INDIA – US food major Cargill will invest $240 million, or Rs 1,500 crore, in India over the next few years as it seeks to expand in the lucrative market where doing business has become decisively easier, Peter van Deursen, CEO Asia Pacific region, told ET.
The company is also adapting to Indian market conditions, learning from successes of Patanjali, which has encouraged it to focus on local aspects of the market instead of blindly launching global products, he said.
“India is an important market for us and this increased investment demonstrates our commitment to the country and the development of the agriculture and food processing industry in this country,” Deursen said.
Investment will be in Cargill’s current businesses including edible oil, cocoa and chocolates, starches and sweeteners and animal nutrition.
Cargill will employ 4800 in the next couple of years, up from the current 3500.
“Ease of doing business is much better for sure and we recognise that as well. We see some improvements in some areas compared to where it was 10 years ago.
There are positive things happening which helps us to tell a better story outside to our shareholders in USA. I think it is positive,” said.
“GST is very favourable to us. (As is) This notion of food standardisation, safety standardisation, global quality standards and I think some improvement on level playing field where everybody is taxed and treated the same way, especially for a big company like us who wants to grow. It will help us,” he said.
However, the company also faces challenges and Cargill would plan bigger investments if these were overcome.
“Difficulty we face is that it’s a huge country, differences among states. That makes it sometimes difficult for us to come with a standard approach and then we copy paste. It’s not an easy country to do business with because of the culture.”
“The country is so big with 1.4 billion people, so where do you prioritise and focus on and what portfolio? You can’t do everything in a country like this. The complexity of that makes business more difficult,” he added.
He also said that a law-abiding company like Cargill faced unfair competition from local companies which did not follow some environmental laws, or resorted to overloading of trucks to save money, which made a lot of differences in low-margin activities.
On the whole, though, the business environment is much better he said.
“When you go to a more harmonised (taxation) system it will help and make things easy. It was very difficult for us to move products from one state to another. Integration makes it easier.”
While there are fewer barriers in transportation, infrastructure remains a challenge.
“I think the infrastructure for moving product form one place to another is also difficult. So to have a pan Indian approach is costly. So you have to be very selective in where you invest.
With GST, products are moving faster, but on infrastructure, I think a lot needs to be done,” he said.
Deursen said that they were also seeing consumers going for products made by domestic companies not only in India but in other countries that have more nationalist view.