madhyapradesh foodprocessingindustry-150707052219-lva1-app6891

MESSAGE

(Shivraj Singh Chouhan)

(Anthony de Sa)Chief Secretary

MESSAGE

Madhya Pradesh, with huge potential in Food Processing Sector, offersenormous opportunities for investors across the entire food value chain. Severalinitiatives taken by the Government ofMadhya Pradesh has resulted in bringingmore investment in the state. However there is still a lot of untapped potential to beutilized.

We appreciate the effort of PHD Chamber of Commerce and Industry innAnoecnerefnoCagnizinagro MAKE IN INDIA - MADHYA PRADESH :

Investment Destination for Food Processing Sector on 3 July 2015 at Indore,MadhyaPradesh.

The conference is timely and important for the growth of the foodprocessing sector in the State. I am sure that such initiative will be well receivedby the stakeholders of the sector.

I extendmyall thebestwishes for the success of theprogramme.

MESSAGE

PHD Chamber of Commerce and Industry, a leading Industry Chamber of India,ever since its inception in 1905, has been an active participant in the India GrowthStory through its Advocacy Role for the Policy Makers and Regulators of theCountry. As a true representative of the Industry with a large membership base,PHD Chamber has forged ahead leveraging its legacy with the Industryknowledge across sectors, representing the interests of all local, national,regional, bilateral and trans-national industry and provides a platform forexchange to better serve and promote SME members worldwide.

Agriculture has always been the focus point for the development of Indianeconomy as it caters to the basic need for the existence of the human race. The

processing is essential for controlling heavy post harvest losses.

Despite its importance the level of food processing is merely 2 percent. This facthighlights the need to promote the processing in the country. To have inclusivegrowth of the food processing sector, the states should be included.

As a consequence, PHD Chamber has taken this initiative of organizing theConference on MAKE IN INDIA- MADHYAPRADESH:An Investment Destinationfor Food Processing Sector on 3 July 2015 at Indore, Madhya Pradesh.

I am sure the efforts of PHD Chamber will lead to strategic investments and policydevelopments in the sector in Madhya Pradesh.

I wish the Conference a grand success.

ALOK B. SHRIRAMPresident

PHD Chamber

Alok B. Shriram

MESSAGE

:noecnerefnoCeht MAKE IN INDIA - MADHYA PRADESH An Investment

Pradesh

invest in food processing sector in the State. In Madhya Pradesh, there are severallarge and small scale food processing units contributing to the growth of the Stateand giving ample opportunities of employment. Focus on Food Processing Sector

inclusive growth. There is a huge untapped potential which can catalyze theeconomic growth.

To further promote investment in the sector inMadhya Pradesh, PHDChamber hastaken the initiative. PHD Chamber has always strived to take knowledge to thegrassroots so as to facilitate capacity building among the different sectors of theeconomy.

Iwish the conference all the success.

MAHESH GUPTASr. Vice President

PHD Chamber

MAHESH GUPTA

MESSAGE

India with around 127 agro-climatic conditions offers immense opportunities forproduction of varied agriculture crops. This potential can be best capitalized withfood processing. Food processing adds value to the agriculture product andenhances shelf life.

Chamber has been actively involved in various promotional activities in the sectorboth at State level and Central level. For its sincere efforts, it has been conferredvarious accolades from the State Governments and Central Government.

This Conference on MAKE IN INDIA - MADHYA PRADESH: An InvestmentDestination for Food Processing Sector on 3 July 2015 at Indore, MadhyaPradesh is one such effort.

I am sure this platform would be well acknowledged by the stakeholders.

GOPAL S. JIWARAJKAVice PresidentPHD Chamber

GOPAL S. JIWARAJKA

MESSAGE

With a large agricultural sector, abundant livestock and costcompetitiveness, India is fast emerging as a sourcing hub of processedfood. Liberalization and the growth of organized retail have made theIndian market more attractive for global players. Now, consumption inIndia is driven towards packaged and ready-to-eat foods andfavourable economic and cultural transformation and a shift inattitudes and lifestyles have consumers experimenting with differentcuisine, tastes and new brands. Processed food exports and relatedproducts have been rising steadily.

This implies the need to increase the food processing in the countryand involve all the states to contribute towards this mission.

In this context, it is a matter of great pleasure to note that PHDChamber of Commerce and Industry is organizing a Conference onMAKE IN INDIA - MADHYA PRADESH: An Investment Destinationfor Food Processing Sector on 3 July 2015 at Indore, Madhya Pradesh.

I wish this event a great success.

N.M. KEJRIWALChairman - Agribusiness

N.M. Kejriwal

MESSAGE

As we are aware that a strong and dynamic food processing sector plays a vital

life, ensuring value addition to agricultural produce, generating employments,enhancing income of farmers and creating markets for export of agro foods.Systematic investment in the potential areas with the favourable policy supportwill create a conducive environment for healthy growth of the food processingindustry in Madhya Pradesh.

Government of India has taken several developmental initiatives such ascreation of modern infrastructure for growth of food processing sector throughMega Food Parks, Integrated Cold Chain and providing assistance to foodprocessing industries under various plan schemes etc.

