In spite of being the largest producer of milk and the second largest producer of fruits and vegetable, India’s food-processing sector still lags behind. But, the government has made it top priority to commercialize the sector.

There is indication of eagerness by the US firms for investment in India’s food-processing sector that requires a huge fund of around Rs. 1, 00,00 crore mainly from the private sector. Food Processing Minister Subodh Kant Sahai revealed this in news published by The Hindu.

It is a matter of significance that interest is being shown by American companies as the Indian government has made it a priority sector. As per the government’s Vision Document, an investment of nearly Rs. 1 trillion is provided in the sector, only Rs. 100 billion of which is due from the government. Thus a larger private investment is called for, to enable adequate infrastructural facilities and supply chain for the food-processing sector.

The government has permitted 100% foreign direct investment (FDI) in the food processing industry. India is being eyed by several overseas businesses for investment. Opportunities for investment exist not just in food production, but in infrastructure development, marketing, inspection and testing services, technology development, etc as well.

Despite India being the largest producer in milk and second largest in fruits and vegetables, its food processing industry still remains underdeveloped. India is plagued by the problem of short shelf life for perishable foods and poor marketing facilities. The need for the Indian food processing industry is to focus on reducing the post-harvest losses, building supply chain, cold chain and links between farming and the processing industry.

Industry experts are of the view that the food processing industry is not just nascent but highly fragmented as well. About 13-15 Million people are employed in the industry. The sector’s output is estimated to be US$ 65-70 Billion or nearly Rs. 3,00,000 crore. The sector is growing at an annual rate of around 7%. Rising incomes and demographic pressure may soon push the growth to 10%.

A research analyst at RNCOS sums up the situation by putting the food-processing sector among the largest sectors where production, consumption, export and growth prospects are concerned. The government has also given top priority to commercialization of the food-processing sector with a host of fiscal incentives. Therefore, potential is vast for companies seeking to invest in India’s food-processing sector.

Related Market Research Reports:
Process Food Market - Asia Pacific (2006-2007)
Indian Food Processing (2006)
Food Processing Market in China (2005)