INDIAN FOREIGN TRADE

prospects of Export of Processed foods from India

Group 8 Pulkit Monga

Pratika Chaturvedi

Raghav Agarwal

Sharmila Jayaram

Stuti Arora

Vaishali Sangwan

Contents

FOOD PROCESSING INDUSTRY...............................................................................................................4

MAJOR FOOD PROCESSED ITEM EXPORT OF INDIA...............................................................................6

MARINE PRODUCTS...............................................................................................................................8

Market Structure...............................................................................................................................8

Export Trends....................................................................................................................................8

Major items of exports......................................................................................................................8

EXPORT Promotion prospect.............................................................................................................9

Future Prospects for Marine Products Export Industry.....................................................................9

Poultry.................................................................................................................................................11

PROSPECTS: India’s participation in the world trade of poultry......................................................12

Dried & Preserved Vegetable..............................................................................................................13

GLOBAL MARKET.............................................................................................................................13

MAJOR EXPORTING NATIONS FOR FROZEN PRODUCTS..................................................................14

FUTURE PROSPECTS.........................................................................................................................14

GOVERNMENT INTIATIVE....................................................................................................................15

Schemes Of The Government..........................................................................................................16

Schemes for Market Development..............................................................................................16

Schemes for Infrastructure Development...................................................................................16

Promotion of Quality and Quality Control...................................................................................16

Schemes for Research and Development....................................................................................16

PROBLEMS...........................................................................................................................................17

INFRASTRUCTURE............................................................................................................................17

CERTIFICATION................................................................................................................................17

SPS Problem.....................................................................................................................................17

Subsidy............................................................................................................................................17

Non Tariff Barrier.............................................................................................................................17

Bureaucratic Hurdles.......................................................................................................................17

Lack of food testing lab in India.......................................................................................................17

What needs to be done ?....................................................................................................................18

BY GOVERNMENT............................................................................................................................18

BY EXPORTER...................................................................................................................................18

Conclusion...........................................................................................................................................19

INDIAN FOOD PROCESSING INDUSTRY

What is Food Processing?

Food processing is the set of methods and techniques used to transform raw ingredients into food or to transform food into other forms for consumption by humans or animals either in the home or by the food processing industry. Food processing typically takes clean, harvested crops or butchered animal products and uses these to produce attractive, marketable and often long shelf-life food products. Similar processes are used to produce animal feed.

BENIFITS

Mass production of food is much cheaper overall than individual production of meals from raw ingredients. Therefore, a large profit potential exists for the manufacturers and suppliers of processed food products. Individuals may see a benefit in convenience, but rarely see any direct financial cost benefit in using processed food as compared to home preparation. Poor quality ingredients and sometimes questionable processing and preservation methods detract greatly from the overall benefit gained by individual consumers.

More and more people live in the cities far away from where food is grown and produced. In many families the adults are working away from home and therefore there is little time for the preparation of food based on fresh ingredients. The food industry offers products that fulfill many different needs: From peeled potatoes that only have to be boiled at home to fully prepared ready meals that can be heated up in the microwave oven within a few minutes.

Benefits of food processing include toxin removal, preservation, easing marketing and distribution tasks, and increasing food consistency. In addition, it increases seasonal availability of many foods, enables transportation of delicate perishable foods across long distances, and makes many kinds of foods safe to eat by de-activating spoilage and pathogenic micro-organisms. Modern supermarkets would not be feasible without modern food processing techniques, long voyages would not be possible, and military campaigns would be significantly more difficult and costly to execute.

Modern food processing also improves the quality of life for people with allergies, diabetics, and other people who cannot consume some common food elements. Food processing can also add extra nutrients such as vitamins.

Processed foods are often less susceptible to early spoilage than fresh foods, and are better suited for long distance transportation from the source to the consumer. Fresh materials, such as fresh produce and raw meats, are more likely to harbour pathogenic micro-organisms (e.g. Salmonella) capable of causing serious illness.