With the support of State Government, Food Processing Sector will surelyachieve the new heights in the State.

To contribute towards this great cause, PHD Chamber is organizing thisConference on MAKE IN INDIA - MADHYA PRADESH: An InvestmentDestination for Food Processing Sector on 3 July 2015 at Indore, Madhya Pradesh.

I am sure that this initiative of PHD Chamber shall be a grand success.

ASHWANI ARORAChairman,

Ashwani Arora

MESSAGE

PHD Chamber has always been proactive to address the issues and concerns thataffect business community as well as society.

Amongst the thrust areas of PHD Chamber, Agriculture and Food processing hasits special place.

India is a richly endowed agricultural nation. It has nearly a tenth of world's arable

the largest food processing countries in the world. Potential for production is alsomatched by strong demand for processed food products due to rapid urbanization,change in preferences and practices in consumption.

Madhya Pradesh is one of the States that offers enormous opportunities for stakeholders across the entire food value chain with huge potential in food processingsectors. Madhya Pradesh Government has been engaged in taking variousdevelopmental initiatives attracting and bringing more investment in the State.

MAKE IN INDIA - MADHYA PRADESH: An Investment Destination for FoodProcessing Sector being organised on 3 July 2015 at Indore, MadhyaPradesh would surely give a platform to deliberate upon the potential andthe opportunity in the State.

I wish the Conference a great success.

SAURABH SANYALSecretary General

PHD Chamber

Saurabh Sanyal

1. India Food Processing Industry Outlook to 2020

Industry OverviewIndia is the world’s second largest food producer with the potential to be the biggest, backed by its food and agricultural sector. The total food production in India is likely to double in the next 10 year. With an expansive agricultural sector, copious livestock, and cost efficacies, India is swiftly emerging as a sourcing hub for processed food.

Growing at a rate of 12% annually, it is anticipated that the food processing industry of India will transcend INR 16,500 Billion mark by 2020, owing to the rise in middle class income, changing urban lifestyle and modern retail trade. Moreover, the advancements on the technology front, people seeking more nutritional food products with variety, and the limited time availability due to fast paced life has further provided tailwind to the food processing sector.

Figure:1-1India - Food Processing Industry (INR Billion), 2012, 2015, & 2020

Source: ICAR, RNCOSNote: e = ICAR Estimates; f = RNCOS ForecastExchange Rates: 2012: US$ 1 = INR 54.85; 2015 & 2020: US$ 1 = INR 60.0

2012

6637

11640

16500

2015e 2020f

Market SegmentationThe Indian food processing market was close to INR 4000 Billion in 2014. The organized sector occupies 25% of the market, and is expected to grow with a CAGR of 16% during 2014-2020. Dairy sector accounts for the largest share, i.e. 33%, in the Indian food processing market, followed by Grains and Convenience Foods at 10% each. It is expected that Convenience Foods will exhibit an increase of 4% in share by 2020, owing to its increasing penetration among the newer generation.

CAGR 12%

Madhya Pradesh: An Investment Destination For Food Processing Sector14

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Industry Drivers

• India being an agro-based economy, has abundant resources to support the flourishing food processing industry

• Globally, India ranks first in milk production and second in the production of fruit and vegetables

• Increasing interest for ready-to-eat food products among young generation and working class

• Tier-I and Tier-II cities exhibiting high demand with rising disposable income

• Consumers are ready to experiment with unique processed food offerings

• Government focus towards setting-up food parks, mega food parks, cold chains, etc. for food processing industry (projected establishment of 42 mega food parks)

• National program, “Make-in-India” creating prospects for manufacturing industries

42%33%

10%

10%5%

Dairy Products

Grains

Convenience Foods

Fruits & Vegetables

Others

Figure:1-2Indian Food Processing Market (%), 2014

Source: RNCOSNote: Others include alcoholic beverages, meat and poultry

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To further boost the new units in food processing industry, the state is offering various incentives under its Agro & Food Processing Policy. This includes 15% reimbursement (up to INR 50 Million) on expenditure towards establishment of food parks, mega food parks and horticulture hubs.

In the Global Investors Summit (GIS) 2014, major business groups have committed to invest in the food processing industry of Madhya Pradesh. Future Group is planning to set up a Mega Food Park with an investment of INR 20 Billion, under which around 50-60 food processing units shall be established. ITC Ltd is also planning to set up a world class Agri-Product Manufacturing Plant in the state. Similarly, Adani Group has committed to invest in this sector.

In light of the ongoing and proposed investments in the state, food processing industry is expected to boom.

2. Madhya Pradesh Food Processing Industry Madhya Pradesh is one of the fastest growing states in terms of food processing industry. The abundance of variety of crops, government initiatives, and technological advancements are fuelling growth in state’s food processing industry. MadhyaPradesh is the first state to bring into line its economic development road map with the Make in India – Make in Madhya Pradesh. It is the only state in the country to plan the establishment of a separate Ministry for Micro, Small and Medium Enterprises (MSME).

The Gross State Domestic Product (GSDP) from agriculture & allied activities has registered a growth of over 18% in the last three years. Food processing industry forms an average 32% share of state’s industrial output. There are about 650 food processing and beverages units in the state, with an estimated investment of INR 91 Billion.

