Foodworld India 2005
November 28-30, 2005, India

Speech by Mr. Subodh Kant Sahai, Hon'ble Minister for Food Processing Industries

The Chief Guest, Shri Buddhadeb Bhattacharjee, Hon'ble Chief Minister of West Bengal, Shri Onkar S. Kanwar, President, FICCI, Shri D.P. Singh, Secretary, FPI, Dr. Hans-Joachim Korber, CEO, Metro Group, Mr. Rajeev Bakshi, Chairman, FICCI, Food Processing Committee, Dr. Amit Mitra, Secretary General, FICCI and friends. It gives me great pleasure to be amongst you today and to participate in this event on 'Foodworld India 2005'. I must congratulate Federation of Indian Chambers of Commerce & Industry (FICCI) for having chosen for discussion a subject having enormous significance for the Indian Farming Sector in general and the processed food sector in particular.

India is the third largest primary food producer in the world. It has a strong competitive advantage in food processing being blessed with natural advantages. It has large areas of arable land with wide range of agro-climatic conditions, which make it possible to grow numerous varieties of agricultural produce. Further, our geographical situation gives us the unique advantage of being near consumption centers, the East, Middle East and the West.

Despite a substantial raw material base, and possible potential; the levels of processing at present are very low. There is large amount of wastage of perishable agricultural produce. The estimated losses of fruits and vegetables alone is to the tune of Rs.22,000 crores in a year. The U.P.A. Government being committed to the welfare of farmers and employment, besides enhancing productivity of industry, treats agriculture and agro-processing as a thrust sector .

Certain factors inhibiting growth of this industry are clearly identifiable. These are long and fragmented supply chain retail structure, inadequate infrastructure, including cold chain storage & transportation, special handling facilities at airports, inadequate post harvest management, limited access to appropriate technology for processing & packaging, low investment in Research & Development by industry and high cost of production. The rectification of the constraints provides for an opportunity for massive investment for upgradation of infrastructure and processing capacity as well as of post-harvest handling facilities and induction of latest technology. Despite the constraints we are committed to make processed food affordable domestically and competitive globally.

However, let me add here that despite these constraints, food processing industry has grown at a rate of 7.1% per annum over the last five years and has been ahead of GDP which gives an indication that with the removal of constraints, this sector can grow at a much faster rate.

The large potential of food processing industry in India is corroborated by an extensive study carried out by the leading international consultants, Rabo Bank. The Vision (2015) prepared by them envisages trebling the size of the processed food sector so as to enhance farmer income, generate employment opportunities, provide choice to consumer at affordable prices, and contribute to overall national growth by increasing the level of processing of perishables from 6% to 20%, value addition from 20% to 35% and share in global food trade from about 1.6% to 3%. We envisage an investment of Rs. 1,10,000 crores in this sector during the next ten years.

With a view to creating a conducive and enabling environment, the U.P.A. Government has already taken a number of steps to develop the sector. Income tax has been exempted for 5 years and 25% of profits for the next 5 years are also exempted for setting up of new agro processing industries to process, preserve and package fruits and vegetables, etc. There have been reliefs in the customs and excise duties as well. We in the Government realise that for long agriculture has concentrated on a supply side strategy. We now need to change this to demand driven strategy, so that our produce find markets and thus remunerative prices are available to farmers.

To make food chain competitive we need to reduce costs by having a relook at taxes and levies. We need to also reduce costs by addressing the inefficiencies in the supply chain as well as costs which accrue due to inadequacies of infrastructure. Organised retailing would reduce costs and provide gains to consumers as well as to farmers. The Ministry of Agriculture has taken up with the states to amend their APMC Acts so that direct linkages can be established between farmers and processors as well as between farmers and organised retail. Some states have already taken steps in this regard and others are in the process. This would also lead to lowering of costs and foster organic linkages. I had mentioned earlier that we need to grow and process more and more looking towards demand side. This also would lead to looking at the varietal mix of crops which go into table produce and processed food.

On the export side though agri exports have been growing from year to year, yet the rate of growth needs to be improved upon. With the opening up of world markets and the possible reduction of subsidies in the western world India could well emerge as the food factory of the world. We have therefore to look at the world markets and what they demand.

With the rising consumer consciousness and the demand of developed markets, another area which needs a close look is the matter of food safety. We have been looking at the food laws in the country and the Government in the last Session of Parliament had introduced the Food Safety and Standards Bill so that standard making is made more professional and safety concerns are addressed. This Bill on being enacted would subsume a large number of acts and orders in force today which are being administered by various authorities. The various implementing authorities would also be subsumed under the Food Safety and Standards Authority and one would have a single window on matters of food safety and regulation.

The Government has been for some time considering the vast expanse of this area of endeavour so as to arrive at an overall Vision, Strategy and Action Plan for this sector. The Government is planning to set up a Group of Ministers to address all relates issues and concerns which we face today. This would provide a greater fillip to
this sector as all agencies and ministries would be able to address issues in a more coordinated and comprehensive manner.

Sir, I would like to draw your attention to the vital role that states play in this sector as agriculture is in the states domain. States would also have to look at ways and means to reduce costs, come forward to amend their respective APMC Acts and take further facilitation measures in their domain. Some states have realised the potential of the agro business sector. I would like to compliment the State of West Bengal which has taken major steps in boosting this sector. Of the 51 food parks sanctioned across the country by my Ministry, West Bengal alone accounts for 8 of them. This speaks volumes of the interest which West Bengal is taking in this direction and we would like to hear the Hon'ble Chief Minister as to his vision of this sector and how we can take it forward.

Ladies and gentlemen, I look forward to this emerging sector on the Indian canvass and the possibilities of global cooperation. I am sure this conference is going to discuss various aspects related to Indian processed food sector and the global food business so that we can be better informed about the emerging requirements. I would like to thank our participants from abroad who have come to share their valued experiences. I also see a host of entrepreneurs and business leaders from various parts of the country today and I wish you all the success in your endeavours. Let me assure you that the Government of India shall take all possible measure to ensure growth of this sector. I wish the Conference all success.

Jai Hind.