PRESENTATION:

FOOD LOGISTICS & SUPPLY CHAIN IN

INDIA: OPPORTUNITIES FOR

INVESTMENT AND COLLABORATIONS

- Dipankar De, Partner, D&B Tangram

August 19th, 2015

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Meet Dipankar…

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• Dipankar has around 13+ years of experience in policy

research & advisory and strategy consulting for both private

as well as government sector.

• He has been involved in assignments relating to business

growth & expansion, strategic planning, competition & risk

analysis, regulations & policy analysis, competitiveness &

innovation, & macroeconomic forecasting, etc.

• He has diverse experience of working on assignments across Middle East, CIS

and Africa.

• He is currently leading the Government Advisory Practice and Business Advisory

Practice of D&B Tangram. He is responsible for the overall practice development,

business development & execution of projects for both the practice areas.

About D&B Tangram Advisory Services

• Dun & Bradstreet (D&B) Tangram, a trademark licensee of D&B, actively

engaging & partnering with business organizations, regulators & policy

makers, and banks & financial institutions, across their management

decision process to identify and leverage opportunities, address challenges

and create sustainable value.

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Market

Research

Financial

Research

Economic & Policy

Advisory

Strategic & Growth

Advisory

Spot Opportunity

Understand behaviour

Assess Viability

Assess Value Creation

Partner Policy Making

Decipher Policy Impact

Enter, Consolidate &

Grow

Essential elements of our offerings:

Layout of the Presentation

Advantage India

A Snapshot of the Indian Food Supply Chain

Why Invest Now?

Our Study

Opportunities for Investment and Collaboration

Your Feedback

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Advantage India

• India grew by 7.3% in 2014 & is projected to grow at 7.5% in 2016 as compared to 6.3% for China

Rapid GDP Growth Rate

• Population of 1.21 billion

• Private consumption expenditure is around 60% of the GDP

• Almost 30% of the total consumption expenditure is on food and grocery

• Food and grocery is the largest with 60% share in the total retail market

Large Consumer Base

• Largest producer of milk, mangoes and bananas, among others

• Second largest producer of all fruits and vegetables taken together

• Third largest producer of fish

Large Raw Material Base

• World’s largest youth population, 350 mn people in the age group of 10-24

• Large number of people in the working age group – around 500 mn

• Abundance of skilled, English speaking workforce at a lower cost compared to Western economies

Favourable Demographics

• Land connectivity within Asia and several sea ports (>200) connecting to ROW

• Logistics industry is expected to grow over 12% by 2020

• International cargo: 95% by volume and 75% by value is carried by sea

• Ports capacity 1,247 million tonnes, doubling by 2017

Location and Logistics Advantage

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Typical Indian Food Supply Chain: Is Complex!

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ConsumersFarmers Aggregators

Ripening Chamber

Processing Units

Mandi

Warehouses or

Cold StoragesRetailers

Village Level

Consolidation

Cash & Carry

Importers

Pack-houses

E-commerce

Market Yard

Food Corporation of

India

Public Distribution

System

Trade Agencies /

Agents

In house processing unit

Structural Issues in the Supply Chain: Leading to

Opportunities!

• At present, post-harvest losses of 18 to 40 per cent for several commodities, including

perishables

Fragmented, inefficient logistics system

and long supply chain

• Multiple inefficient handling

• Inadequate cold chain, transportation,

storage & packaging methods

• Institutional drawbacks & regulatory

bottlenecks

• Lack of adequate processing facilities

• Ministry of Agriculture, DAC, NHM,

NHB, NCDC; Ministry of Food

Processing Industries (MOFPI), NMFP;

Ministry of Commerce, APEDA

• State Governments/ Ministries

• Industry & Industry Associations

Several coordinated & focused initiatives

during the last 2 decades

Substantial improvement of capacities, investment/ business opportunities in the supply chain

Why Invest Now?

