Food Processing Sectoral Overview (Knowledge paper)

Government of Odisha

Spices Fruits & Vegetable

Fisheries Food Grains

To become the investment destination of choice by continuously creating and delivering outstanding opportunities for business growth, fostering all-round socio-economic development for the state and its people.

NAVEEN PATNAIKChief Minister, Odisha

VISION

CONTENTSTable of Contents Page

1. Sectoral Overview: Agro & Food Processing 2

1.1. Agro & Food processing – Global Industry Overview 2

1.1.1 Major Segments in Agro & Food Processing Industry

1.1.2 Global Agro & Food Processing Market Trends

1.2. Overview of Indian Agro & Food Processing Industry 2

1.2.1 Strategic Advantage and Demand drivers of Agro & Food Processing 3

1.2.2 Major segments of Indian Agro & Food Processing industry 3

1.2.3 Agro & Food Processing Market Size 4

1.2.4 Indian Agro & Food Processing exports 5

1.2.5 Market Investment Opportunities – Agro & Food Processing 6

1.2.6 Funds for Food Processing Infrastructure development 7

1.2.7 Investment initiatives and Statutory Framework 7

2. Odisha Agro & Food Processing Sector 7

2.1 Strategic Advantage 7

2.2 Agro & Food Processing Clusters in Odisha 8

2.3 Key Segments in Odisha 8

2.4 Agro-Food Processing Infrastructure in Odisha 9

2.5 Growth Drivers – Agro & Food Processing Sector 9

2.6 Policy initiatives and statutory framework 11

2.7 Target Segments for Agro & Food Processing 12

2.8 Key Projects in Offering 12

1. SECTORAL OVERVIEW: FOOD PROCESSING

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1.1. Food processing – Global Industry Overview

Globally, the food market is expected to bring in revenue by 2020 of $3.03 trillion as per

research report by Research and Markets. Food and agribusiness have a massive economic

and social footprint—the $5 trillion industry represents 10% of global consumer spending and

40% of employment. The global agro-food products industry is expected to reach $1,148.3

billion by 2018, with good growth over the next two years. Rising disposable income,

increasing awareness of health and wellness, higher population, expanding urbanization,

and consumer spending are the major drivers of the industry. The structure of the global food

industry is continually changing and evolving as food suppliers, manufacturers, and retailers

adjust to meet the needs of consumers, who are increasingly demanding a wider variety of

higher quality products.

Global Food Industry Statistics and Market Size Overview

I. Vital Statistics Quantity Unit Date Source

Total Value of Global Food Exports 1,486.30 Bil. US$ 2014 WTO

Total Value of Global Food and 7.8 Tril. US$ 2015 PRE

Agricultural Industry

Global Non-Food Agricultural Exports 279.1 Bil. US$ 2014 WTO

Global Food and Agricultural Sector Revenues 7.9 Tril. US$ 2015 PRE

Global Food and Agricultural Sector Share of GDP 10 % 2015 PRE

Global Packaged Food Industry 2.5 Tril. US$ 2015 PRE

Food Production Increase Required to 70 % 2010-2050 UN

Meet Global Demand

Global Organic Food Sales 72 Bil. US$ 2013 IFOAM

II. Aquaculture

Estimated Global Aquaculture's Share of Fish 60 % 2030 FAO

for Human Consumption

Global Aquaculture Exports 160 Mil. Tons 2013 FAO

Total Value of Global Aquaculture Exports 136 Bil. US$ 2013 FAO

III. Other

Global Wine Market 420 Bil. US$ 2013 VINEXPO

WTO = World Trade Organization IFOAM = International Federation of

Organic Agriculture Movements

PRE = Plunkett Research Estimate FAO = UN Food and Agriculture Organization

UN = United Nations

Source: Plunkett Research, Ltd.