KEY HIGHLIGHTS

First state to bring into line its eco-nomic development road map with Make in India – Make in Madhya Pradesh.

State’s Food processing sector forms an average of around 32% share of total industrial output value.

Estimated Industrial investment of INR 91 Billion.

Source: MoFPI

Large to MediumScale Units - 23

Large to MediumScale Investment-

INR 6 Billion

Small Scale Investment-INR 85 Billion

Small Scale Units - 625

Figure:2-1

Food Processing and Beverage Units viz-a-viz Investment

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3. Agriculture Overview in Madhya PradeshMadhya Pradesh is the 2nd largest state by area in the country. The economy of the state principally depends on agriculture, with more than 70% of the population involved in agricultural activities. The state is bestowed with 11 agro-climatic divisions that has been a major precursor for the growth and development of agriculture in the state. The vast climatic variation has made Madhya Pradesh a suitable place for cultivation of a gamut of crops needing diverse environmental conditions. The state has around 15.7 Million hectares of land under cultivation, which produced 46.5 Million Metric Tonnes of agricultural product (food grains, vegetable, fruits and spices) in FY2014. Agricultural production grew at a CAGR of around 16% during FY2011 to FY2014.

12%

23%

1%

64%

Grains & Cereals

Fruits

Vegetables

Spices

Figure:3-1

Agricultural Produce by Type (%), FY2014

Source: Directorate of Economics and Statistics, Department of Agriculture and Cooperation

3.1 Grains & CerealsMadhya Pradesh is one of the top performers in the food grains production in India. It is the 3rd largest producer of wheat in the country. Grain & Cereals accounted over 60% of state’s agricultural produce last year. With new and reformed government policies and incentives to the agriculture sector, the quality and quantity of production is foreseen to show further improvement.

Hoshangabad, Chhindwara, Sehore, Harda, Raisen and Vidisha contributed to around 33%1 of the total wheat production of Madhya Pradesh. Pulses are also one of the major crops of the state. Pulses like Moong, Urad, Masoor, Gram, Arhar and Kabuli Chana have given a distinct identity to the state. It accounted for around 29% of the India’s total pulses production. Production of wheat and soybean has declined in past three years, whereas pulses, rice and maize production has increased.

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47%

18%

17%

18%

Wheat Soybean

Pulses Others

Figure:3-3

Grains & Cereals Production by Type (%), FY2014

Source: Directorate of Economics and Statistics, Department of Agriculture and CooperationNote: Others include Rice and Maize collectively

Figure:3-2

Grains & Cereals Production (Million Metric Tonnes), FY2011 to FY2014

Source: Directorate of Economics and Statistics, Department of Agriculture and CooperationNote: *= Fourth Advance Estimates

FY2011 FY2012 FY2014FY2013

29.4

22.5

31.2

29.6

CAGR 10%

19

18%

30%

16%15%

8%

7%

6%Banana Orange Guava

Papaya Mango Aonla

Others

Figure:3-5

Fruits Production by Type (%), FY2014

Source: National Horticulture Board

3.2 FruitsIn FY2014, Madhya Pradesh produced 6% of the total fruits produced in India. It is the 8th largest producer of fruits. A total area of more than 0.16 Million hectares is under fruit cultivation. Indore, Ujjain and Jabalpur divisions accounted for approximately 71% of total area under fruit cultivation owing to Banana, Citrus fruits and Papaya as major crops.

Madhya Pradesh accounts for a significant share in total production of Orange (26%), Guava (23%) and Aonla (30%), in India.

Figure:3-4

Fruits Production (Million Metric Tonnes), FY2011 to FY2014


FY2011 FY2012 FY2014FY2013

3.43.4

5.75.5

CAGR 19%

20

22%

18%

15%

28%

8%

5%

4%

Figure:3-7

Vegetables Production by Type (%), FY2014


Onion Potato Tomato

Brinjal Cauliflower Cabbage

Others

Madhya Pradesh accounts for a significant share in total production of Onion (15%), Peas (12%), and Tomato (10%), in India. All the major vegetable crops exhibited double digit growth rates during FY2011 to FY2014.

3.3 VegetablesIn FY2014, Madhya Pradesh produced 8% of the total vegetables produced in India. It is the 5th largest producer of vegetables. Ujjain, Indore, Jabalpur and Sagar divisions accounted for about 70% of total area under vegetable cultivation owing to Onion, Potato, Tomato and Pea as major crops. A sudden rise in vegetable production in FY2012 was due to addition of five lakh hectares of land under horticulture crops.

Figure:3-6

Vegetables Production (Million Metric Tonnes), FY2011 to FY2014


FY2011 FY2012 FY2014FY2013

10.1

12.6

10.8

3.7

CAGR 43%

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4. Status of Food Parks in MadhyaPradeshThe concept of food parks has been gaining momentum in past few years. The food processing industry is recording new levels with reduction in resources wastage, lesser cost, government incentives and supportive financial benefits. Various agro-food parks are being developed in Madhya Pradesh to promote medium and small- scale units.