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• Policy focus - Food Processing and Food Supply Chain is focus area of the present government,

which took over in May 2014

• Government Initiatives and Schemes

• Make in India and Serve from India Campaigns

• Digital India

• Smart cities/ consumption hubs

• Economic corridors and regional linkages within SAARC and SARRC with ASEAN

• Industrial and Economic Corridors like DMIC and BMEC

• Golden Quadrilateral, North-South & East-West Corridors already functional

• Promotion of clusters, Mega Food Parks, SEZs, Free Trade Warehousing Zones (FTWZ),

dedicated logistics and food parks

• Private Freight Terminals which would integrate rail transport

• Market access reforms

• Liberalisation of FDI in Railways: Permitted 15 private train container operators to run

container lines

• Institutional restructuring - Establishment of new Ministry for Skill Development and

Entrepreneurship , focus of NITI Aayog on supply chain development and agriculture

Our Study: Enhancing India’s Competiveness through

Logistics and Supply Chain Efficiency

• Improve understanding among the UK businesses about Indian policies on logistics and supply chain

• Insight into the expectation shortfall regarding the Indian policies and market access barriers

• Identify joint collaboration & partnership opportunities and help formulate go-to-market strategies

• Provide inputs into the logistics and trade facilitation negotiations under the India-EU BTIA

Improve global competitiveness of

Indian manufacturing

Support the ‘Make in India’

Campaign

Encourage foreign investments

across selected areas

Facilitate linkages in India’s logistics &

supply chain to:

Objective

Cold Chain

Storage & Warehousing

Packaging Technology

R&D in Logistics & supply chain

Skill development in logistics & supply chain

5 Key Areas

Sector Overview: Cold Chains

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Cold Chain Sector (1/2…)

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Industry Overview

• Current market size is $ 3.34

bn as of 2011-12

• Growing at a CAGR of 28%

- expected to reach $11.6 bn

by 2017

• Highly fragmented market

• > 3,500 companies

• Organised players ~

8-10%

• Only a few companies

provide complete end to end

solutions

• Very few foreign companies

have presence in Indian

markets

• Cold storages growing at 13%

• Organised sector growing ~ 20% CAGR

• Only 11% of the produce can be stored with current capacity

• Key growth drivers

• Growth in organised retail, e-commerce and

• rising export demand

• Will benefit from GST

• In the past subsidies were directed to cold storage – nearly

reaching the required capacity

• ~ 104 mn MT of perishables is transported and only 4

million MT is through reefers!

• ~ 80% of refrigerated trucks used for transportation of

milk and dairy products

• Significant shortfall in capacity - Need for more

investments

• New focus area as identified by the NCCD (National

Centre for Cold Chain Development)

• Shortage of Primary Processing Centre & Cool Pack

Houses

• Focus area of NCCD for future incentives and schemes

Cold

Storage

Refer

Vehicles

Others

Status of Various Elements in Cold Chain

Cold Chain Sector...(2/2)

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• 100% FDI allowed in cold chains

• Subsidies and tax benefits by central and state

government

• Establishment of National Centre for Cold Chain

Development

• Schemes for Food and Logistics Parks

• Infrastructure status given to cold chains so that

they can access bank loans

• Viability Gap Funding (VGF) upto 40% of the cost

• Concessional land from state governments

• Integrated cold chain with the implementation of

GST

• Clean technology, energy efficiency and cost

saving technology

• Refrigerated vehicles, small cool pack houses

and sorting and grading centres

• Cold storage and logistics park along economic

corridors using renewable energy

• Technologies related to tracking and monitoring

of vehicles

• Development of integrated cold chain networks

linking farms and processing units across

economic corridors and golden quadrilateral –

start working with state government

• Multimodal cold chain transport

• North-East development and linkages with

ASEAN

What has Government Done so far? Future Areas for Private/Foreign Investment -

Opportunities for the UK companies

What are the Concerns? Way Forward

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No short term gains - it takes almost 5-7 years to breakeven on investment

Slow Pace of Development of Organised Retail and FDI restriction in retail

Slow Pace of GST

Being from a developed country like the UK, the companies may not be able to avail subsidies

