Investment environment and opportunities in food processing-TN 1

Table of contents

State Introduction 1

Why Tamil Nadu 1

Raw Material Base 2

Production Clusters 4

Agricultural Marketing 6

Processing Clusters 6

Infrastructure 8

State Government Initiatives 12

Snapshot of Investable Projects 15

References 17

Investment environment and opportunities in food processing-TN 1

State Introduction

Tamil Nadu shares its borders with Kerala on the West, Karnataka on the North West, Andhra Pradesh on the North, the Bay of Bengal on the East and the Indian Ocean on the South. It is one of the southernmost states of India and its capital is Chennai. Tamil Nadu is the only state in India which has both the Western and the Eastern Ghat mountain ranges.

Tamil Nadu- key highlights

State capital Chennai

Geographical area1 1,30,058 sq. kms

Population (Census 2011)2

72.14 mn

Gross state domestic product (GSDP)3

USD 193.55bn (2016-17) CAGR 9.81%; (2011-12 to

2014-15)

Per capita income4 USD 2,284 (2016-17, at current prices)

FDI inflows5 USD 23,760 mn (2011-12 to 2016-17)

Total road length (kms)6 2,61,100

Rail length (route kms)7 4027.08

Costal length8 1,076 Kms

Airports9

International –Chennai , Coimbatore , Tiruchirapalli , Madurai

Domestic – Chennai , Tuticorin , Salem

Why Tamil Nadu

Chennai

Tamil Nadu

Leading player in agro-processing sector contributing 7% in India’s food processing output- Rank 1 in the production of Banana, Tapioca, Cloves; Rank 2 in the production of Maize, Tamarind ; Rank 3 in the production of Grapes , Gram , Pepper, Turmeric10

Robust infrastructure - 1 mega food park; 8 industrial parks, 4 agri-export zones11; only Indian state with 4 international airports connecting with 20 countries; 3rd largest power generation capacity

Presence of leading brands in the state - ITC, PepsiCo, Haldiram’s, Suguna Foods, Mondelez , Dabur , Lotte , Aachi Masala , McRennett , Capricorn Foods

1

2

3

Investment environment and opportunities in food processing-TN 2

Raw material base (share of agriculture)

The state favors cultivation of a multitude of crops, vegetables and fruits with seven agro-climatic zones 13

The state is a major producer of fruits (such as Banana, Mango, Papaya, Sapota, Watermelon); vegetables (such as Tapioca, Tomato, Brinjal, Beans, Cabbage, Ladyfinger) and spices (such as Garlic, Turmeric, Ginger, Tamarind and Chillies). Some of the major plantation crops cultivated in the state include Tea, Coffee and Cashew, and the leading cash crops of the state are Cotton, Sugarcane and Oilseeds.

Tamil Nadu has a huge agricultural base and contributes 8.7% to India’s GDP (2015-16)

SNAPSHOT OF LAND UNDER CULTIVATION12

Arable land 5,829

Net sown area 4,714

Total area sown 5,897

(2013-14, ‘000 hectare)

The share of agriculture in the state’s GSDP is 7.3% (2013-14). The state contributes about 3% to India’s foodgrain produce, 7% to vegetable produce and 12 % to fruit produce.

North Eastern Zone

District: Kancheepuram, Tiruvallur, Cuddalore,

Villupuram, Tirunvannamalai, Vellore

North Western Zone

District: Dharmapuri, Krishnagiri, Salem,

Namakkal (Part)

Western Zone

District: Coimbatore, Tiruppur Erode, Karur, Theni, Namakkal (Part), Perambalur , Ariyalur

Cauvery Delta Zone

District: Thanjavur, Nagapattinam, Tiruvarur,

Trichy, Karur, Ariyalur, Pudukkottai, Cuddalore

Southern Zone

District: Madurai, Sivagangai,

Ramanathapuram, Tirunelveli, Virudhunagar

High Rainfall Zone

District: Kanyakumari, Chinnakallar

Hilly Zone

District: Nilgiris, Kodaikanal (Dindigul)