Presently, there are seven food parks in the state approved by Ministry of Food Processing Industries. These food parks in the state are occupied to the high level of around 90%, majorly occupied by grain/rice milling, pulses milling, and spices manufacturing units. Based on the interaction with the food parks governing bodies, major opportunities lies in the sector of tomato pastes/ketchup/purees, fruit juices, soybean oil, dairy products and wheat and pulse based products.

In addition to seven food parks, a Mega Food Park (MFP) has been approved in Khargone district by Ministry of Food Processing Industries (MoFPI), Government of India. MoFPI has also provisionally approved 3 Integrated Cold Chain projects in the State.

4.1 Nimrani Food ParkNimrani Food Park is located in District Khargone, near Indore. Being near to Indore, it has good connectivity with other states through the airways, railways and roadways. Food Park has total area of 27.12 hectares, with basic infrastructure like internal roads, power, cold storage, common effluent treatment plant, and warehousing, among others. The sole governance of the food park lies with Madhya Pradesh Audhyogik Kendra Vikas Nigam (Indore) Ltd.

Existing Units: The major units in the park are Grain Milling, Rice Milling and Bakery.

Prospective Food Processing Units: Food Park is close to districts like Indore, Khargone, Dhar, Dewas, which are rich in agriculture production of crops like Garlic, Onion, Tomato, Soybean and Wheat.

S.No. Crops Prospective Food Processing Units

1 Garlic Pickle, Paste, Powder

2 Onion Dehydrated Flakes, Snacks (Onion Rings), Onion Dips, Packed Onion

3 Tomato Ketchup, Paste, Sauces

4 WheatBakery & Confectionary Products (Bread, Biscuits/Cookies, Noodles, Pasta, Rusk, Vermicelli, etc.)

5 Soybean Cheese, Sauce, Oil, Milk, Margarine, Animal Feed





3 Orange Juice, Pulp, Confectionary Products (Candies, Chocolates, Biscuit Creams)



1 Soybean Sauce, Oil, Margarine, Cheese, Milk, Soy Nuts, Animal Feed

2 Wheat Bakery & Confectionary Products (Bread, Biscuits/Cookies, Noodles, Pasta, Rusk, Vermicelli, etc.)

3 Maize Corn Flakes, Snacks, Popcorn, Starch, Oil

4 Rice Wafers, Pasta, Idli Mix, Snacks (Quaker), Cereal Bars (Sweet), Bran Oil

5 Pulses Namkeen & Snacks

4.3 Borgaon Food ParkBorgaon Food Park is located in District Chhindwara, spread over an area of 21.5 hectares. The nearest city to the park is Nagpur, at a distance of 55 kilometers, connecting the park to other major districts and states through well managed modes of transportation. Food Park has all the required infrastructural facilities like internal roads, power, cold storage, common effluent treatment plants, warehousing, water and surface transportation. The sole governance of the food park lies with Madhya Pradesh Audyogik Kendra Vikas Nigam (Jabalpur) Ltd.

Existing Units: The major units in the park are Rice Milling, Spices Milling, Baby Food, Papad, Pickles and Ketchup.

Prospective Food Processing Units: Park is in Chhindwara, which has high production of Maize, Wheat, and Soybean. It is in close proximity with Betul and Seoni districts, whose major productions are Soybean, Rice, Wheat, Pulses and Maize. Based upon the raw material availability, following opportunities exist for the players in the food processing sector.

4.2 Jaggakhedi Food ParkJaggakhedi Food Park is located in District Mandsaur, near Indore. It has similar advantage in terms of connectivity, like Nimrani Food Park. It has total area of 20.46 hectares, with basic infrastructure like internal roads, power, cold storage, common effluent treatment plant, and warehousing, among others. The sole governance of the food park lies with Madhya Pradesh Audyogik Kendra Vikas Nigam (Ujjain) Ltd.

Existing Units: The major units in the park are Spices Milling.

Prospective Food Processing Units: It is close to districts like Ratlam, Neemach and Indore, which have high production of Tomato, Onion, Orange, Papaya, and Garlic. Ratlam is one of the districts in Madhya Pradesh, which produces variety of agriculture and horticulture crops like Kaddu Vargoya, Papaya, Onion Lady Finger, Peas, Potato, Orange, Brinjal, Cauliflower, and Soybean. Proximity to districts with such diverse production could be used by upcoming and existing units.

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4.4 Maneri Food ParkManeri Food Park is located in District Mandla, spread over an area of 30.3 hectares. The nearest city to the park is Jabalpur, at a distance of 35 kilometers, connecting the park to other major districts and states through well managed modes of transportation. Maneri Food Park has various infrastructural facilities like internal roads, power, cold storage, common effluent treatment plants, warehousing, water and surface transportation. The sole governance of the food park lies with Madhya Pradesh Audyogik Kendra Vikas Nigam (Jabalpur) Ltd.

Existing Units: The major units in the park are Amla, Papad, Badi and Tomato Pulp.

Prospective Food Processing Units: Park is in Mandla, which produces majorly Rice, Mango, Maize, Wheat and Mustard. Mandla together with surrounding districts like Balaghat, Dindari, Jabalpur and Seoni produces large quantity of Rice, Wheat, Tomato, Soybean and Pulses. These major crops accounts for about 70% of the total production around the Maneri Food Park.


