New Delhi: Ahead of the World Food India event aiming to attract investments and the latest technology in food processing, Harsimrat Kaur Badal, minister of food processing industries, announced on Wednesday that investments to the tune of Rs65,000 crore have already been committed by companies. In an interview, she said the government wants to transform India’s food economy and double farm incomes by bringing in the best global technologies. Edited excerpts:
Currently, just 10% of food produced in India is processed and you are targeting to take it to 30%. How are you going to do that?
We are going to do this by creating the infrastructure for food processing through schemes like the Pradhan Mantri Kisan Sampada Yojana. We will spend Rs6,000 crore over the next three years to create the infrastructure which will leverage investments worth Rs31,000 crore. When I am putting up this infrastructure, I want to bring in the best technology of the world, which is why we are having this event where the best in the processing industry—manufacturing, technology, reefer vans, R&D (research and development), lab testing—comes in.
What explains the resurgence in food processing? You said today that Rs65,000 crore investment commitments have come in ahead of the World Food India event.
First we worked for creating an environment. When there is policy paralysis and nothing is happening on the ground no one is interested to come. First we brought in a Rs2,000 crore corpus fund to provide cheaper credit. We also brought incentives in terms of taxes and import duties. The other thing we brought in was transparency in the whole procedure. Those who want to make use of the Sampada (scheme) grants do not have to grease palms. We have removed the government interface and made it all online, so someone from South (India) does not have to come running here to apply. Then we worked to create the markets and (allowed) 100% FDI (foreign direct investment). We have also worked to create a cold chain grid.
Simultaneously, as this infrastructure is coming we want to collaborate with the West... We are telling them this is our infrastructure, we have a $600 billion retail sector out of which $400 billion is food retail. The markets are there, there is no dearth of raw material, the infrastructure the government is subsidizing and incentivizing and the middle class is also wanting more and more ready-to-eat foods. So companies are looking at Indian markets... and while they grow their business we will learn from their technology to make ourselves the global food factory.
Food processing as a sector has a deep rural connect. But how much will the farmer benefit? Will these industries be set up close to the farm gate?
The food processing industry has to connect with the farmer. Whatever they are processing they have to have storage and preservation facilities at farm gate level. They have to have reefer vans and transportation facilities. What is lacking for the farmer today is storage, transportation, and good scientific methods. This is what the industry is going to provide. This is going to help the farmer who is now forced to sell to the nearest market or middle man. Even better, the farmer will have the option to preserve and sell when prices go up, or value add and become a processor himself. My aim is to provide all these opportunities to the farmer.
Food processing will not only play a pivotal role in doubling of farm incomes but also job creation. In any mega food park, a large number of women are employed. Besides processing it will also help reduce wastage and make food available for more people at reasonable prices.
How much of FDI has come into food processing in the past few years?
In 2015-16, it was $500 million which rose to $740 million the next year. This financial year $200 million has come in already. We have got big companies like Amazon which is into e-retail committing $500 million over next 2-3 years. We have companies like Bigbasket, Grofers, Metro Cash and Carry.
Food processing is a seasonal industry. How much of that is a challenge?
That has been the biggest challenge. It is capital intensive like any industry but since it is seasonal in nature (like mangoes can only be processed during harvest season) a company has to bear expenses year round. We are telling big industries to use the facilities in the mega food park, that instead of using Rs200 crore to set up one industry they can set up units in 10 parks using common facilities. Nine mega food parks are functional and we have had 264 meetings with people who are going to invest in these parks. To put up a separate unit in the park we are giving incentives to companies.
Traditionally Indian households prefer fresh to processed food. Do you think in such a scenario the industry can grow rapidly?
Everything we eat today from the wheat flour to ghee and sugar is processed. The only thing is that the variety of healthy things we eat which is processed should increase. Today when you pluck an apple it starts losing nutrients. If the same apple was plucked and preserved to maintain its nutrients, you’re eating something more healthier. Indians are having fresh food but are more malnourished than Western countries as our food is losing nutrients during transportation and storage.
But food safety does play a critical role in processed food industry.
