India woos Gulf investors for food processing sector

DUBAI — The Indian food processing industry can offer strategic investment opportunities for Gulf-based investors as well as companies engaged in food exports and retailing, according to India's Minister for Food Processing Industries Subodh Kant Sahai.

By Issac John

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Published: Thu 22 Feb 2007, 8:42 AM

Last updated: Sat 4 Apr 2015, 8:29 PM

The minister who is in Dubai to take part in the Gulf Food Exhibition, said the government while opening its doors to the foreign investors also plans to invest heavily, up to Rs1000 billion by 2015, to develop the food processing industry infrastructure.

The minister said there is a dearth of food processing infrastructure despite the fact that India is the largest milk and livestock producer and one of the largest agri-product exporters in the world.

"The government is planning huge investments in the sector with increased foreign participation. The government is also providing bonus and tax reductions to the foreign players."

As per an estimate, the Federal government probably will allow 51 per cent foreign direct investment (FDI) in food retailing, covering dairy, poultry, marine, vegetables and fruits sectors by 2006 end. Presently, FDI permitted in the food-processing sector is 100 per cent.

Shai said his target is to boost the share of the processing industry which is currently at 6-7 per cent to 20 per cent. "The government is opening the doors of the food processing industry to international majors to improve the infrastructure, packing, cold storage and transportation. This will ultimately raise the country’s share in the global food processing industry, which is at present is just 1.5 per cent," the minister said at a reception held by Kamal Vachani, a Dubai-based non resident Indian businessman also the regional director of the Electronics & Computer Software Export Promotion Council. Also present were Indian Ambassador C.M. Bhandari and Consul General in Dubai Venu Rajamony along with a group of NRI businessmen.

Last year, Indian agri-food exports were to the tune of $9.2 billion. According to a market research company, the amount of money Indians spend on meals outside the home has more than doubled in the past decade, to about $ 5 billion a year and is expected to double again in about half that time. The industry is estimated to grow at 9-12 per cent, on the basis of an estimated GDP growth rate of 6-8 per cent, during the tenth five-year plan period. Value addition of food products is expected to increase from the current 8 per cent to 35 per cent by the end of 2025. Fruit and vegetable processing, which is currently around 2 per cent of total production will increase to 10 per cent by 2010 and to 25 per cent by 2025.

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