FOOD PROCESSING INDUSTRY

The food processing industry provides vital linkages and synergies between industry and agriculture. The Food Processing Industry sector in India is one of the largest in terms of production, consumption, export and growth prospects. The government has accorded it a high priority, with a number of fiscal relief and incentives, to encourage commercialization and value addition to agricultural produce, for minimizing pre/post harvest wastage, generating employment and export growth. India's food processing sector covers a wide range of products fruit and vegetables; meat and poultry; milk and milk products, alcoholic beverages, fisheries, plantation, grain processing and other consumer product groups like confectionery, chocolates and cocoa products, Soya-based products, mineral water, high protein foods and so on. Earlier, food processing was largely confined to the food preservation, packaging and transportation, which mainly involved salting, curdling, drying, pickling, etc. However, over the years, with emerging new markets and technologies, the sector has widened its scope. It has started producing many new items like ready-to-eat food, beverages, processed and frozen fruit and vegetable products, marine and meat products, etc. It also include establishment of post-harvest infrastructure for processing of various food items like cold storage facilities, food parks, packaging centres, value added centres, irradiation facilities and modernized abattoir. India has a strong agricultural production base with diverse agro-climatic conditions and arable land of 184 million hectares. It is one of the major food producers in the world and has abundant availability of wide variety of crops, fruits, vegetables, flowers, live-stock and seafood. India produces annually 90 million tonnes of milk (highest in the world); 150 million tonnes of fruits and vegetables (second largest); 485 million livestock (largest); 204 million tonnes of food grains (third largest); 6.3 million tonnes of fish (third largest); 489 million poultry and 45,200 million eggs. As a result, Indian food processing industry has become an attractive destination for investors the world over. The size of the semi-processed and ready to eat packaged food industry is over Rs. 4000 crores (US $ 1 billion) and is growing at over 20%.In short, India has the following advantages in the Food Processing Sector:

India is one of the largest food producers in the world India has diverse agro-climatic conditions and has a large and diverse raw

material base suitable for food processing companies India has huge scientific and research talent pool A largely untapped domestic market of 1000 million consumers 300 million upper and middle class consume processed food 200 million more consumers expected to shift to processed food by 2010 Well developed infrastructure and distribution network Rapid urbanization, increased literacy, changing life style, increased number of

women in workforce, rising per capita income- leading to rapid growth and new opportunities in food and beverages sector

Strategic geographic location (proximity of India to markets in Europe and Far East, South East and West Asia)

Market TrendsEmploying over 1.6 million people, India’s food processing industry contributes 6.3% to the GDP and 16% to exports and 6 per cent of total industrial investment. Food retail accounts for 26 per cent of India’s GDP and is growing at a compounded annual growth rate of 7-8 per cent. At present, the food processing segment holds a 32% share of India’s booming food industry. Exports of processed food have grown at over 190% between 2002-03 and 2006-07, increasing from $6.98 billion in 2002-03 to $20.51 billion in 2006-07. FDI inflows in the food sector have been high and according to estimates, they are likely to touch $325 million by 2009.The market size for processed foods is pegged at $102 billion, with the potential to grow by 10% to $330 billion by 2015. India, with the second largest arable land area, is one of the key food producers in the world. The Indian processed food industry ranks fifth in size in the country. It ranks first in the world in production of cereals and milk , second in production of fruits, third in vegetable production, seventh largest producer of fish in the world, ranked second in inland fish production and is among the top five producers of rice, wheat, groundnuts, tea, coffee, tobacco, spices, sugar, and oilseeds. It is the second largest exporter of rice and fifth largest exporter of wheat in the world.The country produces over 500 million tonnes of agricultural, horticultural and dairy produce annually, thus making it one of the world's largest food producers. However, the country’s food processing industry is in a nascent stage. Only around 2% of fruits and vegetables are processed, and the figure stands at 15 per cent for milk, 26% for marine, 6% for poultry and 20% for buffalo meat, as against 60-70% of the overall food production in developed countries. Milk and milk products contribute to nearly 17% of the country’s total expenditure on food. India has 53% of world’s buffalo, 23% of sheep and 842 million poultry (6th largest in the world) India is a largely untapped domestic market of over one billion consumers of whom 300 million consume processed and packaged foods while an additional200 million are expected to shift to processed food consumption by 2010. Moreover, the food processing industry has been declared a Priority sector in the country. In 2007-08, food grain production in India had registered a 4.6 per cent growth with 227.32 million tonnes as against 217.28 million tonnes in 2006-07, according to estimates by the agriculture ministry.The output of coarse cereals in 2007-08 was 39.67 million tonnes, 17 per cent higher than the 33.92 million tonnes in the previous fiscal. The total output of oilseeds is estimated to have risen to a record 28.2 million tonnes, about 16 per cent higher than the 24.29 million tonnes in 2006-07. The production of pulses has risen to 15.19 million tonnes, registering a one year growth of 7 per cent, and touching a new high.In the Financial Year '08, Indian food processing industry logged an impressive growth rate of 18%. India currently produces about 50 million tonnes of fruit (about 9% of the world's production) and about 90 million tonnes of vegetables (11% of the world's production).The turnover of the total food market is approximately Rs.250, 000 crores (US $ 69.4 billion) out of which value-added food products comprise Rs.80, 000 crores (US $ 22.2 billion).