• Make long-term Plans

• Start working with MNCs and large domestic players in food processing and retail and food and

grocery e-commerce companies, understand their requirements and gaps in food supply chain

• Work with state governments like Maharashtra, Gujarat, Andhra Pradesh

• Work with the Ministry of Food Processing Industries for investment in Punjab

• Work with APEDA for export-linked infrastructure projects

• Work with NCCD for new and innovative technology and development of North-East India

• GST will come very soon and companies from countries such as Germany and Australia have

already done the feasibility study to develop cold chain grids and networks

• Undertake feasibility study along the corridors and national highways connecting major ports &

production centres

• Work with NCCD and Ministry of Agriculture on Ease of Doing Business - Select the Right

State

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Sector Overview: Storage &

Warehousing

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Storage & Warehousing: Market Overview (1/2…)

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Storage & Warehousing

Industrial /

Retail

Warehousing

~55%

Container

handling and

storage

~14%

Cold Stores

~16%

Agri

Warehousing

~15%

Overview

• Size - USD 9 billion

• Expected Growth: 10% annually

• Growth Drivers: Rise in international

trade, incl. agri-exports, organised

retail

• Market is highly fragmented, with

warehouses in every state and hub

and spoke model is hardly developed

• Increase in private players have

made the sector more competitive

supported by modern technology

and automation companies (like

Gandhi Automations, Grey Orange)

• Focus on becoming integrated

supply chain providers

• Offering value-added services,

allied services along with

warehousing space

• Size: USD 1.4 billion

• Growth: 10 – 12%

• Capacity: 110-120 million MT

Public

Sector

70%

Private /

unorganised

30%

• Food Corporation of India

• Central Warehousing Corporation

• 17 State Warehousing Corporations

• Adani Agri Logistics

• National Bulk Handling Corporation

• Shree Shubham Logistics Ltd., etc.

Storage & Warehousing (2/2)

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• Unlike Cold Chain, which does not have a sector

specific regulation, Storage and Warehousing is

regulated by Warehousing (Development and

Regulatory) Act, 2007

• 100% FDI is allowed in this sector

• Incentives and Income tax holidays

• Free Trade Warehousing Zones gets SEZ related

incentives

• Grants and Incentives under other policies such as

Mega Food Park Scheme

• Many states have reformed APMC and allowed

private terminal markets

• Agri-Warehousing is covered under priority sector

lending by the Reserve Bank of India (RBI)

• Development of hub and spoke and large

automated-state-of-the-art storage & warehousing

facilities with the implementation of GST

• Storage and warehousing facilities can be

constructed in the railway hubs/stations

• Clean technology, energy efficiency and cost

saving technology

• Technologies related to tracking and inventory

management, cranes and space management

• Invest in states with abundant production but

shortages in storage and warehousing facilities

Government Initiatives Future Areas for Private/Foreign Investment –

Opportunities for the UK companies

What are the Concerns? Way Forward

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Land availability, land prices and change in land use from agriculture to commercial

Small size of present storage and warehousing preventing economies of scale

Inadequate use of technology, high cost of technology and energy

Regional imbalances in warehouses

• Work with State Industrial Development Corporation to identify the land and get land at concessional rates

• Focus on large, state-of-the-art multiproduct storage infrastructure,

• Identify captive clients from food processing industry, distribution and retailing – the demand will be

very high after GST and there is a shortage of supply

• Work with local partners, distributors, wholesalers

• Provide customised solutions for technology - ensure affordable technology

• Scope for investment in energy saving technologies and renewable technology

• Do feasibility study on demand and supply and map requirements

• Target projects close to national highways, economic corridors, consumption hubs (cities)

and trade points (ports)

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Fragmented and Inefficient logistics management

• Scope for consultancy and training in management

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Sector Overview: Packaging

technology

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Packaging Technology

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• India is the 6th largest packaging market in

the world, expected to become 4th largest by

2016

• Expected to grow at CAGR of 13-15% with

sales of $ 43.7 bn 2016 ($24.6 bn in 2011)

• The primary drivers for demand are retail

growth, e-commerce and increased

consumption of consumer products

• About 22,000 registered packaging companies

in India, more than 85% which are MSMEs

• Involved in the lower value added activities

such as conversion, filling and production.

