Processed Food Agribusiness Recent Trends, Developments Evolution

2. Flow of presentation India � Demand Dimensions India � Agriculture India � Food Processing

3. India is growing

4. Household Incomes Increasing

5. Consumer Market Growing

6. Young Population India has a demographic advantage with a large young population More than 85% population estimated aged less than 65 in 2050

7. Incomes-Changing Profile

8. Consumption Growing

9. Consumption Shifting

10. Food is the Largest Category

11. Most Attractive Retail Market�

12. From traditional to� � modernized traditional From globalize to� � Indianise From functional to� � lifestyle Consumer Preferences Evolving

13. Indian Agriculture

15. Supply � Demand Gap in commodities like oilseeds, pulses, etc Supply side equation in production Low farm realization Technology and methods out of step �.low yields Missing information links Lack of market led agri research Low investments in agriculture�..virtual collapse of infrastructure Distorted resource allocation The sub par quality and reach of credit flow Disjointed Supply Chain

19. India � Food Processing

20. India - opportunities in Food Processing 52% cultivable land as against 11% world wide Unsurpassed Natural Advantages All the 15 major climates of the world 46 out of the 60 soil types 17% animal, 12% plant and 10% fish genetic resource of the world Food processing sector ranks fifth in terms of contribution to GDP Indian urban food market estimated at 350,000 crore Estimated investment in Food processing sector during 11th plan � 1 lakh crore

21. Challenges And Strategy - Food processing Utilisation of scarce resources � MORE CROP PER DROP, power etc Varying taste preference within the country Increasing International Competition Non tariff barriers Integrated Food law to remove multiplicity of food laws & regulatory agencies

22. Drivers of Change

23. Role of Key Drivers

24. Is India Ready?

25. Hurdles towards Value addition Wide disparity between peak & lean period arrivals usually ranging from 100 � 150% Long revenue cycle as products to be purchased in bulk during peak season Control of markets by few traders and agents who command large storage capacity Discouragement of farmer � lower returns act as disincentive Crashing of prices during peak season Larger intermediaries exerts negative pressure on farmer margin, and deteriorates quality due to multiple handling

26. Bottle-necks in Cold storage & Processing industry Higher Tax duties including on packaging material Lower capacity utilisation Role of cold storage etc � current utilisation 48% of capacity 5100 units with 216 lakh MT capacity Non adoptive of cost effective technology High working capital requirement High cost of finance Infrastructural constraints Dependence on intermediaries � inadequate farmer � processor linkages

27. Can India be a sourcing hub for food products ? Good governance Strong , Stable and reform oriented government WTO signatory Strong economy comparatively resilient to the current economic crisis Focus on improving the Road connectivity Vision to solve the power situation � Nuclear energy Improving relationship with neighboring countries and a more important role in the WORLD ORDER Focus on agri & rural sector Has a Strong agriculture base Increased out lay for rural spend Rural economy to be give the next big push to GDP Annual rural income to increase from 2.8% to 3.6% over next 2 years

28. Government Initiatives - Food processing Included in the list of Priority sector lending by banks since 1999 Most of processed food Exempted from purview of licensing under the industries (Development & regulation) Act, 1951, except items reserved for small scale sector & alcoholic beverages Excise duty for processed fruits & vegetables, food mixes etc. � NIL Excise duty on reefer vans reduced from 16 to 8% Reduction in customs duty on food processing machinery Tax breaks Move towards GST

29. Corporate Role Incentives to Corporate to enter core farming � land ceiling restrictions Increase Mechanization to tackle low availability of labour and to remain a low cost producer Liberalized credit norms for agricultural � production , marketing and infrastructure development Changes in market regulatory framework to allow corporate to establish market yards At present 7521 regulated markets which lack critical infrastructure Review of legal instruments to facilitate entry in marketing activities Tax holidays and incentives Excise exemptions for CAPEX items.

30. Recommendations Reduction of wastage /spoilage to be tackled on a war footing Accelerated establishment of cold chain networks Irradiation facilities and pest free warehouses Encourage SSI units and corporate to set up food processing units Improvement of productivity � both land and manpower Example the case of Rubber where India has the highest land productivity in the world Change in cultivation practices such as irrigation for paddy rather than method of flooding the fields Price stability Make farming remunerative to attract talent and retain farmer interest

31. Conclusion Food sector � the highest multiplier effect of any industry Tripling the size of the industry would generate Direct employment � 28 lakh and Indirect employment � 74 lakh Thrust in agriculture to be provide the next push to GDP and prosperity Enhanced export earnings to compensate for any slow down in IT related exports