MAJOR FOOD PROCESSED ITEM EXPORT OF INDIA

India can become one of the largest fruit and vegetable exporters in the world and can equally be a large importer given its demographic diversity. This strong footing in agriculture provides a large and varied raw material base for food processing.

There should be technology up gradation, quality management, firm adherence to export commitments and acquisition of appropriate negotiation skills. Many non-traditional vegetables mainly processed & gherkins and others like asparagus, celery, bell pepper, sweet corn, green and lime beans and organically grown vegetables are also being increasingly exported.

The Indian food –processing industry is primarily export oriented. India’s geographical situation gives it the unique advantage of connectivity to Europe, the Middle East, Japan, Singapore, Thailand, Malaysia and Korea. One such example indicating India’s location advantage is the value of trade in agriculture and processed food between India and Gulf region. Products that have growing demand in the export market are pickles, chutneys, fruit pulp, canned fruits and vegetables, concentrated pulps and juices, dehydrated vegetables and frozen fruits and vegetables along with processed animal-based products.

India's exports of agricultural and processed food products in 2007-08, has grown by 38 per cent, which, in absolute value terms, is US$ 6.59 billion, against US$ 4.79 billion in 2006-07. Below is the table wgich shows India major processed food export (Quantity in MT,Value in lakh)

2006-07 2007-08 2008-09

PRODUCT Qty Value Qty Value Qty Value

PROCESSED FRUITS AND VEGETABLES

DRIED AND PRESERVED VEGETABLES 119270.43 42754.17 125726.28 42993.81 147861.21 49641.51

MANGO PULP 156835.51 50582.79 166752.17 50968.51 173013.6 75298.9

OTHER PROCESSED FRUITS AND VEGETABLES 318067.57 95550.82 311756.29 96281.65 387126.42 137179

PULSES 255084.47 78999.4 170614.39 54900.85 136880.08 54232.5

Total 849257.98 267887.18 774849.13 245144.82 844881.31 316351.91

ANIMAL PRODUCTS

BUFFALO MEAT 494506.3 321374.6 483478.29 354978.47 462749.62 483970.99

SHEEP / GOAT MEAT 5777.52 6587.23 8908.72 13409.96 37790.65 49336.94

POULTRY PRODUCTS 711245.67 31817.08 1355246.31 44108.55 1057016.47 42205.8

DAIRY PRODUCTS 45371.84 43457.8 69415.44 86656.36 70146.77 98086.06

ANIMAL CASINGS 435.98 950.65 619.68 684.14 1823.72 884.32

PROCESSED MEAT 860.69 712.62 1245.47 1296.13 857.63 1014.4

NATURAL HONEY 8135.6 6091.63 12231.19 9329.64 15587.53 14896.37

SWINE MEAT 1523.47 865.3 1710.89 2463.69 817.82 917.23

Total 1267857.07 411856.91 1932855.99 512926.94 1646790.21 691312.11

OTHER PROCESSED FOODS

GROUND NUTS 251428.65 79846.01 269587.64 105407.83 297890.37 123900.93

GUARGUM 189304.36 112579.2 211166.56 112574.57 258567.56 133898.53

JAGGERY AND CONFECTIONERY 455935.85 87346.11 2408129.7 281068.2 1467904.9 200482.09

COCOA PRODUCTS 3412.21 4011.65 4979.27 4225.84 6831.9 8403.91

CEREAL PREPRATIONS 111123.05 59880.36 135962.85 67735.48 206928.49 110092.5

ALCOHOLIC BEVERAGES 50771.79 22194.22 59614.33 33856.2 56152.9 54254.2

MISCELLANEOUS PREPARATIONS 77426.45 33687.72 130760.28 47446.61 139637.31 59172.63

Total 1139402.36 399545.27 3220200.63 652314.73 2433913.43 690204.79MARINE PRODUCTS

Quantity (in MT) Value (in Crores)

602835 8,607.94

MARINE PRODUCTS

Market Structure

Before 1960, the markets of Indian marine products were largely confined to neighbouring countries like Sri Lanka, Myanmar (formerly Burma), Singapore etc. when our exports were dominated by dried items. This situation changed with the development of technology/modernization; dried products gave way to canned and frozen items. The product shift also resulted in market shift. More sophisticated and affluent markets viz. Japan, USA, Europe, Australia, etc. became our important buyers. Several seafood processing units with modern machinery for freezing and production of value added products were set up at all important centers in the country for export processing.

