Post on 28-Nov-2014
description
FOOD PROCESSING INDUSTRY OF INDIA
By Group 2:
Neha
Souvik
Boby
Rahul
Vipul
FLOW OF PRESENTATION
Introduction Structural analysis of the industry Reforms 10th and 11th Five year Plans Budgets
INTRODUCTION
India -One of the largest food producers of the world
Output of the organized segment -US$ 34,827 million
Marine and Spices together contribute more than 70% of export earnings
Investment requirement is around US$ 15 billion
India is looking for investment in infrastructure, packaging and marketing
The Indian scientific and research talent -a knowledge source that can be tapped for advantage
INTRODUCTION (CONTD..) Increase in per capita income and purchasing
power. A largely untapped domestic market of 1210
Million Consumers 300 Million Upper and Middle Class consume
processed food Increasing number of working women. Well developed infrastructure and distribution
network. Fast expansion of electronic and print media. Annual growth rate of the industry is around 9-
12%. Employs around 2 million people (as of 2005)
CLASSIFICATION OF INDIAN FOOD AND AGRO PROCESSING INDUSTRY
PROSPECTS OF FOOD PROCESSING
Presently, a small percentage of farm produced processed into value added products
India needs US $ 28 Billion of investment to raise food processing levels by 8-10 %.
Rapid urbanization, increased literacy, changing life style, more and more women in workforce, rising per capita income leading to rapid growth and new opportunities in food and beverages sector
Indians spend about 50% of household expenditure on food items
STRUCTURAL ANALYSIS OF THE INDUSTRY
REFORMS
POLICY INITIATIVES AFTER LIBERALIZATION
Regulation and Control Most of the Processed food items exempted from the
purview of licensing. FDI up to 100% permitted under automatic route in
the food infrastructure. FDI permitted only in single brand product retailing. No industrial license required for almost all of the food
and agro processing industry. Use of foreign brand names freely permitted by the
government. MRTP rules and FERA regulations have been relaxed. Most of the items can be freely imported and
exported.
POLICY INITIATIVES AFTER
LIBERALIZATION(CONTD..) Fiscal Policy and Taxation
Reduction of custom duty rates . Excise and import duties substantially reduced. Reduction of corporate taxes and a shift towards
market related interest rates. Tax incentives for new manufacturing units for certain
years. India currency now fully convertible on current
account. Repatriation of profits freely permitted in most of the
industries
FISCAL INCENTIVES FOR FPI
Excise Duty rates On ice cream, pasta, yeast, etc abolished which
was 16% earlier. On ready to eat packaged food reduced from 16%
to 8% On food mixes reduced from 8% to 0%. On meat, fish and poultry products reduced from
16% to 8%. On aerated drinks reduced from 24% to 16%. On Reefer Vans (refrigerated motor vehicles)
reduced from 16% to 8%. Dairy machineries completely exempted. On unbranded edible preparations of oil increased
from nil to 8%.
FISCAL INCENTIVES FOR FPI(CONTD..)
Custom Duty Rates On food processing machinery and their parts
reduced from 7.5% to 5%. On Packaging Machine to be reduced from 15%
to 5%. On refrigerated vans reduced from 20% to 10%.
Income tax relief: Rebate allowed - 100% of profits for 5 years and
25% of profits for the next 5 years, for new industries.
POLICY INITIATIVES AFTER
LIBERALIZATION(CONTD..) Export Promotion
Setting up of FTZ and EPZ with all infrastructures.
Setting up of 100% EOU is encouraged. Capital goods may be imported at concessional
rate of import duty. Export linked duty free imports are also allowed. Units in EPZ/FTZ and 100% EOU can retain 50%
of foreign exchange receipts in foreign currency account.
50% of the production of EPZ/FTZ and 100% EOU unit saleable in domestic tariff areas.
FINANCIAL AND BANKING REFORMS (CONTD..) Direct finance to companies for agriculture and
allied activity of up to Rs1crore as PSL exposure as against the earlier exposure of Rs20 lakh.
Loans up to Rs.20 lakh to individuals for purchase/construction of dwelling unit per family
Provision of credit and other financial services and products of very small amounts not exceeding Rs.50,000 per borrower.
Education loans of up to Rs.10 lakhs for studies in India and Rs. 20 lakhs for studying abroad.