1 Rice Wafers, Pasta, Idli Mix, Snacks (Quaker), Cereal Bars (Sweet), Bran Oil





6 Maize Corn Flakes, Snacks, Popcorn, Starch, Oil

4.5 Malanpur Food ParkMalanpur Food Park is located in District Bhind, spread over an area of 62.0 hectares. The nearest city to the park is Bhopal, the Capital of the state. Being the capital city, the infrastructure is of high standard and improves connectivity of the park to other major districts and states. The Food Park has various infrastructural facilities like internal roads, power, cold storage, common effluent treatment plants, warehousing, water and surface transportation. The sole governance of the food park lies with Madhya Pradesh Audyogik Kendra Vikas Nigam (Gwalior) Ltd.

Existing Units: The major units in the park are Dairy Products and Grains Milling. Prospective Food Processing Units: Malanpur Food Park is surrounded by districts like Gwalior, Datia, and Morena. Gwalior has one of the largest productions of Potato in the state. Other major crops in the surrounding districts are Wheat, Peas, Garlic and Onion. These major crops accounts for more than 80% of the total production around the Malanpur Food Park.


1 Potato Chips, Snacks (Potato Bites), Seasonings


3 Pea Namkeen, RTE/RTC (Matar Paneer), Packed/Canned Peas



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4.6 Babai-Pipariya Food ParkBabai-Pipariya Food Park is located in district Hoshangabad, spread over an area of 50 hectares. The nearest city to the park is Bhopal, the Capital of the state. Being the capital city, the infrastructure is of high standard and improves connectivity of the park to other major districts and states. The Food Park has various infrastructural facilities like internal roads, power, cold storage, common effluent treatment plants, warehousing, water and surface transportation. The sole governance of the food park lies with Madhya Pradesh Audyogik Kendra Vikas Nigam (Bhopal) Ltd.

Existing Units: The major units in the park are Rice Milling, Pulse (Tuar and Chana) Milling, and Bakery) Milling, and Bakery

Prospective Food Processing Units: Babai-Pipariya Food Park is surrounded by districts like Harda, Sehore, Raisen, Betul, and Narsinghpur which majorly produce Wheat, Soybean and Pulses. The high production of the Wheat and Pulses in the region surrounding the park has lead to Pulses and Bakery processing units in the park and opens up multiple opportunities for the upcoming units through the value addition. Also, Soybean Processing is one of the big prospective opportunities for the food processing companies backed by raw material availability and health benefits of the product.

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5. Regulatory Framework for Food Processing in Madhya PradeshThe Madhya Pradesh government has been taking various steps to promote food processing industry in the state. The agricultural base of the state is very strong both in food grains and vegetable production, still the processing is limited.

According to the Chief Minister, Madhya Pradesh, Shivraj Singh Chauhan, agricultural surpluses should be used for value addition and MSMEs can play a greater role in this endeavor. Ministry has already mapped Madhya Pradesh to see which commodity is in surplus, and the idea is to create cold chains and storage capacities, adding value at the local level.

Various benefits have been announced to promote industrial growth under “Industrial Promotion Policy 2014” and “Agro & Food Processing Policy 2012” in Madhya Pradesh.

Some of the incentives and subsidies on Land, Capital, and Plant & Machinery under the given policies are as follows:

Industrial Promotion Policy 20142

• Land Concessions: 50% assistance subject to a maximum of INR 10 Million each shall be provided to medium, large and mega scale industrial units for developing power, water and road infrastructure, if the investor acquires private land or gets underdeveloped government land for setting up of project.

• Green Industrialization: Small, Medium, Large and Mega industries shall be provided a capital subsidy of 50% up to a maximum of INR 2.5 Million for investment in setting up of waste management systems, pollution control devices, health and safety standards etc.

• Capital Subsidy: Subsidy of 15%, subject to a maximum ceiling of INR 1.5 Million on plant & machinery for micro and small scale industrial units.

• Interest Subsidy: Subsidy of 5%, subject to a maximum ceiling of INR 0.3 Million, INR 0.4 Million, and INR 0.5 Million on term loan for micro, small and medium scale industrial units.

• VAT & CST Exemption: Eligible enterprises (except textile units) will be given reimbursement after adjusting the input tax rebate on the amount of value added tax (VAT) and central sales tax (CST) (excluding the amount of value added tax on purchase of raw materials) deposited by them to the extent of : •50%foraperiodof7yearsforfixedcapitalinvestmentofatleastINR10Million(Fordistricts having no mega industrial unit) and 5 years for remaining districts •75%foraperiodof10yearsforlargeandmegascaleindustrialunit(Fordistrictshavingno mega industrial unit) and 7 years for remaining districts

• Mandi Fee Exemption: All Food processing units shall be given exemption from mandi fee for a period of five years or a maximum of 50% of investment in plant & machinery (whichever is lower). This fee exemption shall be made available to those units, which purchases agriculture produces of this state.