For a long time USA was the principal buyer for our frozen shrimp but after 1977, Japan emerged as the principal buyer of the product, followed by the West European countries. Japan retained its position till 2001-02 as the single largest buyer for our marine products accounting for about 31% in the total export value. During the year 2002-03 and 2003-04 USA emerged as the single largest market for our marine products. During the year 2004-05, the European Union has collectively become the largest importer of Indian marine products and it retained its position since 2005-06. During 2008-09 European Union (EU) continued as the largest market with a percentage share of 32.6% in $ realization followed by China 14.8%, Japan 14.6%, USA 11.9%, South East Asia 10%, Middle East 5.5% and Other Countries 10.6%. May be due to the prevailing economic recession export to EU, USA and Japan declined 6.08%, 10.18% and 8.80% respectively, all other countries increased their import of marine products from India during the year.

Export Trends

The export of marine products has steadily grown over the years - from a mere Rs.3.92 crore in 1961-62 to Rs. 8607.94 crore in 2008-09. Marine products account for approximately 1.1 % of the total exports from India.

Major items of exports

Frozen shrimp continued to be the single largest item of export in terms of value accounting for about 44% in the total export earnings. In terms of quantity, fish accounted for the major share at 40% (shrimp 21%) as could be observed from the table below. About 85 species of shrimps are known to exist in Indian waters of which 55 species are reported either as commercially important or having considerable demand in the local as well as international

market. Among these Penaeus indicus, P.monodon, P. merguiensis are having high demand and are candidate species for cultivation

EXPORT Promotion prospect

40% increase in export to south east Asia as well as 59% increase in African and, South American export, While other sector are facing SPS and non trade barriers the barier faced by marine are comparatively less.

Future Prospects for Marine Products Export Industry Marine products have created a sensation in the world market because of their high health attributes. With the high unit value, seafood has been acclaimed as one of the fastest moving commodity in the world market. The world market for seafood has doubled within the last decade reaching US $49.32 billion mark India's share is 2.4%, dependence on shrimp as a product and is changing due to the increased attention given on other fishery resource like squid, cuttlefish, fin fish, etc. and penetrating into markets of Western Europe and South East Asia.Our export to Japan has increased from US$251.49 million of 1987-88 to US $ 641.68 million by 1997-98. In the comparable period export to Europe has increased from US$60.76 million to $113.80 million. Steady growth is anticipated during the coming years due to rapid expansion taking place in the production front through shrimp farming and introduction of several resource specific vessels to enlarge the marine fish landings.

 

Exim policy regarding marines product

1. Items permitted

(i) No Quantitative restrictions on export.

(ii) Licence under Foreign Trade Policy not required for import of 125 species/groups of fish, crustaceans, molluscus and other aquatic invertebrates covered under FREE policy in Chapter 3 of ITC (HS) classification of Export &Import items under the EXIM policy.

(iii) Import of five groups of live fish permitted under Restricted Policy (EXIM Code 0301)

(iv) Import of Whale Shark (Rhincodon types) and parts and products of the species is restricted.

2. Promotional measures

(i) Central assistance to States for development of critical infrastructure for export such as roads, inland container depots, container freight stations, Export Promotion Industrial Parks and for equity participation in infrastructure projects.

(ii) Encouragements to State Governments for setting up Export Zones.

(iii) Declaration of Towns of Export Excellence to encourage setting up of critical infrastructure for export production, encourage common service providers and facilitate availability of better technological services and integrate benefits under the other schemes of EXIM Policy for the units in such towns.

(iv) Market Access Initiative Schemes for encouraging increased marketing efforts by exporters/Brand promotion

(v) Schemes to promote the Concept of Total Quality Management.

3. Import for export production

(i) Advance authorization for duty free import of inputs for export production.