Investment environment and opportunities in food processing-TN 3

CROPS

(‘000 tonnes)

FRUITS

(‘000 tonnes)

VEGETABLES

(‘000 tonnes)

LIVESTOCK & FISHERIES

Raw material base (2/2)

Key production highlights (2015-16)10 of the state include:

One of the largest contributor to Fish production

Rank 2 in the production of Coconut

Total production of 11,941 thousand tonnes of food grains- Rank 2 in production of Ragi

Total production 6,635 thousand tonnes of fruit- Rank 1 in production of Banana

Total production 6,976 thousand tonnes of vegetables- Rank 1 in production of Tapioca

The key production statistics for the state (year 2015-16) are presented as below:

Tapioca 2,810.03

Tomato 645.70

Onion 380.95

Brinjal 245.84

Milk 7244 (mn tonnes)

Eggs 0.16 mn

Fish Marine : 0.45 mn

tonnes In-land : 0.24mn

tonnes

Meat 542

(‘000 tonnes)

Sugarcane 26497.37

Rice 7982.57

Maize 2,383.33

Groundnut 881.82

Banana 4,331.65

Mango 975.11

Papaya 428.01

Sapota 225.40

Source: MOSPI

Investment environment and opportunities in food processing-TN 4

Production clusters

The indicative production clusters in Tamil Nadu14 include:

Ariyalur , Coimbatore , Cuddalore , Dharmapuri , Dindigul , Erode , Kanniyakumari

Sugarcane/ Rice

Ariyalur, Coimbatore ,Cuddalore , Dharmapuri, Dindigul , Erode , Kanchipuram , Karur

Perambalur , Tiruppur , Dindigul , Namakkal , Tiruchirappali , Tiruneleveli , Coimbatore, Erode,

Maize, Ground nut

Erode, Dharmapuri, Vellore, Salem, Coimbatore, Theni , Tiruppur , Coimbatore

Papaya

Dindigul , Vellore , Theni , Namakkal , Tirunelveli ,

Virudhnagar , Madurai , Salem ,

Sapota

Nilgiris, Kanchipuram , Thiruvallur , Vellore , Krishnagiri , Dharmapuri , Tiruvannamalai ,

Villupuram

Tapioca

Dharmapuri, Salem, Krishnagiri , Tiruppur , Coimbatore , Vellore , Theni , Dindigul ,

Tomato

Theni, Tiruchirappalli, Coimbatore, Tuticorin ,

Pudukkottai, Erode, Tiruvannamalai , Kanniyakumari

Banana

Onion

Namakkal, Erode , Dharmapuri , Karur , Salem , Tiruchirapalli , Coimbatore , Krishnagiri Salem, Villupuram, Vellore,

Tiruppur , Erode , Coimbatore

Milk

Thiruvallur, Vellore, Dharmapuri , Dindigul , Tirunelveli

Mango

Dharmapuri, Vellore , Tuticorin, Pudukkottai , Salem , Krishnagiri , Madurai , Tiruvannamali

Brinjal

Tiruppur, Erode, Coimbatore, Namakkal, Vellore, Salem, Chennai

Eggs

Meat

Investment environment and opportunities in food processing-TN 5

Investment environment and opportunities in food processing-TN 6

Agriculture marketing

Various marketing infrastructure facilities have been created in the state considering the demand of the farming community and marketable surplus of farm produce. There are 278 regulated markets, 179 farmer markets in the state. By 2024, food processing levels in Tamil Nadu is predicted to increase manifold. The state has 371 Farmer Producer Organizations

Processing clusters

Some of the major processing clusters in the state include:

Madurai, Salem, Coimbatore

Processed milk

Tirunelveli, Madurai, Thoothukudi, Thiruvannamalai

Rice

Krishnagiri, Kancheepuram, Thiruvallur

Manufacturing and exporting of frozen fruits

Chennai, Erode, Thiruvallur

Chillies

Namakkal, Erode, Chennai

Poultry farming, processed chicken

Ramnad, Virudhunagar, Erode, Salem

Turmeric

Krishnagiri

Pulp mango

Tirunelveli, Madurai, Thoothukudi, Thiruvannamalai, Erode, Salem

Bran oil

Tirunelveli, Madurai, Thoothukudi, Thiruvannamalai, Erode, Salem

Husk

Coimbatore, Erode, Namakkal, Kancheepuram

Dairy Products and analogues

Kanyakumari, Thiruvallur, Namakkal

Fats and oils, and fat emulsion

Kanyakumari, Cuddalore, Thoothukudi, Chennai

Fish processing

Investment environment and opportunities in food processing-TN 7

Investment environment and opportunities in food processing-TN 8

Infrastructure

The status of key physical and agricultural infrastructure in Tamil Nadu is as follows:

Parameter Status

Inland container depots* 7

19

Existing Industrial Areas/ SEZs

12 industrial parks 4 agri export zones20 1 food parks

Installed power 22

Thermal - 12713.94 MW Hydro- 2182.20 MW Renewables- 9747.39 MW

Utilities

Electricity cost 23

Cold storage and dairies with chilling plants: Category Power rates

LT Industry 2.50-6.60 HT Industry 6.35

Water rates

Meter rent: Category Power rates

Rural local bodies 3.00/KL Urban local bodies 4.50/KL Industries/commercial organizations ( proportionate cost of CWSS)

15.00/KL

Industries / commercial organizations ( not have proportionate cost of CWSS)

60.00/KL

A number of industrial areas and food parks are available in the state for investors keen on setting up food processing units. The key food parks include:

S. No. Food Park Location Area

(in acres) Project Cost

(Rs. in crore)

MoFPI Subsidy (Rs. in crore)

1 Ratnatray Mega Food Park Pvt. Ltd

Village Akkarai Sengapally, Annur

Taluka, District Coimbatore

64.03 137.12 50

(In principle approval only

given)

Investment environment and opportunities in food processing-TN 9

In addition to the above, land is also available at various industrial parks/ growth centres across the state.

S. No. Industrial

Park/Growth Centre

Location Owner/

Developer Type

Total Area

(acres)

1

Thervoy

Kandigai

Industrial

Complex*

Tiruvallur SIPCOT Multi-product manufacturing

1,127

2

Mappedu

Industrial

Complex

Tiruvallur SIPCOT Multi-product manufacturing, Non-polluting

125

3

Madurai Tuticorin Industrial Corridor

Madurai SIPCOT Industrial and Multi product, Non-pPolluting

1,478

4 Tuticorin Industrial Park

Ottapidaram Taluk, Thoothukudi District

SIPCOT Multi-product 1,533

5 Coimbatore – Salem Industrial Park

Perundurai in Erode District

SIPCOT Industrial and Multi-product

1,257

6

Chennai RanipetHosur Industrial Corridor

Cheyyar Taluk, Thiruvannamalai District, Ranipet

SIPCOT Multiproduct

4,883

7 Perambalur SEZ Project

Perambalur District TIDCO Multiproduct SEZ 2,880

There are 9 cold chain units set up with assistance from MoFPI16

S. No. Cold Chain Project Location Type Project cost (INR crore)

Grant sanctioned (INR crore)

1 Farm Fresh Banana Theni F&V 15.54 6.06

2 Frozen Fruits and Vegetables Metttupalayam F&V

25.34 7.17

3 SKM Animal Feeds and Foods (India) Limited

Chennai, Coimbatore, Madurai, Hosur, Trichy, Tuticorin, Salem

F&V 24.76 9.06

* Thervoy Kandigai Industrial Complex – 1,127 acres available

Investment environment and opportunities in food processing-TN 10

S. No. Cold Chain Project Location Type Project cost (INR crore)

Grant sanctioned (INR crore)