FINANCIAL AND BANKING REFORMS
The following items are eligible for classification as priority sector for lending by banks: - Fruit and vegetable processing industry· Food grain milling industry Dairy products Processing of poultry and eggs, meat products Fish processing· Bread, oilseeds, meals (edible), breakfast foods, etc Aerated water/soft drinks and other processed foods· Special packaging for food processing industries Technical assistance and advice to food processing
industries
FINANCIAL AND BANKING REFORMS (CONTD..) Indirect finance to small enterprises shall
include finance to any person providing inputs or marketing the output.
Direct finance to individual farmers, SHGs or JLGs of individual farmers without limit.
RECENT INITIATIVES TO ATTRACT FDI
National Highways Development Project underway to convert 14279 km of highways to 4/6 –lanes connecting: Four major cities of Delhi, Mumbai, Chennai and Kolkata North - South (Srinagar to Kanyakumari) and East–West
(Silchar to Porbandar) corridors Ports
Infrastructure for post harvest management, logistics (including cold chain), markets, retailing, are priority areas.
Plan to set up modern markets with auction centers.
Attracting FDI & private sector investment in infrastructure
AGRI EXPORT ZONES & FOOD PARKS
60 Agri Export Zones set up for end-to-end development for export of specific product from geographically contiguous areas
53 Food Parks approved to enable small and medium food and beverage units to set up and to use capital intensive common facilities such as cold storage, ware house, quality control labs, effluent treatment plant, etc.
10TH 5 YEAR PLAN
INFRASTRUCTURE DEVELOPMENT
Food Parks Value Added Centre
Integrated Cold Chain Facilities
Irradiation Facilities
Modernized Abattoir
QUALITY ASSURANCE, CODEX STANDARDS, R&D
• Grant In Aid to Central/State Organizations, IITs, Central Universities, Etc.
Setting Up/ Up gradation of Quality Control/ Food
Testing Laboratory
• Focus On following Standards:• HACCP, ISO 9000, ISO14000, Good Manufacturing,
Practices (GMP) and Good Hygienic Practices
Total Quality Management
• Following National/ International standards• encourage food processors to affix bar codes on their
processed food packagesBar Coding
• Establishing center of excellence around problem areas of Codex StandardsCodex Cell
• Grant In Aid to Central/State Organizations, IITs, Central Universities, EtcResearch and
Development
HUMAN RESOURCE DEVELOPMENT
Setting up of Food Processing
and Training Centre (FPTC)
Creation of Infrastructure Facilities for
running Degree/ Diplomas
Courses and Training
Programmes
Training Programmes sponsored by
Ministry of Food Processing Industries
Entrepreneurship Development
programme
SUPPLY CHAIN IMPROVEMENT & PROMOTION
• regular supply of raw material through contract farming
• incentives in the form of reimbursement
Backward Linkage
• ensuring regular market for their products by establishing linkages with the market
• Assistance for market survey, test marketing, brand building etc
Forward Integration
• Build awareness among the consumers• encourage marketing promotion campaign for
new products mix and brand name support• Dissemination of information: publications,
journals, press advertisements
Generic Advertisement
• seminars/workshops/symposiums• studies/ surveys/ feasibility reports to assess the potential and other relevant aspects
• association with APEDA, CFTRI, Industry Associations etc. will participate in national/ international exhibitions/ fairs
Promotional Activities
ROOT CAUSE ANALYSIS
Lack of entrepreneurial Awareness and wrong selection of projects
Delay in Financial assistance
Delay in providing basic infrastructure facilities like Power, Water, Road etc.
Weak forward linkages and lack of a developed market
Lack of strong project management capacity
Unrealistic project planning and appraisal
Lack of attention to integrating the supply chain
Neglect of marketing and brand building
Inability to synergize the potential private investments within the rural sector
The 11th Five year
plan.
MoFPI identified areas for growth.
Meat, poultry, fisheries & dairy
Fruits & Vegetables, Wine and Beer
Infrastructure Sub-group on Taxation &
FinanceR&D, HRD, Labs & Standards
Taking various schemes into consideration, a paradigm shift was needed in implementation methodology for targets under VISION 2015.
Continued 10th Plan scheme’s would be restructured in a PPP mode.
While providing an environment which stimulates growth.
• Financial Assistance, • Skill Development,• Entrepreneurship, • Institutional Development.
