India's food industry recipe for profits

PUBLISHED : Thursday, 16 June, 2011, 12:00am
UPDATED : Thursday, 16 June, 2011, 12:00am


India's food industry is expected to be a magnet for foreign investors attracted by a booming economy in the world's second-largest food producer, according to the Hong Kong Trade Development Council.

Ernst & Young has predicted that India's food industry will grow to US$258 billion by 2015, and US$318 billion by 2020, thanks to the country's growing middle class.

Rajesh Bhagat, a Mumbai-based consultant from the council, said food processing had a long way to go in India where only 2 per cent of agriculture output was processed domestically.

The Indian government has said it plans to promote the food-processing industry, and integrate infrastructure from the farm to the market. It also aimed to increase processing of perishables from 6 per cent to 20 per cent by 2015, and wanted to attract domestic and foreign investors to the sector.

India produced 218.2 million tonnes of grain crops, including rice, wheat and cereals in 2009/10.

'Hong Kong is good at supply chain management and distribution,' Bhagat said. 'India is a big market to look into. It loses about US$12.5 billion worth of harvested produce due to lack of processing, packing and distribution facilities.'

The Indian government was also supporting the food processing industry because of concerns about food inflation, which stood at 8.06 per cent in 2010/11, he said. Improving efficiency in food processing and distribution should boost food supplies by reducing wastage.

The food retailing market was also flourishing, as rich Indians sought out branded products, Bhagat said.