The document provides an overview of the food processing industry in India. It discusses the structural analysis and classification of the industry. It also outlines the reforms undertaken, including liberalization policies, fiscal incentives and financial reforms. Key initiatives under the 10th and 11th Five Year Plans are summarized, focusing on infrastructure development, quality assurance standards, and human resource development. The impacts of union budgets on various food processing sub-industries are also highlighted.

1. FOOD PROCESSING INDUSTRY OF INDIA
By Group 2:
Neha
Souvik
Boby
Rahul
Vipul

2. FLOW OF PRESENTATION
 Introduction
 Structural analysis of the industry
 Reforms
 10th and 11th Five year Plans
 Budgets

3. INTRODUCTION
 India -One of the largest food producers of the
world
 Output of the organized segment -US$ 34,827
million
 Marine and Spices together contribute more than
70% of export earnings
 Investment requirement is around US$ 15 billion
 India is looking for investment in infrastructure,
packaging and marketing
 The Indian scientific and research talent -a
knowledge source that can be tapped for
advantage

4. INTRODUCTION (CONTD..)
 Increase in per capita income and purchasing power.
 A largely untapped domestic market of 1210 Million
Consumers
 300 Million Upper and Middle Class consume processed
food
 Increasing number of working women.
 Well developed infrastructure and distribution network.
 Fast expansion of electronic and print media.
 Annual growth rate of the industry is around 9-12%.
 Employs around 2 million people (as of 2005)

5. CLASSIFICATION OF INDIAN FOOD AND AGRO
PROCESSING INDUSTRY

7. PROSPECTS OF FOOD PROCESSING
 Presently, a small percentage of farm produced
processed into value added products
 India needs US $ 28 Billion of investment to raise
food processing levels by 8-10 %.
 Rapid urbanization, increased literacy, changing life
style, more and more women in workforce, rising
per capita income leading to rapid growth and new
opportunities in food and beverages sector
 Indians spend about 50% of household expenditure
on food items

8. STRUCTURAL ANALYSIS OF THE
INDUSTRY

10. REFORMS

11. POLICY INITIATIVES AFTER LIBERALIZATION
 Regulation and Control
 Most of the Processed food items exempted from the purview
of licensing.
 FDI up to 100% permitted under automatic route in the food
infrastructure.
 FDI permitted only in single brand product retailing.
 No industrial license required for almost all of the food and
agro processing industry.
 Use of foreign brand names freely permitted by the
government.
 MRTP rules and FERA regulations have been relaxed.
 Most of the items can be freely imported and exported.

12. POLICY INITIATIVES AFTER
LIBERALIZATION(CONTD..)
 Fiscal Policy and Taxation
 Reduction of custom duty rates .
 Excise and import duties substantially reduced.
 Reduction of corporate taxes and a shift towards market
related interest rates.
 Tax incentives for new manufacturing units for certain years.
 India currency now fully convertible on current account.
 Repatriation of profits freely permitted in most of the industries

14. FISCAL INCENTIVES FOR FPI
 Excise Duty rates
 On ice cream, pasta, yeast, etc abolished which was
16% earlier.
 On ready to eat packaged food reduced from 16% to
8%
 On food mixes reduced from 8% to 0%.
 On meat, fish and poultry products reduced from 16% to
8%.
 On aerated drinks reduced from 24% to 16%.
 On Reefer Vans (refrigerated motor vehicles) reduced
from 16% to 8%.
 Dairy machineries completely exempted.
 On unbranded edible preparations of oil increased from
nil to 8%.

15. FISCAL INCENTIVES FOR FPI(CONTD..)
 Custom Duty Rates
 On food processing machinery and their parts reduced
from 7.5% to 5%.
 On Packaging Machine to be reduced from 15% to 5%.
 On refrigerated vans reduced from 20% to 10%.
 Income tax relief:
 Rebate allowed - 100% of profits for 5 years and 25% of
profits for the next 5 years, for new industries.

16. POLICY INITIATIVES AFTER
LIBERALIZATION(CONTD..)
 Export Promotion
 Setting up of FTZ and EPZ with all infrastructures.
 Setting up of 100% EOU is encouraged.
 Capital goods may be imported at concessional rate of
import duty.
 Export linked duty free imports are also allowed.
 Units in EPZ/FTZ and 100% EOU can retain 50% of
foreign exchange receipts in foreign currency account.
 50% of the production of EPZ/FTZ and 100% EOU unit
saleable in domestic tariff areas.

