FDI in India’s food processing sector bounce back from pandemic slump to reach US$411m in 2021 

INDIA – Investment activities in India’s food processing sector rebounded in 2021 with Foreign direct investment (FDI) into the sector nearly doubling to US$410.62 million during April-September 2021, according to a recent economic Survey. 

The survey tabled in the country’s parliament noted that the sector has witnessed FDI equity inflow of USD 4.99 billion during the period April 2014 to September 2021. 

In 2020 when the pandemic was at its peak, FDI in the sector was also hit dropping to a new low of  US$220.42 million.

In India, FDI of up to 100%, under the automatic route, is allowed in food processing industries.  

Further, 100% FDI under the government route for retail trading, including through e-commerce, is permitted in respect of food products manufactured and/or produced in India. 

Despite FDIs in the food sector almost touching the US$5 billion mark, processing levels in India remain low at 7.7% behind several economies such as China, Malaysia and US, according to data from the India Ministry of State for Food Processing Industries. 

Immense potential for growth however exists as the food processing sector is annually seeing a growth of more than 11%.  

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Besides, India also has a high share of harvest and post-harvest losses from major agricultural produce on account of poor storage, transportation, and logistics to the extent of Rs 92,651 crores (US$12.4bn), according to government data 

The country also has a huge domestic market of 1.3 billion customers with the food being estimated to be worth more than half a trillion dollars by 2025.  

By 2030, India’s annual household consumption would have tripled, making it the world’s fifth-largest consumer. 

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To make the sector attractive to investors, the Ministry of State for Food Processing Industries. 

The ministry is implementing a central sector scheme Pradhan Mantri Kisan Sampada Yojana (PMKSY) since 2016-17 for overall growth and development of food processing sector including for boosting investment. 

It is also implementing a centrally sponsored scheme-PM Formalisation of Micro Food Processing Enterprises Scheme (PM FME) to upgrade and support 2 lakh micro food processing units through credit linked subsidy based on One District One Product (ODOP) approach. 

To support India’s food processing sector, Global food major Cargill recently opened its first innovation center in India.  

The Center at Gurugram includes a sensory lab and demonstration kitchen, with capabilities to serve dairy, beverage, bakery, and convenience food industries, as well as other specialised culinary applications. 

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