families with two earners.
Increasing consumer base.
Rapidly growing organized retail sector.
High Investment
Estimated
investment by 2015Euro 22.9 Bn
3.2 India as a sourcing hub Annual milk production-105 million tones (highest in the world).
485 million live stock (highest in the world).
150 million tones of fruits & vegetables (2nd in the world).
230 million tones of food grains.
20 agro climatic zones.
Out of 60 soil types 40 are found in India.
160 million hectares of arable land.
Largest producer of spices.
3rd largest producer of oil seeds.
Indian Food Processing Industry – A Synopsis
High Returns in
form of quality &
brand loyalty.
High Demand
Growing corporate participation,
improved infrastructure
Source : Bizminder Research
Page 5

6. 3. Indian Food Processing Industry
Either retail directly after secondary
processing or go for tertiary processing
3.3 Supply chain in food processing industry
Production
Inputs
Procurement
& storage
Primary
processing
Secondary
processing
Tertiary
processing
Retailing
3.4 Sub-sectors in food processing industry
Sub-sectors
Primary processing
Secondary processing
Tertiary processing
Examples of key products
Indian Food Processing
Fruits and
vegetables
Livestock
products
Ketchups, jam, juices, pickles,
preserves, candies, chips, etc.
Grains and
cereals
Sorting & grading
Rice puff, flour, malt, rawa,
brokens, etc.
Biscuits, noodles, flakes, cakes,
namkeen
Sorting & grading
Oil cakes
Sunflower, groundnut, mustard, soya,
olive oil, etc.
Beverages
Dairy
Products
Pulp, flakes, dried, flavored,
preserved, paste, sliced, etc.
Oilseeds
Agri
Products
Cleaning, sorting, grading &
cutting
Sorting, bleaching & grading
Powder, dust, leaf etc.
Tea bags, flavored coffee, soft drinks,
alcoholic Beverages
Milk
Grading & refrigeration
Khoya, cottage cheese, cream,
etc.
Processed milk, spreadable fats (butter
and cheese), yoghurt
Sorting, refrigeration, chilling &
freezing
Cut, dried, preserved, frozen,
chilled
Eggs
Preparation such as ready-to-eat meals
Meat and
poultry
Marine
products
Indian Food Processing Industry – A Synopsis
Page 6

7. 3. Indian Food Processing Industry
Chart 4: Food processing sectors
Chart 6: Level of processing of perishable products
25
22
21
20
25%
33%
13
15
10
5
42%
8
6
1.3
2.8
0.8
0.2
0.2
0
Organized
Un-organized
Fruits &
vegetable
Small scale industries
Source: FAIDA/Ministry of food processing Industries
Milk & milk
products
Organized
Meat
Poultry
Marine
Unorganized
Source: Rabobank market research report, 2008
Chart 5: Food processing commodity exports from India
63733
70000
60000
43783
50000
40000
30000
26802
29211
49352
50759
34204
20000
India’s level of processing is still low Fruits & vegetables (F&V)- 2.2%
Marine products-10.80%
Meat -21.2%
Poultry-6.02%
Milk-35%
As against 60-70 % in developed countries
10000
0
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
Value of exports from food processing commodities (rs. in crores)
Indian Food Processing Industry – A Synopsis
2010-11
Source: DGCIS
Food wastage due to lack of processing infrastructure is
estimated to be € 9 billion.
Page 7

8. 3. Indian Food Processing Industry
Chart 7: Consumption pattern across different categories and income class
Number of households (in millions)
Percentage consumption spend across categories
1.3
VERY RICH HOUSEHOLDS
2.4
RICH HOUSEHOLDS
22%
12%
66%
20%
12%
Milk 18%
Lower income and Milk Products
11%
68%
Meat and Meat products
72%
10.9
M I D D L E I N Cmiddle
Lower O M E
20%
19%
11%
11%
71%
72%
91.3
LOWER MIDDLE
Middle income
Rich households
20%
19%
20%
11%
11%
12%
71%
72%
68%
LO
Very W E Rhouseholds
rich I N C O M E
18%
22%
11%
12%
Agri Products
72%
66%
101.11
Source : Economic Survey of India
0%
20%
40%
Milk & milk Products
60%
Meat & marine products
80%
100%
120%
Agri products
Chart 8: The consumption patterns geographically
Wheat forms the staple grain, with high consumption of milk and milk products.
High consumption of meat products.
North
Mixed consumption of both rice and wheat as staple food.
High consumption of vegetables and marine products.
West
INDIA
East
Mixed consumption of both rice and wheat with rice being more
predominant in a few states of the region.
South
Rice forms the staple grain, with high consumption of fruits and vegetables.
Consumption of both marine and meat products.
Indian Food Processing Industry – A Synopsis
Page 8