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1.2. Overview of Indian Food Processing Industry

The Indian Agro and food processing sector contributes for 14% of manufacturing GDP, 13%

of India’s exports and 6% of total industrial investments. Food Processing Sector has been

growing at 8.50%, much faster than the agricultural sector indicating the greater proportion

of raw material is being processed. About 37% of the food produce in India is processed at

present. Of the total workforce of 107 lakhs, around 15 lakhs are employed in the registered

(organized) sector.

• In terms of the exports of agricultural products, the country is ranked sixth in 2013, with

major export destinations being South East Asia and Middle East.

• With the tenth largest arable land resources in the world, India is the largest producer of

milk, 2nd largest producer of fruits and vegetables, 3rd largest producer of rice and 2nd

largest producer of fishes.

• The industry also plays an important role in employment generation, with a sizeable

presence of small scale industries. The unorganized sector is about 42% of the Food

Processing industry.

Recognized as a priority sector in the New National Manufacturing Policy in 2011, the Food

Processing sector is provided the necessary thrust by attractive fiscal incentives provided by

the Central and the State Governments including capital subsidies, depreciation benefits,

tax rebates, reduced custom duties and excise duties etc. 100% FDI is also permitted in the

automatic route for most of the food products in the country. Backed by favourable policy

initiatives by the Government of India, the Indian Food industry is poised for high growth,

thereby increasing its share in the world food trade.

Contribution of food processing industry

to India’s GDP through manufacturing (FY16)

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1.2.1 Strategic Advantage and Demand drivers of Food Processing

Point to be added under Key Strength : 100% FDI in Food Processing. (MoFPI Website)

1.2.1 Major segments of Indian Agro & Food Processing industry

The Indian food processing sector consists of a number of segments with varied

characteristics.

• The country produced 90.18 million MT of fruits, 169.06 million MT of vegetables.

• During 2015-16, India exported fruits and vegetables worth Rs. 8,391.41

crores which comprised of fruits worth Rs. 3,524.50 crores and vegetables

worth Rs. 4,866.91 crores.

• The area under cultivation of fruits stood at 6.110 million hectares while

vegetables were cultivated at 9.542 million hectares.

• India’s food grain production reached 275.68 million tonnes (MT) in FY16.

• The basic feature of the sector is the predominance of primary processing

sector sharing of 96% of the total value with secondary and tertiary sectors

contributing about 4% of the total value addition.

Fruit and

Vegetable

Grains and

Cereals

Economic Survey 2017-18 (GoI)

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•

producer of milk globally. India's milk production is expected to reach 180

million MT by 2020, from current 163.7 million MT, while the demand is

projected (by NDDB) to reach 200 million MT.

• The dairy industry is growing at a compounded annual growth rate

(CAGR) of 15%-17%

• The value-added products are growing way beyond a compounded

annual growth rate (CAGR) 24%

With production of around 163.7 million MT (2016-17), India is the largest

Dairy

Products

• India has the world’s largest population of livestock and is world’s 5th

largest producer of meat

• The total processing capacity in India is over 1 million tons per annum, of

which 40-50 percent is utilized

• India is the ninth-largest producer of poultry meat, fifth largest egg

producer and the eighteenth largest producer of broilers in the world.

Meat

and

Poultry

• Total fish production in India is estimated at 10.80 million MT during 2016-17.

• India ranks second in world fish production, contributing about 5.4 per

cent of global fish production. It is also a major producer of fish through

aquaculture.

• The sector contributes about 1% to overall GDP and represents 4.6 per cent

of agri GDP

Fish and

Marine

Products

• Indian edible oil industry is the world’s fourth-largest industry after USA, China

and Brazil and accounts for around 9% of the world’s oil seed production

• The consumption growth is rising by nearly 5.5 to 6.0% per annum.

• Import of edible oil has increased nearly 2.5 times in last 8 years

Edible

Oils

• Packaged foods market is largely organised and has been witnessing

strong growth across categories.

• Potato chips and potato-based products constitute about 85 percent

share of the Indian snack market.