Agro & Food Processing Policy 2012 •Land allotment at a concessional rate of 25% for MSME units

•75% Land subsidy on industrial plots and/or undeveloped land

•15% re-imbursement of project cost of Food Park/Horticulture Hubs, limit INR 50 Million for the expenditure incurred on establishment of Food Park/Mega Food Park/Horticulture Hub

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• 15% Capital subsidy for upgradation of food processing units, up to a limit of US$ 50,000 (INR 2.5 Million)

• Food processors with capital investment > INR 5 Million (US$ 0.1 Million) are exempted from Mandi fees

• Subsidized power at INR 1.50 per unit, subject to a ceiling of 25% of the electric units consumed to Cold Storage, Cold Chamber, Ripening Chamber and Individual

• Quick Freezing Enterprise for 5 years

• 30% re-imbursement on freight charges up to ICD/port, limit INR 0.5 Million/Year (US$ 10,000/Year)

Support by MP State Agricultural Marketing Board• Concession on Mandi Fee for Banana and Orange produced in the state

• Establishment of value adding centres for sorting, packaging, storage and preservation, processing and transportation

• Foods and vegetables used for processing by a unit in Madhya Pradesh exempted from Mandi Fees

Benefits for Processing Units in Food ParksSailent features & concessions available to the Industrial units established in Food Park are:

• First ten industries would be given rebate in premium in the following manner:- •Initially100%premiumwillhavetobedepositedbytheentrepreneur,settinguptheir unit in the Food Park. •50%ofthepremiumdepositedbytheentrepreneurwillbereturned,iftheIndustry commences the production within the stipulated period.

• Industrial Investment Promotion Assistance would be given to the Food Processing Industry having a fixed capital investment below INR 100 Million. • Mandi fee for purchasing agriculture produce as raw material would be exempted for the food processing units to be set up in the food park.

• The food processing units working as seasonal units to be set up in the food parks would be declared as seasonal industries and be given relaxation in labor laws. They would also be given exemption from the traffic related to minimum power bills.

• The sales tax paid on purchase of raw material by the units set up in the food park would be adjusted (set off) into the sales tax payable on the sale of finished product.

• The Agriculture and Horticulture Department would take initiative to promote contract farming around the Food Park, as per the demand of industries established at food parks.

• Madhya Pradesh Agro Industries Development Corporation and Madhya Pradesh Khadi Gramodyog Board would extend assistance for marketing of product of the units; set up in the food parks.

• Services of private specialist (consultants) would be taken to promote investment in food parks. They would widely advertise the food park, and help the entrepreneurs establishing the units there.

6. Opportunities in Madhya Pradesh Food Processing Industry 6.1 Make in Madhya Pradesh - MSME can Reap Benefits The ‘Make in India’ campaign focuses on the manufacturing sector to generate employment. Through this campaign the food processing sector aims to raise its growth level from 10% to 25% as this is one of the focus industries of the ‘Make in India’ Campaign.

On similar lines, in Madhya Pradesh, the improved functioning of food parks and planned setup of Mega Food Park in Khargone is one of the key opportunities for SMEs. Small and medium food processing unit or ancillary units can come up in the food parks, and take benefit of the facilities provided by the government for the SME’s.

6.2 Need for Advanced & Cost Effective Process Technology Taking into account the increasing agriculture and horticulture production in the state, increasing financial assistance and incentives by government, food processing sector possess immense opportunities. In light of the said reasons, a huge requirement for cold chain management and refrigerated vans is arriving There is a need for advanced technologies to make food processing cost effective. The issues of power, water, and transportation are few of the main industrial challenges, hence advanced and cost effective technologies are the need of the hour.

6.3 Potential Food Processing Opportunities 6.3.1 Fruit Juice (Orange and Mango)

The packaged fruit-based beverages market in India has witnessed substantial growth in recent years on account of rising demand for healthy beverages fueled by growing awareness, urbanization and an increasing working population. According to our research, the total fruit juice market in 2014 was INR 70 Billion. Organized sector had 20% market share, valued INR 14Billion The organized fruit juice segment is poised for 20% growth in next five years. Mango and orange juices being the most preferred variants are set to grow with a magnificent growth rate as well

Madhya Pradesh accounts for 26% share in India’s total orange production and 2% in mango production. Currently, state ranks lower in mango production but it is one of the fastest growing fruit category with a CAGR of about 45% during FY2012-FY2014. The oranges and mangoes are famous across India for their flavor and quality and so are products derived from them, however, still the state lags behind in taking full benefit of high raw material availability. Although state has high production volumes, it is much behind in processing (negligible) and consumption of processed oranges (0.2% of production) and processed mangoes (5.8% of production)3. The high production of oranges and mangoes creates huge opportunity for juices, and other products like candy, juice powder, canned fruits, dehydrated fruits, etc. The major orange producing districts are Chhindwara, Mandsaur, Shajapur, Ujjain, Betul, Ratlam, Neemuch, Hoshangabad, Harda, and Rajgarh. Jaggekhedi Food Park has oranges as one of the major crops in the surrounding districts, adding potential to this product category for the prospective manufacturing units in the food park. Although mangoes are not one of the major crops around any of the food parks, but its high production and even higher growth rate creates an immense potential in the product.

