India and its growing demand for packaged food market is an opportunity “nobody can afford to ignore”, a senior government minister has told just-food.
Harsimrat Kaur Badal, India’s Minister of Food Processing, said the forecast growth of the retail sector, the rise of an “urban, growing middle-class” and the recent moves by government to invest in infrastructure and cut red tape makes the country an attractive destination for international food manufacturers.
Badal was speaking in London to promote World Food India, an industry expo to take place for the first time in November.
The minister said the “stage is now right” to provide a “platform” for international businesses interested in investing in India to find out more about doing business in the country.
“Globally the world is looking at India’s food sector, a $600bn retail sector, with 70% food, set to treble over the next three years – and a 1.3bn population, 30-40% of which is the urban, growing middle-class, looking for ready-to-eat food,” Badal said. “One of the fastest-growing economies, with the highest amount of FDI coming into any country, that’s India.”
She added: “India is a market that nobody can afford to ignore. It’s a growing market and everybody is vying to get in there and I think the early bird catches the worm.”
India’s central government has included the food industry as one of its “focus, sunrise sectors”, Badal explained. She pointed to recent moves made by the Indian government to deregulate in the sector and invest in infrastructure.
“In the last three years, the government focused a lot on setting up infrastructure to promote food processing. Last year, [it] opened up to 100% FDI the multi-brand retail of food that is produced and manufactured in India. [We have] seen a 40% increase in FDI from last year to this year in the food sector.”
Many international food companies have long expressed concerns about red tape and regulation in India, problems at customs and the country’s under-developed supply chain.
Badal was at pains to outline the efforts made by the Indian government on these issues.
“In the last three years, we’ve worked very hard to create that infrastructure and get rid of loopholes,” she insisted. “My ministry was a part of the agriculture ministry, which made the food processing industry separate so that the mega food parks and the cold chains became a reality. Those infrastructures are either up or are going to be up in the next 18 months. We opened up the market to 100% FDI in retail, so that while the infrastructure gets up, the market gets created.”
Earlier this year, India announced plans to invest 600 crores (INR6bn, or US$93.6,) of investment in the country’s food processing sector under a new central scheme, a move designed to modernise the industry and reduce waste. Badal said the programme would “mean a couple of hundred million metric tonnes of food is going to get processed and benefit many farmers”. She added: “That’s just something my ministry is doing but it is going to have a ripple effect on the private industry as well.”
India’s customs regulations have, Badal asserted, “been streamlined a lot” and “now not everything needs to be tested, there is just random testing”. She added: “There has been progress to the extent that when I took over three years ago, every country the first thing they raised was this and now as of the last year no-one has raised it.”
Badal is hoping World Food India, which is set to take place in New Delhi on 3-5 November, encourages more investment into a sector which, she suggests, needs support to feed a growing and population.
“We are the largest producer of milk in the world and yet there’s a shortage in India,” she says, by means of an example. “Not only starting from the production of milk but maybe even from the breeding of the variety of cows that give more milk down to processing whether cheese, yogurt or anything else.”
Badal said Indian states will use World Food India to “showcase their strengths and the tie-ups [with business] they’re looking for”. Asked whether the Indian government was comfortable about multinationals potentially buying local food companies outright, she added: “The Indian government doesn’t have any issues but what I’ve seen in countries is a lot of people wanting to enter the Indian market and looking for joint ventures so that they can enter the market, feel their way around and then probably do it on their own. That is why I thought of World Food India because we can provide that platform.”