9. 4. Indian Food Processing Sub-sectors - Overview
4.1. Agri produce
Grain processing
Grain processing includes milling of wheat rice and
pulses.
There are 43000 modern rice mills, 10000 pulse mills,
820 large flour mills.
The breakfast cereal market is growing at a rate of 7%
and sales are expected to reach EUR 55million by 2015.
Investments in the bakery and milling sector risen by
30.4% since 2007.
This segment is expected to grow steadily at 15-20% for
next 5 years.
Indian basmati rice has high demand in International
markets.
Fruits and Vegetables
India is the 2nd largest producer of fruits and
vegetables.
Expected to grow at 14-15% per annum between 2010
-2015.
Major F&V products are fruit pulp & juices, fruit based
ready to serve beverages, canned fruits and vegetables
jams , quashes , pickles etc.
Food & vegetable processing market growing at a rate
of 11% per annum offers opportunities for high tech
equipment manufacturers.
Major players are Unilever, ITC, Dabur, MTR.
Indian Food Processing Industry – A Synopsis
Source : Ministry of Food Processing Industries
Page 9

10. 4. Indian Food Processing Sub-sectors - Overview
Chart 10: Agri produce supply chain
Source : Government of India, Planning Commission, EY Analysis
Indian Food Processing Industry – A Synopsis
Page 10

11. 4. Indian Food Processing Sub-sectors - Overview
4.2. Dairy
Milk and Milk products
st
India ranks 1 in the world in terms of milk production.
The dairy sector has an estimated consumer demand of EUR
32 billion and growing at a rate of 8% per annum.
Present level of processing in Dairy is 35%.
Industry profitability is good and has high potential for
introduction of new value added products.
Manufacturing of CASEIN and LACTOSE has good scope in
the country: at present these are generally imported.
Market of yoghurt is growing at a rate of 18% and that of
sour milk at 33%.
Major players in Indian Dairy Industry are Nestle, Cadbury,
Amul, H.J.Heinz, Smith Kline Beachem, Wockhardt.
The key producing states of milk is concentrated in the
north, west and south. For the eastern regions, the milk is
converted into powder and then reconstituted for
consumption.
Source : Department of Animal Husbandry, Dairying & Fisheries
Indian Food Processing Industry – A Synopsis
Page 11

12. 4. Indian Food Processing Sub-sectors - Overview
Chart 12: Dairy supply chain
Source : Government of India, Planning Commission, EY Analysis
Indian Food Processing Industry – A Synopsis
Page 12

13. 4. Indian Food Processing Sub-sectors - Overview
4.3. Livestock
Chart 13: Top five chicken producers (MT)
Meat and Poultry
Meat and poultry sector is expected t grow at a rate of 15%
per annum.
Large potential for setting up of modern slaughter houses
and cold chains.
Poultry is also witnessing strong growth.
The newly upcoming modern retail sector has strong
influence on the growth of processed meat and poultry.
Major Players are Venkateshwara Hatcheries (Venky’s),
Godrej Agrovet, Frigo Refico Allana Limited.
Marine Products
With 8000 Km coast line, 50600 sq km of continental shelf
area & 2.2 million sq km of exclusive economic zone India is
endowed with rich fisheries resources.
Total marine products targeted for next 5 years EUR 2.82 bn.
Government has plans to develop India as a major hub for
outsourcing reprocessing of marine products.
Key products are frozen shrimp, lobster, cattle fish, clams
and fish fillets.
Major Players in marine products are ASF sea foods, Bell
foods, Deep Sea products.
More than 200 units are approved by the EU for exports to
the EU.
2.3
India
2.6
Mexico
9.2
Brazil
15
China
16.2
USA
0
5
Source : FAO
10
15
20
Chart 14: Top five meat producers (MT)
6.5
India
7.4
Germany
18.7
Brazil
42
USA
70.4
China
0
10
20
30
40
50
60
70
80
Source : FAO
Indian Food Processing Industry – A Synopsis
Page 13

