The Indian food industry is expected to reach USD 300 billion by 2016. Processed food estimated at USD 114 billion & growing at 8.5 CAGR presents opportunities for investment across the entire value chain.
Major international players have already set foot in India in the processed food segment, yet the market is under penetrated and open for new product launches, especially in convenience and ready-to-eat segments.
Food sector is one of the largest sectors in India in terms of production, growth, and consumption. Food constitutes about 30% of the consumer wallet. Growth in food consumption, increased market penetration, addressing new emerging markets and launch of new value added products to meet the needs of convenience, health and variety has created opportunities for overseas companies to increase their exports to India.
Although Indian food habits comprise use of fresh food to a larger extent but an increased inclination is seen towards processed foods in the recent years. The demand is driven by working class urban population with increasing disposable income and paucity of time.
Growth of organized retail has been a major driver for consumption of value added food products including imported food. Retail trends indicate that convenience is gaining premium while health and hygiene have gained prominence in the food segment. India's top 10-food retailers account for about 40% of the organized retail sector's revenue.
Online grocery retailing is at an early stage with current market size estimated between USD 100-150 million. The number of online food and grocery retail outlets rose to 44 in 2014 from just 14 in 2013 on the back of growing Internet users in the country.
Foreign Direct Investment Policy
The Government of India allows 100% FDI under the automatic route in the food processing sector, in agri-products, milk and milk products, and marine and meat products, except for items reserved for Micro and Small Enterprises (MSEs).
MoFPI and the Government of India is actively promoting the concept of mega food parks (MFPs) and is expected to set up 30 such parks across the country to attract FDI. The government has released a total assistance of USD 23 million to implement the Food Parks Scheme.