Yes, it plays a very important role... that is why we are having it in the GST (goods and services tax) net so the unorganized sector comes into the organized sector and the consumer is assured of a standard. So Food Safety and Standards Authority of India (FSSAI) is launching a food regulatory portal. So anyone can go and see the parameters of what they are consuming.
Currently, just 10% of food produced in India is processed and you are targeting to take it to 30%. How are you going to do that?
We are going to do this by creating the infrastructure for food processing through schemes like the Pradhan Mantri Kisan Sampada Yojana. We will spend Rs6,000 crore over the next three years to create the infrastructure which will leverage investments worth Rs31,000 crore. When I am putting up this infrastructure, I want to bring in the best technology of the world, which is why we are having this event where the best in the processing industry—manufacturing, technology, reefer vans, R&D (research and development), lab testing—comes in.
What explains the resurgence in food processing? You said today that Rs65,000 crore investment commitments have come in ahead of the World Food India event.
First we worked for creating an environment. When there is policy paralysis and nothing is happening on the ground no one is interested to come. First we brought in a Rs2,000 crore corpus fund to provide cheaper credit. We also brought incentives in terms of taxes and import duties. The other thing we brought in was transparency in the whole procedure. Those who want to make use of the Sampada (scheme) grants do not have to grease palms. We have removed the government interface and made it all online, so someone from South (India) does not have to come running here to apply. Then we worked to create the markets and (allowed) 100% FDI (foreign direct investment). We have also worked to create a cold chain grid.
Simultaneously, as this infrastructure is coming we want to collaborate with the West... We are telling them this is our infrastructure, we have a $600 billion retail sector out of which $400 billion is food retail. The markets are there, there is no dearth of raw material, the infrastructure the government is subsidizing and incentivizing and the middle class is also wanting more and more ready-to-eat foods. So companies are looking at Indian markets... and while they grow their business we will learn from their technology to make ourselves the global food factory.
Food processing as a sector has a deep rural connect. But how much will the farmer benefit? Will these industries be set up close to the farm gate?
The food processing industry has to connect with the farmer. Whatever they are processing they have to have storage and preservation facilities at farm gate level. They have to have reefer vans and transportation facilities. What is lacking for the farmer today is storage, transportation, and good scientific methods. This is what the industry is going to provide. This is going to help the farmer who is now forced to sell to the nearest market or middle man. Even better, the farmer will have the option to preserve and sell when prices go up, or value add and become a processor himself. My aim is to provide all these opportunities to the farmer.
Food processing will not only play a pivotal role in doubling of farm incomes but also job creation. In any mega food park, a large number of women are employed. Besides processing it will also help reduce wastage and make food available for more people at reasonable prices.
How much of FDI has come into food processing in the past few years?
In 2015-16, it was $500 million which rose to $740 million the next year. This financial year $200 million has come in already. We have got big companies like Amazon which is into e-retail committing $500 million over next 2-3 years. We have companies like Bigbasket, Grofers, Metro Cash and Carry.
Food processing is a seasonal industry. How much of that is a challenge?
That has been the biggest challenge. It is capital intensive like any industry but since it is seasonal in nature (like mangoes can only be processed during harvest season) a company has to bear expenses year round. We are telling big industries to use the facilities in the mega food park, that instead of using Rs200 crore to set up one industry they can set up units in 10 parks using common facilities. Nine mega food parks are functional and we have had 264 meetings with people who are going to invest in these parks. To put up a separate unit in the park we are giving incentives to companies.
Traditionally Indian households prefer fresh to processed food. Do you think in such a scenario the industry can grow rapidly?
Everything we eat today from the wheat flour to ghee and sugar is processed. The only thing is that the variety of healthy things we eat which is processed should increase. Today when you pluck an apple it starts losing nutrients. If the same apple was plucked and preserved to maintain its nutrients, you’re eating something more healthier. Indians are having fresh food but are more malnourished than Western countries as our food is losing nutrients during transportation and storage.
But food safety does play a critical role in processed food industry.
Yes, it plays a very important role... that is why we are having it in the GST (goods and services tax) net so the unorganized sector comes into the organized sector and the consumer is assured of a standard. So Food Safety and Standards Authority of India (FSSAI) is launching a food regulatory portal. So anyone can go and see the parameters of what they are consuming.