17. FINANCIAL AND BANKING REFORMS (CONTD..)
 Direct finance to companies for agriculture and allied
activity of up to Rs1crore as PSL exposure as against the
earlier exposure of Rs20 lakh.
 Loans up to Rs.20 lakh to individuals for
purchase/construction of dwelling unit per family
 Provision of credit and other financial services and
products of very small amounts not exceeding Rs.50,000
per borrower.
 Education loans of up to Rs.10 lakhs for studies in India
and Rs. 20 lakhs for studying abroad.

18. FINANCIAL AND BANKING REFORMS
 The following items are eligible for classification as
priority sector for lending by banks: -
 Fruit and vegetable processing industry·
 Food grain milling industry
 Dairy products
 Processing of poultry and eggs, meat products
 Fish processing·
 Bread, oilseeds, meals (edible), breakfast foods, etc
 Aerated water/soft drinks and other processed foods·
 Special packaging for food processing industries
 Technical assistance and advice to food processing
industries

19. FINANCIAL AND BANKING REFORMS
(CONTD..)
 Indirect finance to small enterprises shall include
finance to any person providing inputs or marketing
the output.
 Direct finance to individual farmers, SHGs or JLGs
of individual farmers without limit.

20. RECENT INITIATIVES TO ATTRACT FDI
 National Highways Development Project underway to
convert 14279 km of highways to 4/6 –lanes connecting:
 Four major cities of Delhi, Mumbai, Chennai and Kolkata
 North - South (Srinagar to Kanyakumari) and East–West
(Silchar to Porbandar) corridors
 Ports
 Infrastructure for post harvest management, logistics
(including cold chain), markets, retailing, are priority
areas.
 Plan to set up modern markets with auction centers.
 Attracting FDI & private sector investment in
infrastructure

21. AGRI EXPORT ZONES & FOOD PARKS
 60 Agri Export Zones set up for end-to-end
development for export of specific product from
geographically contiguous areas
 53 Food Parks approved to enable small and
medium food and beverage units to set up and to
use capital intensive common facilities such as cold
storage, ware house, quality control labs, effluent
treatment plant, etc.

22. 10TH 5 YEAR PLAN

23. INFRASTRUCTURE DEVELOPMENT
Value Added
Food Parks
Centre
Integrated
Irradiation
Cold Chain
Facilities
Facilities
Modernized
Abattoir

24. QUALITY ASSURANCE, CODEX STANDARDS,
R&D
Setting Up/ Up gradation
• Grant In Aid to Central/State Organizations, IITs, Central
of Quality Control/ Food Universities, Etc.
Testing Laboratory
• Focus On following Standards: HACCP, ISO 9000,
TQM ISO14000, Good Manufacturing, Practices (GMP) and
Good Hygienic Practices
• Following National/ International standards
Bar Coding • encourage food processors to affix bar codes on their
processed food packages
• Establishing center of excellence around problem areas of
Codex Cell Codex Standards
• Grant In Aid to Central/State Organizations, IITs, Central
R&D Universities, Etc

25. HUMAN RESOURCE DEVELOPMENT
Creation of
Infrastructure Training
Setting up of
Facilities for Programmes
Food Entrepreneurs
running sponsored by
Processing hip
Degree/ Ministry of
and Training Development
Diplomas Food
Centre programme
Courses and Processing
(FPTC)
Training Industries
Programmes

26. SUPPLY CHAIN IMPROVEMENT & PROMOTION
Backward • regular supply of raw material through contract
farming
Linkage • incentives in the form of reimbursement
• ensuring regular market for their products by
Forward establishing linkages with the market
• Assistance for market survey, test marketing,
Integration brand building etc
Generic • marketing promotion campaign for new
products mix and brand name support
Advertisement • publications, journals, press advertisements
• seminars/workshops/symposiums
• studies/ surveys/ feasibility reports to assess the
Promotional potential and other relevant aspects
• association with APEDA, CFTRI, Industry
Activities Associations etc. participation in national/
international exhibitions/ fairs

27. ROOT CAUSE ANALYSIS
Lack of entrepreneurial Awareness and wrong selection of projects
Delay in Financial assistance
Delay in providing basic infrastructure facilities like Power, Water, Road etc.
Weak forward linkages and lack of a developed market
Lack of strong project management capacity
Unrealistic project planning and appraisal
Lack of attention to integrating the supply chain
Neglect of marketing and brand building
Inability to synergize the potential private investments within the rural sector

28. The 11th
Five year
plan.

29. Taking various schemes into consideration, a paradigm shift was needed
in implementation methodology for targets under VISION 2015.
Fruits & Infrastructure
Vegetables, Sub-group on
Wine and Taxation &
Beer Finance
Meat,
R&D, HRD,
poultry,
Labs &
fisheries & MoFPI
Standards
dairy identified
areas for
growth.