• Organized sector volume ~ 50 %

• Food processing sector occupies 48% of

the packaging industry

• Focus has been on health & safety standards

which has led to the concept of green

packaging

• The Food Safety and

Standards (Packaging and

Labelling) Regulation, 2011

under the Ministry of Health

and Family Welfare regulates

the packaging & labelling

industry

• Other Regulations include

• Legal Metrology Act 2009

(standards for weights and

measures),

• Environmental Protection

Act, 1986 and

• Plastic Waste (Management

& Handling) Rules, 2011.

• New norms on packaging set

by Consumer Affairs Ministry

from 1st Nov ‘12

• 100% FDI is allowed

• Manufacturing Technology Up-

gradation Fund, which can provide

finance at reduced interest rates on

long term basis

• Units in food packaging industry gets

benefits from

• Mega Food Park Scheme and

• Schemes for Setting up of Plastic

Parks

• Indian Institute of Packaging (IIP),

under the Ministry of Commerce and

Industry was set up –

• improve packaging standards

• provide training and research

support to the industry

• Government focus on recycling and

clean technology under the National

Action Plan on Climate Change

Market Overview Government RegulationsGovernment Incentives/

Schemes/Support

What are the Concerns? Way Forward

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Most Indian firms are at the basic or intermediate level of technological capabilities;

low value addition to food products (7%)

India’s varied climate conditions, fragmented supply chain and poor storage requires

customised packaging solutions

Unorganised market leading to counterfeit technology

• Scope for collaboration in technology especially, green packaging technology, freeze-thaw dehydration

technology, deep freeze technology, vacuum packaging, tetra packaging, injection molded plastic container

packaging

• Scope for collaboration in labelling which will offer better understanding of the food safety regulations of

the two countries

• Scope for collaboration in active packaging, smart packaging, Modified Atmospheric Packaging, etc. to

increase freshness and shelf life of products and reduce wastage

• Recycle and eco-friendly packaging

• UK companies can offer India specific packaging and labelling solutions

• Scope for collaboration in anti-counterfeiting technology in Packaging

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Major equipment suppliers to the Indian market include Germany (42% share), Italy (20%), the US

(10%), Switzerland (8%) and others including Taiwan form the remaining 20%

• UK companies can supply equipment and offer training

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Sector Overview: Skill

Development

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Skill Sector Overview

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• India: one of the largest formal education system, produces maximum number of

engineers and technical persons

• India lags far behind in imparting skill training as compared to other countries.

• Only 10% of the total workforce in the country receives some kind of skill training (2%

with formal training and 8% with informal training).

• 80% of the entrants into the workforce do not have the opportunity for skill training

• There are FDI restrictions in education – however, companies are free to provide skill

and training

• The transportation and logistics sector employed ~7.3 mn people in 2011 and is

expected to increase to ~ 25 mn by 2022.

• Need ~ 17 million workers to meet this requirement.

• Food logistics have undergone significant changes, due to technological improvements,

growth of e-commerce sector, and changes in the consumer demand.

• Significant shortage of skilled manpower across all segments of food supply chain

Need for Skill Training in Supply Chain: Some Examples

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Logistics Sub-segment Key Skills in Demand/Skill Gaps/Opportunity areas

Core Freight

Logistics

Operational Driving skills for truck and fleet operators and helpers, requirement of formal driving

training, basic level of education of drivers, understanding of GPS technology

Technical Knowledge and skills for handling reefer trucks and temperature controlled vehicles, Liquid

logistics

Managerial Soft skills for drivers, cargo-loading supervisor lacks basic skills and is semi-literate,

transport controllers, fleet managers

Non-Core

Logistics

Operational Industry specific stocking and handling practices, especially of perishables like F&V and