(ii) Duty free import authorisation (DFIA) Scheme

Scheme DFIA is issued to allow duty free import of inputs, fuel, oil, energy sources, catalyst which are required for production of export product. DGFT, by means of Public Notice, may exclude any product(s) from purview of DFIA. This scheme is in force from 1st May, 2006.

Entitlement Provisions of paragraph 4.1.3 (FTP)shall be applicable in case of DFIA. However, these Authorizations shall be issued only for products for which Standard Input and Output Norms (SION) have been notified. Pre-export Authorization shall be issued with actual user condition and shall be exempted from payment of basic custom duty, additional customs duty, education cess, anti-dumping duty and safeguard duty, if any. A minimum 20% value addition shall be required for issuance of such authorization.

(iii) Manufacturer exporters, merchant exporters tied to supporting manufacturers and service providers eligible for import of capital goods at 5% Customs duty linked to fulfillment of export obligation in 8 to12 years under EPCG Scheme.

4. EOU/EPZ/SEZ

(i) Scheme of 100% EOU/Export Processing Zone/Special Economic Zone for export production continues. No trading units permitted under the scheme.

5. PACKAGE FOR MARINE SECTOR

a. Duty free import of specified specialized inputs/chemicals and flavoring oils as per a defined list shall be allowed to the extent of 1% of FOB value of preceding financial years export. Use of these special ingredients for seafood processing will enable us to achieve a higher value addition and enter new export markets.

b. To encourage the existing mechanized vessels and deep sea trawlers to adopt modern technology for scientific exploitation of our marine resources in an eco-friendly manner and boost marine sector exports, it is proposed to allow import of monofilament long line system for tuna fishing at a concessional rate of duty.

c. The present system of disposal of waste of perishable commodities like seafood after inspection by a customs official is very cumbersome and leads to development of unhygienic conditions. To overcome this, a self removal procedure for clearance of waste shall be applicable, subject to prescribed wastage

Poultry

Poultry is one of the fastest growing segments of the agricultural sector in India today. While the production of agricultural crops has been rising at a rate of 1.5 to 2 percent per annum, that of eggs and broilers has been rising at a rate of 8 to 10 percent per annum. As a result, India is now the world's fifth largest egg producer and the eighteenth largest producer of broilers. The Potential in the sector is due to a combination of factors - growth in per capita income, a growing urban population and falling real poultry prices. Poultry meat is the fastest growing component of global meat demand, and India, the world's second largest developing country, is experiencing rapid growth in its poultry sector. In India, poultry sector growth is being driven by rising incomes and a rapidly expanding middle class, together with the emergence of vertically integrated poultry producers that have reduced consumer prices by lowering production and marketing costs. Integrated production, market transition from live birds to chilled and frozen products, and policies that ensure supplies of competitively priced corn and soybeans are keys to future poultry industry growth in India. There are number of small poultry dressing plants in the country. These plants are producing dressed chickens. In addition to these plants, there are five modern integrated poultry processing plants producing dressed chicken, chicken cut parts and other chicken products. These plants will manufacture egg powder and frozen egg-yolk for export.

Areas of Production: Over all, Tamil Nadu counts for maximum egg production. In Andhra Pradesh, Hyderabad is the city with maximum poultry and hatcheries. Besides the state of Andhra Pradesh,

Vishakhapatnam, Chittoor, Karnataka, Tamil Nadu, Maharashtra, Gujarat, Madhya Pradesh, Orissa and North Eastern States are the major egg contributorsIndia Facts and Figures : India’s export of poultry products has increased from Rs. 318.17 Crores in 2006-07 to Rs 441.09 Crores in 2007-08 .

Major Export Destinations (2007-08) Kuwait, Afghanistan, Oman, Japan, Denmark.

PROSPECTS: India’s participation in the world trade of poultry has so far been negligible Eggs and eggs-based products account for most of India’s poultry exports. Exports of hatching and table eggs have increased dramatically due to a higher demand from the Middle East and South-East Asian countries – exports of egg powder increased from a meagre Rs. 0.4 million in 1990 to more than Rs.500 million in 1996.

It will be noted that the middle east (Gulf) countries are one of the major importing countries. Considering comparative lower cost of poultry production and availability of cheaper skilled labour in India as compared to the developed countries, nearness of India to Gulf countries and a very large ethnic Indian population in these countries , India has a specific advantage to develop its poultry exports to these countries provide “high quality’ and superior product-presentation is ensured for Indian poultry products .