4 ABT Industries Limited* Coimbatore Dairy

38.90 10.00

5 Hatsun Agro Product Ltd* Kanchipuram and Palacode

Dairy 46.78 10.00

6 Marble Valley Foods and Beverages Private Limited*

Tirunilveli Marine 25.98 8.46

7 Britto Sea foods Exports Pvt Ltd*

Tuticorin Fishery 13.00 3.73

8 Aachi Masala Foods Pvt. Ltd* Thiruvallur F&V 44.68 9.16

9 Monsoon Bounty Foods Manufacturing Pvt. Ltd*

Thiruvallur Marine 10.00 3.55

F&V: Fruits and vegetables

* Under implementation

Investment environment and opportunities in food processing-TN 11

Investment environment and opportunities in food processing-TN 12

State government initiatives (1/2)

The state government has undertaken a number of reforms to offer an enabling and investor- friendly business climate for investors keen on setting up business in the state:

List of documents: Easing of registration norms for SSI/ MSME wanting to start business operations. Single window clearance facility is available for all statutory clearances and approvals. The regulations have been eased to obtain no objection certificate for construction, license, power and water connections

Helpline number : Dedicated helpline to resolve queries regarding the application and approval process

Portal to start operation online : Simplified trade procedures for facilitating exports

Tariff data : Enhanced transparency on tariff rates with online availability of information on effective tariff (and notification of change, if any, ahead of billing cycle)

Single window facilitation

Investment environment and opportunities in food processing-TN 13

State government initiatives (2/2)

The government has been taking many steps to promote and facilitate the growth of food processing industries. Key incentives available for such industries under the industrial policy of the state are summarized in the table below:

Key incentives Industrial Policy, 2012

Capital Investment Subsidy

New or expansion manufacturing units to be given a back ended subsidy ranging from INR 0.30 – 2.25 crore

New or expansion manufacturing units located under SIPCOT Industrial parks in respect of A& B districts will be provided an additional subsidy of 50% over and above the eligible limit

Manufacturing units located in B&C districts are provided with additional capital subsidy of 10% and 25% respectively over and above the eligible limit

25% capital subsidy on the value of eligible plant and machinery upto INR 30 lakhs : To MSMEs in industrially backward blocks and agro based enterprises

Electricity Duty Exemption

Electricity tax exemption on power purchased from the Tamil Nadu Generation and Distribution Corporation ltd ranging from 2-5 years

100 percent for upto 5 years depending on the size of capital investment

Power Subsidy

20 percent low tension power tariff subsidy for the first 36 months from the date of commencement ( MSME in industrially backward blocks and agro based enterprises)

Waiver of Land Conversion Fee

Stamp Duty and Registration Fee Waiver

District A and B : 50 percent exemption Ultra-mega projects : 100 percent exemption

Other incentives

Environmental Protection Infrastructure Subsidy of INR 30 lakhs or 25% of capital cost in setting up ETP/HWTSDF

Technology upgradation - Environmental Protection Infrastructure Subsidy of INR 30 lakhs or 25 percent of capital cost in setting up ETP/HWTSDF

Technology upgradation- 25% additional capital subsidy on the plant and machinery installed to promote clean environment up to INR 3 lakhs ( MSME in Industrially Backward blocks and Agro based enterprises )

Employment generation related incentives - 5% additional employment intensive subsidy on the value of eligible plant and machinery for providing employment to 25 workers for 3 years within the first 5 years , subject to maximum of INR 5 lakhs ( MSMEs for Industrially backward blocks and Agro based enterprises)

Investment environment and opportunities in food processing-TN 14

Promote women entrepreneur - 5% additional capital subsidy on the value of eligible plant and machinery for enterprises set up by women subject to a maximum of INR 2 lakhs (MSMEs for Industrially backward blocks and Agro based enterprises)

Net output VAT + CST paid will be given as investment promotion subsidy/soft loan. This is increased if they double their employment

Uninterrupted power supply will be given to projects set up in Southern districts

Single window clearance for MSME projects by Department of Industries District Industries Centre-Single Window Clearance Committee (SWCC)

Developed food processing investment centre (FPIC) – a single point of contact (one stop shop).