3National Horticulture Board, CIPHET, Dept. of Commerce, Industry & Employment Govt. of Madhya Pradesh, NSSO, PwC Analysis


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Orange

Mango

5Directorate of Economics and Statistics, Department of Agriculture and Cooperation6Ministry of Commerce


6.3.3 Soybean Oil In FY2014, India’s total soybean production was 11.99 Million Metric Tonnes. The majority of soybean produced is crushed, and forms soya meal (~80%) and soya oil (~20%)5. India has a huge demand for soybean oil. Close to 60% of the demand for soybean oil is currently catered by imports. Soybean oil import was 2.32 Million Metric Tonnes in FY2014, which grew at a CAGR of 44% during FY2012 to FY20146.

Madhya Pradesh is the largest producer of soybean in the country. It recorded a total production of 5.37 Million Tonnes of soybean in FY2014, accounting for a share of around 45%. Major districts for soybean production are Ujjain, Dewas, Shajapur, Sehore, Mandsaur, Dhar, Chhindwara, Vidisha, Indore, and Harda. It is also one of the highly cultivated crops around the Nimrani, Borgaon, Maneri and Babai-Pipariya Food Parks. Other than Soybean oil, massive production of soybean creates huge opportunity for other soy based products like Sauce, Margarine, Cheese, and Milk. It should be targeted as premium crop and area under cultivation should increase.

Figure:6-3

Soybean Production (Million Metric Tonnes), FY2011 to FY2014


FY2011 FY2012 FY2014*FY2013

6.50

7.80

5.37

6.27

6.3.4 Value Added Dairy Products Market for Value Added Dairy Products (VADP) is rising gradually across country as operating margins in value-added products are almost 2x liquid milk business. Demand of various dairy products like Cheese, Packaged Milk, Butter, Non Dairy CrAeamer, Instant Milk Powder, Condensed Milk and Flavored Buttermilk are exhibiting high growth. Together with domesti market, export market for milk and dairy products presents a large opportunity to the SME’s in the state Indian export of processed dairy products has attained CAGR of around 103% during FY2010 FY2014.

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In terms of milk production, Madhya Pradesh is the 6th largest producer. The production reached to 8.84 Million Metric Tonnes in FY2014 from 7.17 Million Metric Tonnes in FY2010. At district level, Morena, Ujjain, Mandsaur, Jabalpur and Indore districts produced 3.5%7 of the states’ total milk production in FY20128. As per NSSO data, the share of unprocessed consumption of milk in the state is around 98.19%, whereas only 1.81% of milk is consumed in the processed form Food parks such as Malanpur, Jaggakhedi, Maneri, and Nimrani can be targeted due to availability of milk in and around the surrounding districts.

Figure:6-4

Milk Production (Million Metric Tonnes), FY2010 to FY2013

Source: Department of Animal Husbandry, Dairying & Fisheries, Ministry of Agriculture, GoI

FY2011 FY2012 FY2014FY2013

7.51

8.158.84

7.17

CAGR 7%

6.3.5 RTE/RTC According to our research, Indian organized RTE/RTC foods (Noodles, Pasta, Upma, Snacks etc) market was estimated to be INR 53 Billion in FY2014. It is expected to grow with a CAGR of around 22% during 2014-2020. The demand of RTE/RTC is gradually rising backed by various factors like changing lifestyle, increasing adaptability among the consumers of tier-I and tier-II cities, modern retail chains etc. Wheat based products like upma, noodles, and snacks are few of the highly demanded products.

Madhya Pradesh is the third largest producer of grains in the country with wheat production at 13.93 Million Metric Tonnes during FY2014, growing at a CAGR of 15% during FY2011- FY2014. The majorwheat producing states are Hoshangabad, Chhindwara, Sehore, and Harda. Together with high production, wheat is one of the majorly produced crops across all food. High raw material production and remarkable growth in the RTE/RTC foods sector creates a growth potential in state’s wheat based food processing.

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Figure:6-5

Wheat Production (Million Metric Tonnes), FY2011 to FY2014


FY2011 FY2012 FY2014*FY2013

14.37

13.13

13.93

9.22

CAGR 15%

7. Industry Roadblocks 7.1 Inadequate Infrastructure One of the key challenges for Madhya Pradesh food processing industry is inadequate infrastructure. With changing consumption pattern, especially in urban areas, demand of processed food is increasing, which is further drawing foreign investments in the sector but insufficient infrastructure hampers the expected growth prospects. More than one third of the warehouses in the mandis are not adequate to handle the volumes they are expected to. On the other hand, advance facilities such as ripening chambers and cold storages, which have direct impact on transactions and shelf life of horticultural produce, are absent. 7.2 No Incentive for Quality Production Due to lack of standardization of quality norms at mandi level, comparable quality produce can fetch different prices and different quality produce are sold at similar prices. Farmers adopting superlative practices and producing quality material usually do not get incentives for their efforts. If mandis start using equipments and methods to measure produce characteristics on certain parameters and prices are determined based on those parameters it will give a boost to primary processing.