Low volumes for exports: According to a Kuwait based broiler Company, the demand in Gulf (West Asia) is 60000 tons of frozen chicken per month. In Kuwait ,the firm sells 1000 metric tons per month. One of the challenging problems faced by the Indian exporters so far is that the export demands are in huge quantities while the quantity available for export per lot from India is very small due to fragmented small sized farms with little or no facility for processing ,refrigeration and marketing with infrastructure for maintaining a cold chain during the transportation of products

Poultry has a potential for producing following value added products:-

Whole egg powder, albumen flakes, yolk powder, natural yellow pigment from yolk, lecithin, conalbumin and avidin from eggs used in pharmaceutical industry. Lysozyme, di-calcium phosphate from shell and shell membranes, chicken soup, chicken essence , nuggets, kababs, hot-dogs, frankfurters etc. Giblets, liver , and liver extract , deboned meat for airline industry, Feather meal , poultry byproduct meal from inedible portions as a source for poultry feed etc..

There are good investment opportunities in all above new innovative ventures.

Dried & Preserved Vegetable

India is the major producer of dried & Preserved Vegetable Like Preserved Onions, Cucumber & Gherkins, provisionally preserved, Mushrooms of the gensus agaricus, Other mushrooms and truffles, Green Pepper in Brine, Dried Truffles, Asparagus Dried, Dehydrated Garlic Powder, Dehydrated Garlic Flakes, Garlic Dried, Potatoes Dried, Grams, Grams Dal, Onion Prepared/Preserved etc. Many non-traditional vegetables mainly processed cucumber and gherkins and other vegetables produced like asparagus, celery, bell pepper, sweet corn, green and lime beans and organically grown vegetables are also being increasingly exported.

Varieties: The major varieties under Dried and Preserved Vegetables products are as follows Mushroom(Button Mushroom, Oyster Mushroom, Paddy straw mushroom and milky mushroom) Garlic (Agrifound White (G-41), Yamuna Safed (G-1), Yamuna Safed 2 (G-50), Yamuna Safed 3 (G-282), Agrifound Parvati (G-313) and Yamuna Safed 4 (G 323).

The individual products under this sub-head are as below: Preserved Onions Cucumber & Gherkins, Mushrooms of the gensus agaricus, Other mushrooms and truffles, Green Pepper in Brine, Dried Truffles, Asparagus Dried, Dehydrated Garlic Powder, Dehydrated Garlic Flakes, Garlic Dried, Potatoes Dried, Grams, Grams Dal .

Areas of Cultivation and Processing: The raw vegetables are typically grown in field conditions and are mainly grown in the states of jammu & kashmir, Himachal pradesh, hilly regions of north Uttar Pradesh, TamilNadu, Maharashtra, karnataka, Gujarat, Andhra Pradesh, Assam, Madhya Pradesh, Rajasthan, Punjab, Tripura, West Bengal and Orissa .

India Facts and Figures : India’s Export of Dried & Preserved Vegetables was Rs 429.94 Crores in 2007-08.

Major Export Destinations (2007-08) : Germany , USA, Bangladesh, France, Spain

GLOBAL MARKETThe global frozen fruits and vegetables market was around 14 million tonnes in 2005.This is expected to grow to 15 million tonnes by 2006 and to 17 million tonnes by 2010, growing at a stable rate of 3.26% per annum between 2001 and 2010.Europe is the largest market for frozen fruits and vegetables, with demand estimated to total 5 million tons in 2005. The market is projected to grow at an annual rate of 2.75% for the period 2001- 2010, to reach around 6 million tons by 2010. The European market is

estimated to account for 37.51% of world’s consumption in 2005 while US, the second largest market, is estimated to account for a market share 33.33% in 2005.

MAJOR EXPORTING NATIONS FOR FROZEN PRODUCTSChina, Thailand, New Zealand, Mexico Indonesia Morocco USA ,Saudi Arabia, Bulgaria , Canada , Chile Guatemala, EU

FUTURE PROSPECTSWorldwide market for Frozen Fruits and Vegetables escalated to 12 million tons in 2000 from 10 million tons in 1991, reflecting a CAGR of 2.45% over the analysis period 1991-2000. Europe emerged as the largest growing region accounting for 39.29% of the global market for frozen fruits and vegetables in 1991.. Frozen fruits and vegetables present a huge opportunity in Asia and Russia, as the markets are practically untouched by these product categories. Fresh Fruits and Vegetables still dominate the scene in these regions. In Europe a mixed trend is being witnessed. In countries like Germany, UK and Scandinavian countries, the growth is stagnating. However in Italy, France, Spain and Portugal a healthy above average growth rate is being experienced.As a part of trend, the product composition in the frozen fruits and vegetables category has also undergone a change. It has evolved from food in a raw form to prepared and processed foods. There is increasing demand for more and more consumer packs as compared to bulk packs earlier. Increased demand for consumer packs is directly related to the packaging industry as it requires convenient and attractive packaging as compared to the bulk packs.