Integrated approach addresses
Proposals for the 11th Five Year Plan
Comparative summary of the
10th & 11th plan:
Parameter 10th plan 11th plan
Integrated food zones Supply Driven, Demand driven, Increased integration, FA, PPP.
Abattoirs Lessor FA Increased FA, Eligibility & project management agencies.
Cold Chain, Value Addition &Preservation Infrastructure
Lessor FA Increased FA + Inclusion of cold storage & horticulture produce.
Adoption ofTQM, ISO Standards, GMP, etc.
Lessor FA, only grants Increased FA, reimbursement & grants.
R&D in the processed food sector Lessor FA Increased FA
Food Corner / Food Court NA FA + IA
Safe food towns NA FA + IA
FA: Financial Assistance; IA: Implementation Agencies
10th v/s 11th plan
Estimated Impact on Employment & Growth
The proposal envisages a total
outlay of about Rs. 8,700 cr
Rs. 7,400 cr in infrastructure can
lead to Rs. 20,000 cr of investment in processing units.
Rs. 20,000 cr investment would lead to 2,800,000 additional jobs.
An investment of Rs. 20,000 cr would
lead to an aggregate production value of
Rs. 40,000 cr.
Growth rate of the Industry would
increase from 7% to 10.01%.
The income levels of the affected farmers are also expected to
go up by 20%
BUDGETS
MOFPI:- SET UP IN THE YEAR1988UNION MINISTER:-SHRI SHARAD PAWAR11 SUB- DIVISIONSSTRATEGIC ROLE AND FUNCTIONS ARE FALL UNDER THREE CATEGORIES
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
450.0
MINISTRY OF FOOD PROCESSING IN-DUSTRIES
Budget
IMPACT OF UNION BUDGETS ON FPI
•2001-02, excise duty reduced to 0 from 16% •2004-05, 100% tax reduction on profit for 5 years and 25% for next 5 years
Fruits and vegetable processing
industry
•2007-08, grant up to 33.33% on Plant & Machinery (maximum of Rs.75 lakhs ).
Food grain milling industry
•2004-05, Excise duty on fish processing has been reduced from 16% to 8%.•2006-07, Excise Duty has been waived on fish processing.
Marine product industry
•2004-05, Excise duty on meat and poultry has been reduced from 16% to 8%•2006-07, Excise Duty has been waived on meat and poultry
poultry and eggs, meat and meat
products
•2004-05, Excise duty of 16% on dairy machinery has been reduced to 0%•2006-07, Excise Duty has been waived on condensed milk and ice cream•2008-09, Customs duty on bactofuges reduced from 7.5 % to 0%
Dairy products industry
•2003-04,excise duty on biscuits, boiled sweets, etc has been reduced from 16% to 8%•2007-08,Excise duty on biscuits reduced from 8% to 0% (< Rs100/1kg)•2007-08, ready to eat packaged foods fully exempt from excise duty.
Bread, biscuits and other ready to eat food products
•2004-05, Excise duty on food-grade hexane has been reduced from 32% to 16%. •2005-06, Excise duty of Re 1/kg on refined edible oil abolished.•2007-08, Custom duty on sunflower oil (crude) reduced from 65% to 50% .
Edible oil industry
IMPACT OF UNION BUDGETS ON FPI
•2003-04, excise duty reduced from 32% to 24%•2006-07, Excise Duty reduced from 24% to 16%
Aerated waters / soft drinks.
•2006-07, duty on packaging machines is reduced from 15 % to 5 %. •2008-09, Excise duty reduced on specified packaging material and packing paper to 8%
Packaging for food processing industries
•2001-02, Automatic approval for foreign equity upto 100% is available •2003-04, customs duty on refrigerated truck has been reduced from 25% to 20%•2005-06, Customs duty on refrigerated vans reduced from 20% to 10%•2005-06,To ensure availability of credit:- FPI included in the list of priority sector for bank lending•2005-06, NABARD has created a refinancing window with a corpus of Rs.1000 crore•2007-08, Custom duty on food processing machinery reduced from 7.5% to 5%•2008-09, fund of Rs 5, 000 cr in NABARD to enhance its refinance operations•2010-11, External commercial borrowing facility available to the food processing industry
Assistance to food processing
industry
IMPACT OF UNION BUDGETS ON FPI
THANK YOU