30. Proposals for the 11th Five Year Plan
Continued 10th Plan scheme’s would be restructured in a
PPP mode.
Integrated • Financial Assistance,
• Skill Development,
approach • Entrepreneurship,
addresses • Institutional Development.
While providing an environment which stimulates growth.

31. Comparative
summary of the
10th & 11th plan:

32. 10th v/s 11th plan
Parameter 10th plan 11th plan
Integrated food zones Supply Driven, Demand driven, Increased
integration, FA, PPP.
Abattoirs Lessor FA Increased FA, Eligibility & project
management agencies.
Cold Chain, Value Addition & Lessor FA Increased FA + Inclusion of cold
Preservation Infrastructure storage & horticulture produce.
Adoption of Lessor FA, only grants Increased FA, reimbursement &
TQM, ISO Standards, GMP, etc. grants.
R&D in the processed food sector Lessor FA Increased FA
Food Corner / Food Court NA FA + IA
Safe food towns NA FA + IA
FA: Financial Assistance; IA: Implementation Agencies

33. Estimated Impact on
Employment & Growth
Rs. 7,400 cr in
The proposal Rs. 20,000 cr
infrastructure can
envisages a total investment would
lead to Rs. 20,000 cr
outlay of about Rs. lead to 2,800,000
of investment in
8,700 cr additional jobs.
processing units.
An investment of Rs.
Growth rate of the The income levels of
20,000 cr would
Industry would the affected farmers
lead to an aggregate
increase from 7% to are also expected to
production value of
10.01%. go up by 20%
Rs. 40,000 cr.

34. BUDGETS

35. MINISTRY OF FOOD PROCESSING INDUSTRIES
500.0
400.0
300.0
200.0
100.0
0.0
Budget
MOFPI:- SET UP IN THE YEAR1988
UNION MINISTER:-SHRI SHARAD PAWAR
11 SUB- DIVISIONS
STRATEGIC ROLE AND FUNCTIONS ARE FALL UNDER THREE CATEGORIES

36. IMPACT OF UNION BUDGETS ON FPI
• 2001-02, excise duty reduced to 0 from 16%
Fruits and vegetable
• 2004-05, 100% tax reduction on profit for 5 years
processing industry and 25% for next 5 years
Food grain milling • 2007-08, grant up to 33.33% on Plant & Machinery
industry (maximum of Rs.75 lakhs ).
• 2004-05, Excise duty on fish processing has been
Marine product reduced from 16% to 8%.
industry • 2006-07, Excise Duty has been waived on fish
processing.

37. IMPACT OF UNION BUDGETS ON FPI
poultry and
• 2004-05, Excise duty on meat and poultry has been reduced from 16% to 8%
eggs, meat and • 2006-07, Excise Duty has been waived on meat and poultry
meat products
• 2004-05, Excise duty of 16% on dairy machinery has been reduced to 0%
Dairy products • 2006-07, Excise Duty has been waived on condensed milk and ice cream
industry • 2008-09, Customs duty on bactofuges reduced from 7.5 % to 0%
Bread, biscuits • 2003-04,excise duty on biscuits, boiled sweets, etc has been reduced from 16%
to 8%
and other ready to • 2007-08,Excise duty on biscuits reduced from 8% to 0% (< Rs100/1kg)
eat food products • 2007-08, ready to eat packaged foods fully exempt from excise duty.
• 2004-05, Excise duty on food-grade hexane has been reduced from 32% to 16%.
Edible oil industry • 2005-06, Excise duty of Re 1/kg on refined edible oil abolished.
• 2007-08, Custom duty on sunflower oil (crude) reduced from 65% to 50% .

38. IMPACT OF UNION BUDGETS ON FPI
Aerated waters / • 2003-04, excise duty reduced from 32% to 24%
soft drinks. • 2006-07, Excise Duty reduced from 24% to 16%
Packaging for food • 2006-07, duty on packaging machines is reduced from 15 % to 5 %.
processing • 2008-09, Excise duty reduced on specified packaging material and packing paper to
8%
industries
• 2001-02, Automatic approval for foreign equity upto 100% is available
• 2003-04, customs duty on refrigerated truck has been reduced from 25% to 20%
• 2005-06, Customs duty on refrigerated vans reduced from 20% to 10%
• 2005-06,To ensure availability of credit:- FPI included in the list of priority sector for
Assistance to bank lending
food processing • 2005-06, NABARD has created a refinancing window with a corpus of Rs.1000
crore
industry • 2007-08, Custom duty on food processing machinery reduced from 7.5% to 5%
• 2008-09, fund of Rs 5, 000 cr in NABARD to enhance its refinance operations
• 2010-11, External commercial borrowing facility available to the food processing
industry

39. THANK YOU