Besides this, existing norms on the processing of food items are liberal, which allow small and unorganized players to manufacture adulterated and low quality products. In light of this, the state government should take stringent measures to control the quality of food processing. Regular and strict monitoring of the processed food quality will create the demand for advanced food processing technologies.

7.3 R&D Not in Line with Industry In Madhya Pradesh, companies are following the same channels as were adopted in past years, giving lesser weightage to the upcoming trends across the globe in terms of product attributes, production, processing, and supplying the product. The growth of an industry depends upon its ability to reach out end-consumers with the products meeting their demands. Innovations which can create fresh demand, is needs of the hour. However, the R&D is not going in line with the industry trends and hence, unable to boost demand.

KEY POINTS

Ripening chambers and cold stor-age are not adequate

No norms for checking the quality of production.

Less focus on global trends and developments

Highly unorganized food processing industry.


8. Madhya Pradesh Food Processing Industry - Road AheadCreation of Food Testing Facilities: Since a lot of attention is given to the hygiene and quality factors of food, food testing is one of the major avenues where the potential is still untapped. As India moves forward towards adopting international standards of food processing and other related activities, food testing laboratories come in play as stringent measures needed to be adopted for approving food items fit for human consumption.

Promoting Food Processing in Food Parks: Madhya Pradesh is quite rich in its agriculture and horticulture production amongst which Orange, Tomato, Soybean and Wheat are found in abundance. Also, most of these crops are found in high quantities in districts around various food parks. Hence, it is recommended that the state government should actively work towards improving the processing of potential processed food opportunities like fruit juice (orange), tomato ketchup, soy milk, soy oil, processed milk, honey, starch, wheat-based convenience food items, etc in the food parks. The improvement can be brought by providing few additional incentives to the upcoming units.

Special Schemes for New Entrepreneurs: Government has been very supportive towards the industrial units in the state, giving special incentives to food processing units. Various incentives like on capital, bank loans, plant & machinery, mandi tax, VAT, among others. As MP’s food processing industry majorly comprises of SME’s, special incentives and relaxations for the entrepreneurs will give further push to the industry.

Need for Center of Excellence / Nodal Agency: A central or nodal organization to facilitate and connect the investor, entrepreneur, and other stakeholders is one of the key recommendations for promoting the food processing industry. The existence of such organization would bring clarity in procedures & policies between the industrial unit and investor. It will also bring all the stake holders on the same platform thereby reducing the communication gap and any kind of misinterpretation in facts. Moreover, it will be a cost and time effective move to manage the resources of upcoming food processing units in the state.

R&D for Product Development: Madhya Pradesh food processing industry is in a dire need for accelerating R&D and modern technology adoptions in agriculture, and food processing. For instance, at the processing stage, small scale and unorganized sectors, which claim a major portion of the food processing industry, call for focused programs for ameliorating productivity, technology access, quality output, meeting the food safety standards, & new product development for competitive edge & consumer needs. All these measures will increase output and subdue wastage and nutrition losses throughout the production and processing stages.

Creation of Robust Cold Chain/Supply Chain Network: Establishing a firm and sound logistics framework is imperative to curtail the post-harvest losses, particularly of perishables. State’s government needs to devise novel new strategies, and work closely with third party cold chain operators to develop better cold storage systems, ensuring better conditions of warehouses by employing sophisticated refrigerated transportation systems to avoid food wastage. In the similar direction, MoFPI has also provisionally approved 3 Integrated Cold Chain projects in the State.

Increasing Domestic Demand for Soya Oil: The domestic market for soy-based products like soya oil is growing at double digit. Imports cater around 60% of the demand. With huge production and processing capacity for soybean, Madhya Pradesh can successfully tap the growing demand.

Increasing Domestic Demand for Soya Milk: Soya Milk is an inexpensive and remarkably versatile high protein food made from soybeans. It is a white liquid made from the seed. Unlike most other protein foods, milk is entirely free from cholesterol and low in fat. It is an excellent food for babies, children, elderly people and pregnant and lactating women since it contains vegetable protein which is very nutritious and easy to digest.


With the increasing health consciousness among the general people, the use of soybean is getting acceptance in the form of textured vegetable protein (popularly known as Soya nuggets), Soya fortified wheat flour, Soyamilk, Tofu and Soya curd etc. Being mainly the country of vegetarians, India has indeed a very great potential for Soya Milk, Cottage Cheese and Curd. The high production of soybean is an additional benefit to the state’s soya processing industry.

Value Addition at Different Levels: The increasing demand for processed food, like fruit-based beverages, pulps, sauces, chocolates, flavored milk, flavored yogurt, cheese, honey, starch, dehydrated fruits & vegetables among others, creates large growth area for food processing units in the state. Increase in disposable incomes and improving lifestyles has a visible effect on the consumption pattern of the people.

Easy Credit Availability to MSME Segment: Madhya Pradesh food processing industry is majorly unorganized, comprising of only few regional players. Although government has provided various incentives for the food processing companies, yet a special credit agency for the SME’s in the sector is the need of the hour. State has various credit societies and cooperative banks but no dedicated financing institution for the food processing industry. It is recommended that the Madhya Pradesh government should work upon providing credit assistance to the SME’s through a credit society or agency for the food processing units specifically.


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