Leverage NMFP schemes for attracting investments into the state through appropriate stakeholder sensitization programs

MSE-CDP Schemes ( micro and small enterprises cluster development programme) , Integrated Infrastructure upgradation scheme

Investment environment and opportunities in food processing-TN 15

Snapshot of potential investable projects

Tamil Nadu offers tremendous opportunities for investment across the entire value chain in the food processing sector. An indicative list of potential projects for investment is presented in the table below:

Project name

Processed Products Value Proposition

Turmeric Processing

Turmeric powder

Global market size is expected to reach USD 99.3 mn by 2024

Turmeric is a very popular spice in India, which produces nearly the whole world’s crop (82% of the global output). India is by far the largest producer and exporter of Turmeric in the world. It occupies about 6% of the total area under spices and condiments in India. Tamil Nadu is one of the largest producers of this spice in the country

Mango Processing

Mango pulp , jam , squash , concentrate

,mango jelly (using the system of Ultra High Density plantation)

World demand for Mangoes is on the rise and is expected to increase. International trade in mangoes will amount to USD 1,799,000 mn in 2029

India produces 40% (approx) of the total world production of Mango and is a major exporter of Mango pulp in the world. The state producers variety of Mangoes

Sago & Starch Processing Plant

Starch & Sago , wet Sago starch , Sago flour

processing , Sago trunks are cut into shorter and

processed , coating Starch paper and organic glue alternative for PVA

based glue

Global Tapioca market is expected to grow at a CAGR of around 3% by 2021

India ranks 25th in area, 11th in production of Tapioca (34.95 tonnes/ha). These factors along with suitable weather conditions makes it most suited to explore emerging and developed economies. Tamil Nadu is one of the largest producers of Tapioca

Fish Processing

Canned and tinned Fish , ready to retail processed

Seafood

Global market for fish processing is projected to reach USD 222.71 bn by 2021, at a CAGR of 3.8% from 2016 to 2021 and is projected to reach 37,194.98 KT in terms of volume by 2021, at a CAGR of 2.2%

India is one of the fastest growing retail markets for processed fish due to changing lifestyle, increased incomes, increasing health awareness, rising demand

Investment environment and opportunities in food processing-TN 16

Project name

Processed Products Value Proposition

Rice Mill

Edible Rice free of husks, stones and other foreign

material , Rice bran , Rice bran oil , Rice flour and hulls , Rice starch , broken Rice , brewers

Rice , rough Rice

With the world’s population predicted to reach 8.27 billion by 2030, demand for Rice is expected to increase by approximately 100 mn tonnes to 550 mn tonnes in the same period

India has emerged as the top rice exporter and is expected to grow at a CAGR of 3.51% by 2022. Tamil Nadu is one of the largest producers in the country of different varieties of Rice

Cashew Processing

Raw cashew nuts , salted cashew nuts, paste,

cashew curries, cashew nut shell liquids

Globally, the demand for Cashew nut has shot up 53% since 2010. Cashew ranks third in world production of edible nuts that are traded globally. World trade in edible nuts has experienced relatively rapid growth, averaging about 2.7 % per year. Worldwide, trade in Cashews exceeds US$2 bn and its demand is increasing.

India’s share in the world Cashew nut market is at 23% and is the 2nd Cashew producer in the world. Further, India accounts for more than 50% of the global cashew exports. Tamil Nadu is one of the largest producers of cashew in the country

Investment environment and opportunities in food processing-TN 17

References

1. http://www.agritech.tnau.ac.in/pdf/Agro_and_Food_Processing.pdf

2. http://www.mospi.gov.in/statistical-year-book-india/2017/171

3. http://www.mospi.gov.in/publication/state-domestic-product-state-series-2004-05#

4. https://www.rbi.org.in/scripts/referenceratearchive.aspx

5. http://pib.nic.in/newsite/PrintRelease.aspx?relid=1235636. http://dipp.nic.in/sites/default/files/india_FDI_July2013_0.pdf

http://dipp.nic.in/sites/default/files/india_FDI_May2014_0.pdfhttp://dipp.nic.in/sites/default/files/FDI_FactSheet_January_March2017.pdf