COMPETITOR APPROACH Large acreage - The competitors use harvest combines for harvesting the produce

hence making the produce lower in cost and fresh as well. High Subsidies - Lots of subsidies are given by competing country’s governments

which make their products cost competitive. Low Inland transportation cost - Competing countries do not face the high Inland

transportation cost as compared to the Indian exporters. For e.g. in case of exporting peas, since most of the peas are grown in Punjab and Uttar Pradesh it costs approximately Rs 5-6 per kg to bring the produce to Mumbai port. This makes the export option unprofitable and unviable.

Image of the competing country is better as compared to India - Image of India is quite poor as a food processor. Hence, Indian produce has few takers and it is looked upon as that of low quality.

Good varieties – The competing countries grow varieties which ripen very fast. Good packaging techniques - Competitors have advanced packing techniques

making the product attractive. Huge investment in infrastructure - The competitors have good infrastructure to

support the seamless export. World class processing plant - The processing plants in competing countries have

much more capacity as compared to the Indian plants.

GOVERNMENT INTIATIVE

Ministry created for food processing as well as various department like ,apeda(agriculture and processed food export development authority) mpeda (for marine products) has been set up for the promotion of export activities

Most of the processed food items have been exempted from the purview of licensing under the Industries (Development & Regulation) Act, 1951,except items reserved for small-scale sector and alcoholic beverages; Food processing industries are included in the list of priority sector for bank lending in order to ensure easy availability of credit to them;Most of the items can be freely imported and exported except for items in the negative lists for imports & exports).

.

Free trade zones (FTZ) and export processing zones (EPZ) have been set up with all necessary infrastructure. Also, setting up of 100% Export oriented units (EOU) is encouraged in other areas. They may import free of duty all types of goods, including capital foods.

Units in EPZ / FTZ and 100% Export oriented units can retain 50% of foreign exchange receipts in foreign currency accounts.

50% of the production of EPZ / FTZ and 100% EOU units are saleable in domestic tariff area.

All profits from export sales are completely free from corporate taxes

The government has established of mega food parks in different parts of the country, which will be run by a Special Purpose Vehicle created by all the stakeholders to create an integrated value chain from the farm gate to the consumer

Another strategic initiative taken in India is to establish cold chain facilities including refrigerated vans all over the country, to provide relief to the farmers, to enhance the shelf life of their product and retain its qualitysecond hand ones in the food processing sector

Capital goods, including spares up to 20% of the CIF value of the Capital goods may be imported at a concessional rate of Customs duty subject to certain export obligations under the EPCG scheme. Export linked duty free imports are also allowed.

100% FDI permitted on automatic route Customs duty on food processing machinery and their parts is being reduced from 7.5% to 5% a, dairy machineries are completely exempted from Central Excise Duty. Custom duty on Packaging Machine to be reduced from 15% to 5%.

Schemes Of The Government

Schemes for Market Development financial assistance in Packaging (Activity for development of packaging standards and design, Up-gradation of already developed packing standards)

Assistance for conducting feasibility studies etc.50% of the total cost subject to a ceiling of Rs 5.00 lakh per beneficiary in accordance with MDA/MAI guidelines

Brand publicity (Product specific Indian Brands) through advertisement etc. Brand promotion for those brands which are of Indian origin , advertisement in international print/electronic media, website development etc.(25% of the total cost subject to a ceiling of Rs 50.00 lakh in a year on reimbursement basis subject to auditing of the accounts. Not to be extended to an exporter beyond 3 consecutive years. Norms for providing assistance would be framed by APEDA)

Schemes for Infrastructure DevelopmentEstablishment of common infrastructure facilities by APEDA or any other Government or Public Sector agency like Airport Authority of India or Port Trust etc.(100% grant in aid)

Assistance for purchase of specialised transport units for animal products horticulture and floriculture( sector 25% of the cost subject to a ceiling of Rs.2.50 lakh per beneficiary.)

