The report, released at the inaugural session of the Ficci's Food 360 here on Wednesday, says the opportunities in the food processing industry are significant and expected to reach a size of Rs 400,000 crore by FY15 contributing to around 6.5 percent to the GDP.
The vast Indian agri business market has also triggered a surge in private equity (PE) placements and mergers and acquisitions (M&A) in the past few years. Over 2008-2012, private equity (PE) investments in agri business have grown to 3.8 percent in 2012 from 0.2 percent in 2008. During the same period, venture capital (VC) investments in agri business grew from 0.2 percent to 1.6 percent of the total investments. Agri-logistics is the other area that has been attracting a lot of attention from investors with over $ 60 million invested just in 2012, the report pointed out.
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“Continuous financial and regulatory support from government, increasing participation of private and public corporates, and increasing exposure of foreign players is likely to spur investments in developing the infrastructure across the value chain right from farm inputs to the consumers,” KPMG India partner and retail head, Rajat Wahi, said.
Stating the agriculture sector had been suffering from major roadblocks, the report estimated that the loss of primary produce before reaching the market due to lack of proper handling, cleaning, sorting, grading and packaging facilities at the village level was 30-40 percent for agricultural products such as grains, fruits and vegetables.
According to the report, problems exist at each stage of the value chain. The unreasonably long supply chain results in a steep increase in the total cost owing to procurement, transit and other taxes and service charges levied at various layers. Consequently, the price received by the farmers is in the range of 25-60 percent of what the consumer pays.
Inaugurating the two-day Ficci conference, Ministry of Food Processing Industries secretary, Siraj Hussain, said the cold storage capacity in India was 25 million tonnes (mt) in 2010, while the requirement was around 61 mt. Since then, 10 mt capacity had been added but the deficit was still around 15 mt. The government was looking at investments from entrepreneurs to bridge this deficit without any subsidy.
On the other hand, he said, India exports of agricultural products stood at $ 30 million per annum and grew at 20 per cent on average in the last five years.
ITC group head-agribusiness, S Sivakumar, said the food processing industry was growing twice as fast as agriculture. He also pointed out that the job multiplier of the food processing sector was much higher than any other industry.
Ficci AP State Council chairperson, Sangita Reddy, said the conference would discuss critical issues like key constraints that were slowing the growth of the food processing sector and how they were being addressed.
Ficci AP co-chairman and conference general chair, JA Chowdary, said the next wave of industrial revolution could be achieved only by connecting innovation and technology to the complete value chain of agriculture and food processing.