7. http://www.mospi.gov.in/statistical-year-book-india/2017/190 ;8. http://pib.nic.in/newsite/PrintRelease.aspx?relid=155019

9. http://www.airportsindia.org.in/public_notices/aaisite_test/main_new.jsp

10. http://mospi.nic.in/sites/default/files/statistical_year_book_india_2015/Table-8.3%20.xlsx

http://agricoop.nic.in/sites/default/files/2015-16%20%28Final%20Est.%29_0.xlsxhttp://eands.dacnet.nic.in/PDF/Glance-2016.pdf

11. http://mofpi.nic.in/sites/default/files/ministrys_notification.pdf

http://sezindia.gov.in/writereaddata/pdf/ListofoperationalSEZs.pdfhttp://apeda.gov.in/apedawebsite/trade_promotion/Agri_Export_Zone.htm

12. http://www.mospi.gov.in/sites/default/files/statistical_year_book_india_2015/Table-8.1_0.xlsx

13. http://www.tnhorticulture.tn.gov.in/horti/agro-climatic-zones

14. http://geo-sampada.nic.in/

https://data.gov.in/catalog/district-wise-season-wise-crop-production-statistics15. http://pib.nic.in/newsite/PrintRelease.aspx?relid=168990

16. http://www.mofpi.nic.in/sites/default/files/website_cold_chain_status_18.08.2017.pdf

17. http://www.msmetfc.in/cluster-activity

18. http://www.mofpi.nic.in/sites/default/files/asi_state_wise_2014-15.pdf

19. http://commerce.nic.in/trade/ICD_list.pdf

20. http://apeda.gov.in/apedawebsite/trade_promotion/Agri_Export_Zone.htm

1021. http://mofpi.nic.in/sites/default/files/ministrys_notification.pdf

22. http://www.cea.nic.in/reports/monthly/installedcapacity/2017/installed_capacity-01.pdf

Vision 2023 Tamil Nadu government, shared by the state government

Investment environment and opportunities in food processing-TN 18

Disclaimer

Without limiting the rights under the copyright reserved, this publication or any part of it may not be translated, reproduced, stored, transmitted in any form (electronic, mechanical, photocopying, audio recording or otherwise) or circulated in any binding or cover other than the cover in which it is currently published, without the prior written permission of MoFPI. EY and CII. All information, ideas, views, opinions, estimates, advice, suggestions, recommendations (hereinafter ‘content’) in this publication should not be understood as professional advice in any manner or interpreted as policies, objectives, opinions or suggestions of EY and CII. Readers are advised to use their discretion and seek professional advice before taking any action or decision, based on the contents of this publication. The content in this publication has been obtained or derived from sources believed by EY and CII to be reliable but MoFPI, EY and CII do not represent this information to be accurate or complete. MoFPI, EY and CII do not assume any responsibility and disclaim any liability for any loss, damages, caused due to any reason whatsoever, towards any person (natural or legal) who uses this publication. This publication cannot be sold for consideration, within or outside India, without express written permission of MoFPI, EY and CII. Violation of this condition of sale will lead to criminal and civil prosecution. Ministry of Food Processing Industries, Confederation of Indian Industry (CII) and Ernst & Young (EY) © 2017

Investment environment and opportunities in food processing-TN 19

TRANSFORMING THE FOOD ECONOMY

3-5 November, 2017 | Vigyan Bhawan, New Delhi, India

About World Food India

A global event to facilitate partnerships between Indian and international

businesses and investors, World Food India (WFI) is a gateway to the Indian

food economy and an opportunity to showcase, connect, and collaborate.

Write to us at:

Ministry of Food Processing Industries, Government of India

Panchsheel Bhawan, New Delhi, India.

Telephone Number: +91 11 -26492216/ 26492174/ 26493227/ 26490933

Find us at: http://mofpi.nic.in/ https://www.worldfoodindia.in/

Department of Agriculture & Cooperation SH-104, Thiruvathiyur Ponneri Road, Minjur , Thiruvallur Tamil Nadu

Find us at http://www.tn.gov.in/department/