14. 4. Indian Food Processing Sub-sectors - Overview
Chart 15: Livestock supply chain
Source : Government of India, Planning Commission, EY Analysis
Indian Food Processing Industry – A Synopsis
Page 14

15. 5. Factors impacting growth of food production
There are restrictions about the size of land
holding in the name of a single entity —
regulations are dependent upon individual
state policy.
Holdings have become
fragmented as the farms are
divided through inheritance.
Small operations make investments in
automation unviable and also
complicate coordination and integration
between farmers, processors and the
end consumer.
1. Fragmented land holding patterns
An imbalance in the usage of
fertilizers has resulted in the drop of
fertilizer efficiency over the years
from 17.1 in 1980 to 6.5 in 2000.
The high dependence on labor for
agricultural activity has affected
the speed of technology adoption.
In spite of efforts by the government in
subsidizing new technology adoption,
challenges in educating the farmers of their
benefits has affected their adoption.
Poor maintenance of natural resources
and high dependence on monsoon
which is not consistently favorable.
2. Low labor productivity with low adoption of technology
Indian Food Processing Industry – A Synopsis
The poor transport and storage infrastructure,
along with use of labor for post harvest
processing affects the farm productivity by
reducing the quantity available for sale.
The lack of credit access to farmers
limits the working capital available,
hindering investments in technology
and high yielding inputs.
Wastage due to post harvest/pre sale
transport, processing and storage
contributes to a loss of nearly 2.3%
of the total produce quantity.
3. Inadequate support infrastructure
There are several constraints of land
availability for agriculture due to
competing pressures from urbanization,
constructions and industrialization.
Each region has its own
limitations for impacting
agricultural productivity like soil
erosion, floods etc.
Land under cultivation is stagnant and
yield growth is largely flat across major
categories due to low productivity from
agriculture.
Other factors like non-availability
of electricity, high population
growth, poor road and
communication infrastructure, etc.
4. Specific factors impacting productivity
Page 15

16. 6. Improvement opportunities
Technology up-gradation.
Consolidation of creators for economies of scale.
Bio-measures for pesticides and insecticides.
Soil health and nutrition management.
Indian Food Processing Industry – A Synopsis
Better utilization of land.
Educating the Indian farmer on modern farming practices.
Water management.
Seed management system.
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17. 7. Some of the key business opportunities in food processing infrastructure
Increase in demand for value added tertiary
processed products especially frozen food will
also drive the need for improved warehousing
and cold storage facilities.
The demand for cold chain infrastructure is set to
increase with modern trade expected to grow at 2025% and the emergence of large Indian and
international players in the food chain.
In spite of being one of the worlds leading
producers of food there is lack of proper
storage and organized cold chain facilities,
which leads to large scale wastages.
Warehousing
facilities
Indian Food Processing Industry – A Synopsis
Managing and providing common infrastructure
for fees, that is required by a group of food
processing small scale industries like common
machineries, technology etc. which otherwise
may not be affordable by individual processor.
Considering this gap, companies , especially
international companies present in Indian
manage these processes in house with
minimal intervention from third parties.
There is currently a large gap in terms of
availability of value added services like
tagging, repacking, promotion packing,
etc.
Value added
services
There is a large opportunity in the sector
as the Indian logistics space is currently
dominated by unorganized players who
provide very basic services with a very low
use of technology.
The use of information technology to
integrate the point of sale systems with
delivery chain to aid inventory management
and forecasting is minimal.
There is a growing need among retailers
and manufacturers to obtain real time
data to ensure proper order planning,
stocking and manufacturing plans.
Supply chain
management
Page 17

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