Packaged

Food

• Consumption of non-alcoholic beverages in India is expected to increase

by 16.5–19 percent over the next three years.

• Sales of alcoholic drinks are forecast to increase by CAGR of 8 percent by

volume in 2012–17 period.

Beverages

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1.2.3 Food Processing Market Size

• Indian Agro & Food Processing is expected to grow at around 13% on a nominal basis

and reach size of USD 530-550 billion by 2020.

• The Indian food and grocery market is the world’s sixth largest, with retail contributing to

70% of the sales and is projected to grow to US$ 482 billion by 2020.

• Food Processing in India ranks fifth in terms of production, consumption and exports and

is expected to reach US $258 billion by 2020.

• The Agro and Food Processing market includes both the organized and unorganized

sector where organized forms 50-55% of the overall market. Grains and pulses,

beverages and other foods and dairy products make up around 80% of the total

processed food market

• Within the food processing sector, segments like meat and marine, edible oils, grains and

cereals are expected to witness high growth rates.

• By 2022, the food processing industry is expected to generate about 44.34 lakh new jobs,

primarily entry-level and supervisory profiles.

Source : MoFPI, GoI website.

Source: MOFPI, KPMG Report, 2013

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1.2.4 Indian Food Processing exports

• During FY11–16, India's exports of processed food and related products (inclusive of

animal products) grew at a CAGR of 11.74%, reaching USD16.2 billion

• Main export destinations for food products have been the Middle East and Southeast

Asia

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1.2.5 Market Investment Opportunities – Food Processing

Outsourcing Hub • India enjoys favourable supply-side fundamentals (abundant

raw materials supply, cost advantages). Therefore, Global

supermarket majors looking at India as a major outsourcing hub

AEZs and Food Parks • The government has helped by investing in AEZs, mega food

parks, easier credit.

• The establishment of food parks – a unique opportunity for

entrepreneurs, including foreign investors to enter in the Indian

food processing sector.

• With an investment of USD1.6 billion, process of setting up 42

mega food parks in PPP is underway, as of 2015

Supply chain infrastructure • The government’s main focus is on supply chain related

infrastructure like cold storage, abattoirs and food parks.

1.2.6 Funds for Food Processing Infrastructure development

1.2.7 Investment initiatives and Statutory Framework

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u

u

Angul, the State is in the process of developing other dedicated Parks which would provide

opportunities for downstream units across Steel, Stainless Steel and Aluminium sectors

These Parks are being anchored by the established mother units in the State, as shown below:

Besides, the National Investment Manufacturing Zone, Kalinganagar and Aluminium Park,

Sl. No Project Proponent Sector Location Area (in acres)

M/s Vedanta Alumina Limited

M/s Jindal Steel & Power Limited

M/s Jindal Stainless Limited

DownstreamSteel Park

DownstreamSteel Park

Jharsuguda

Badkerjung,Angul

Kalinganagar,Jajpur

230

500

300

DownstreamAluminium Park

1

2

3

Technical Infrastructure

u

u u

for Testing/ Training/ Design Facilities/ Tool Room

Telecom & IT Infrastructure Intake well, pump house

Common Facilities Centers including Equipment u Admin, Business training complex

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Others

u One-stop solution for all required services by an investor during the investment life cycle of a project

Government of Odisha – Single Window for Investor Facilitation & Tracking (GO SWIFT)

DOING BUSINESS AND POLICY ECOSYSTEMEase of Doing Business Reforms

u

a hassle free experience, some of the marquee reforms implemented in the State include:

Odisha has been a pioneer in bringing out reforms for the ease of investors. To provide investors

Hassle Free labour compliances

Power at one go

Fast track for white industries

Get set build

Voluntary Compliance Scheme and

self certification

New energy connection in

15 days with minimal documentation

Exemption of White Category industries

from consent administration

Online BuildingPlan Approval within 30 days

u

facilitation

Facilitation cells set up at IPICOL and DICs provide one stop solution for all investment

u

u

one of the first legislations in the country

for “Single Window Clearance”