Dairy products, knowledge and skills for Reverse logistic service, Express Logistics

Technical Training in using RFID technology, robotic technology, use of modern equipment like reach

stackers, forklifts, pallet trucks, Professional manpower for handling cold stores, Custom

clearance (ICDs and CFS)

Managerial Ability to understand Warehouse management systems (WMS) by warehouse managers,

multi-tasking, soft skills, management of personnel, logistic specialists, key account

managers

Other Services Operational Up-skilling in retail and allied services, hiring people with high education level (graduates)

and technical skills for courier services

Technical Use of technology for track and trace facility, computer training skills,

Managerial Soft skills in speaking to customers, quality managers, supply chain consultants

Governance Structure

Joint jurisdiction of Central and State Governments

• Co-ordination of all skill development initiatives across the country

• Removal of disconnect between demand and supply of skilled

manpower

• Skill up-gradation and building new skills

• The nodal agency for skill training has been integrated with the new

Ministry for Skill Development and Entrepreneurship

NSDC & the Ministry will work together with the Sector Skill Councils to

• Develop synergies between industry and academics to determine occupational standard for each skill

• Make vocational training aspirational for the students

• Reach out to public and private sector to invest 2% of mandatory CSR (corporate social responsibility)

expenditure towards skill development and training

• Work closely with countries such as the UK for technology transfer in skill training, training of trainers,

setting up of curriculum and centres of excellence, and adapting the best practices in skill development

A new Ministry for Skill

Development and

Entrepreneurship (MSDE) has

been established

National Skill Development

Council (NSDC)

The National Policy for Skill Development and Entrepreneurship 2015 is recently announced…

Collaborations and Opportunities for the UK Companies

Collaborations with the UK

MoU between MSDE and UK Department ofBusiness, Innovation and Skills throughUKIERI Phase II was signed in March 2015

MoU between NSDC and Association ofColleges UK in Jan 2014 for buildingtraining capacity and internationalbenchmarking in certifications

MoU between NSDC and UKCES (UKCommission on Employment and Skills) in2011 for collaboration to support Sector SkillCouncil and other skill initiatives in India

• Focus on skill development in niche areas or

specialized areas - robotic technology, RFID

technology, skills for food packaging

technology

• Work with Indian Institutes/ITIs to develop

training modules and curriculum

• Provide training to Trainers (3 months to 6

months course)

• Offer online training through facilities like

webcasting which will ensure greater reach

at lower cost

• Work with Indian institutes to set up joint

centres of excellence

Opportunities

Sector Overview: R&D

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R&D and Opportunities for the UK Companies

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Overview

• Largely been driven by

government through dedicated

R&D institutes

• R&D expenditure as a

percentage of GDP is less than

1%

• Expenditure on R&D by the

private sector is low but rising

• Hardly any R&D spending on

food supply chain and logistics

• Department of Science &

Development (DST) is the nodal

agency for R&D

• STI policy (2013) lays down the

vision for greater engagement of

private sectors

• Through the Seventh Framework Programme

(FP7), which is now Horizon 2020India-EU

Cooperation

International Cooperation in R&D: Four Tier Structure

• Global Innovation and Technology Alliance

(GITA) between DST & CII (India) and UK

Innovate (UK)

• New focus area likely to be food supply chain

Joint

Programme

• Co-operation among industry associations and

research organisations/ institutes of the two

countries

Co-operation

• Industry-to-industry cooperationOther

• Joint projects initiated by the UK research organisations under

Horizon 2020

• Partnerships with premier Indian institutes like IITs

• Advantage of high-skilled manpower at relatively lower cost –

Opportunity for the UK companies to set-up R&D centres in India

Interaction and Q&A…

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Share your experiences in India

Where do you see the opportunities and scope for collaborations?

Tell us about your concerns

What do you want from the Indian government?

Thank You!

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Dun & Bradstreet Tangram Advisory Services Pvt

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Delhi, Delhi – 110 019

M: +91 98114 76732 D: +91 11 41097944

E: dipankar.de@dnbtangram.com

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