Promotion of Quality and Quality ControlAssistance etc. for setting up/strengthening laboratories 25% of the cost subject to a ceiling of Rs 20 lakh per beneficiary. Quality standards should be adhered to for availing the subsidy

Up gradation and recognition of labs for export testing (50% of the cost for private labs;100% for the Central Government labs)Assistance for up gradation of technical and managerial skills through on spot training in India/abroad 100% of cost of the programme organized by APEDA subject to a ceiling of Rs 1.5 lakh per representative (not more than three from single organization)

Schemes for Research and DevelopmentAssistance for technology development through R & D efforts with research institution under Government/Public Sector (100% in case of APEDA)Assistance to recognized exporters associations of APEDA to support relevant research and development for export enhancement through R & D organizations in co-operative/private sector (Upto 50% of the total cost of the project subject to a ceiling of Rs 20 lakh(

PROBLEMS

The main problem area of Indian exporters is that there is lack of information flow in the value chain regarding product specifications, packaging, labelling, and qualitystandards as per the International demand

INFRASTRUCTURE there is lack of infrastructure it is estimated that half of the food is wasted in transportation besides this there are lack of cold storage facilities etc

CERTIFICATION to export to other countries especially in developed countries an exporter need to obtain certificate from importing country agency as developed countries don’t accept certification of quality issued by Indian agencies

SPS Problem: How do you ensure that your country’s consumers are being supplied with food that is safe to eat — “safe” by the standards you consider appropriate? And at the same time, how can you ensure that strict health and safety regulations are not being used as an excuse for protecting domestic producers? An agreement on how governments can apply food safety and animal and plant health measures (sanitary and phyto sanitary or SPS measures) sets out the basic rules in the WTO. Problem for example in case of Japan we have Stringent plant quarantine procedures including zero tolerance for the insects and pests which already exist in Japan Ban on the import of fresh grapes from India on the basis of report of the incidence of oriental fruit fly on grapes in Pakistan

Subsidy - developed countries provide large amount of subsidy to there farmers (which reduce the cost for food processing) also to the agro industry in USA the average subsidy per egg is around 50cents while same in India is around 40paise

Non Tariff Barrier other than SPS there are also the problem of market access to protect the domestic producer for example in Russia we have limited Market Access for Egg products

Bureaucratic Hurdles food processing industry is cover in more than 4 ministries and for setting food processing unit you have to take approval of 20 different ministries and follow age old labour laws

Lack of food testing lab in India there are very limited food testing lab in india and moreover lack of sprite to get there food tested by exporters

What needs to be done ?

BY GOVERNMENT

infrastructure improvement in the areas of cold storage etc Integration of various schemes no. of ministries have the same schemes

Running hence there is duplication of effort Promote setting up of food testing laboratory Real time update to exporter regarding changes in rules of importing countries Increase in allocation of money allotted MOFPI(ministry of food processing ) Development of infrastructure like road, port etc Improving Image of India’s food through strict quality check Better representation in WTO for reduction in subsidy and SPS removals

BY EXPORTER

integrating supply chain according to importing countries requirement Adoption of international standards for production and processing of Food Increasing production through application of advanced technologies in the processing

of dairy products; Better and improved packaging, Improving cold storage and transportation capacity, Developing an efficient export marketing network to optimize the production and

exports; integrating supply chain according to importing countries Setting up of more quality control laboratories for testing the quality of dairy products Self Regulation should also be there on the part of exporter so that don’t send food of

bad quality Brand Building effort should also be undertaken by exporters as there are no many

Indians brand

Conclusion

India is one of the key food producers in the world. The food processing sector in India is of the largest in terms of production, consumption, growth and export prospects. The food processing sector contributes 6.3% to GDP and 16% to exports

However India share in processed food has been negligible mainly due to the fact as identified by lack of infrastructure, Non Tariff Barrier Faced by our exporter (like subsidy, SPS) and image of India as low quality food processor

Food processing due to changes in the preference of eating habits industry is growing exponentially and India surely has lot of potential in this sector a vast availability of raw material adding to that low cost of production thus It has a comparative advantage in production of processed food and can become leader in export of processed food

To achieve this not only government(by ensuring barriers are minimal, and by providing adequate infrastructure ) but exporter (by ensuring quality and standard of food ) has to contribute