Regulatory approvals under “Odisha

Right to Public Service Act” for time

bound disposal

Odisha Industries Facilitation Act, 2004 – Final project approval within 15

days for White/Green Category

Industries

Final Project approval

within 30 days for other industries

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Industrial Policy Resolution - 2015u

u

u

priority sectors

The manufacturing units under this sector can avail exclusive provisions as mentioned below

Besides, the State provides land at a subsidised cost in the identified Steel, Stainless Steel and

Aluminum clusters

Industrial Policy Resolution 2015 has identified Downstream & Ancillary in Metals as one of the

Incentive Description

Capital Subsidy for 10% of investment for investments more than INR 100 Crs and employment

Plant & Machinery more than 100 people (max cap: INR 50 Crs based on investment size &

employment potential) or25% of capital investment for micro & small

industries (max cap: INR 1 Cr)

Power Tariff Reimbursement on investments more than INR 100 Crs and employment

more than 100 people

Stamp Duty 100% exemption

Interest Subsidy 5% p.a. for 5 years of the term loan availed from Public Financial Institutions/

Banks upto INR 1 Cr

Energy Charges Exemption of electricity duty upto a contract demand of 5 MVA

for 5 years

Net SGST* 100% Net SGST reimbursement for 7 years from the date of production on

the net tax paid, cap of 200% of cost of plant and machinery

Anchor Tenant The first and the lead investor in the industrial park whose brand value &

potential for backward and/or forward linkage shall stimulate further

investments in the industrial park-

l 25% subsidy on cost of land

l VAT reimbursement for additional 2 years subject to the overall limit

* Under finalization

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VISION 2030: DEVELOPMENT OF DOWNSTREAM UNITS IN METAL SECTOR

u

shown below-

Odisha is a leader in terms of total reserves in the country and is home to variety of minerals as

Minerals in Odisha as a percentage of Total Reserves in India

u

u

has set a Vision 2030: Development of Downstream Units in Metal Sector’. The Vision is to

achieve more than 50% value addition to the primary metal produced in the State.

The Vision is proposed to encompass short, medium and long term interventions in order to

propel the business ecosystem for metal sector downstream units. These include financial &

policy support, business & promotional support, requisite infrastructural and institutional

framework, promoting innovation and R&D, amongst others. The roadmap would become the

blueprint for attracting downstream units to the State.

With an aim of greater value addition to primary metal within the State, the State government

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KEY PLAYERSSteel & Stainless Steel

u

u Increasing the capacity of Kalinganagar by 5 MT with an investment of

INR 23, 500 crore

One of the world’s top ten steel producers

u

u

power, mining and infrastructure sectors

JSPL set up the largest blast furnace of India in the State with an investment

of INR 29, 580 crore

Industrial powerhouse with a dominant presence in steel, stainless steel,

u

u

and aluminum metals

Expanding its current unit with an investment of INR 168 crore

German based equipment supplier to the metallurgical industry for steel

u

u

u

One of the

Invested more than INR 24, 650 crores in the State

In the process of expansion of refinery with an investment of INR 1, 300 crores

Asia’s largest producer of primary aluminium

Aluminium

u

u In the process of expanding it refinery capacity from 2.275 MPTA to 3.275

MPTA with an investment of INR 4, 375 crores

Major State owned Aluminium company headquartered in Odisha

u

u

u

Has invested more than INR 49, 000 crores in the State

Further expanding with expected investment of INR 6, 483 crore in the State

Global diversified metals and mining company

u JSL plans to increase the capacity to 2 MTPA from existing 0.8 MTPA

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Industrial Promotion & Investment Corporation of Odisha Limited (IPICOL)

IPICOL House, Janpath, Bhubaneswar – 751022, Odisha

Tel: +91-674-2542601 Fax: +91-674-2543766

E-mail: contact@@investodisha.org

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