India's food processing sector poised for a boom

26 May 2021 2 min. read
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The time is right for India to launch a charge in the food processing sector – given the sector’s strong economic fundamentals and India’s strategic geographical position as an exporter. A new KPMG report presents the details.

Food processing is a powerful industry worldwide – valued at $1.7 trillion according to KPMG. Developed economies such as the US, China, Germany, Netherlands and Japan add billions to their GDP each year by exporting key processed items such as meat, beverages, fruit, nuts, fish and cereals. 

India is missing a trick in this landscape. Despite being touted as a major economic force in the future, the country ranks only 14th in the global list of food product exporters – and remains a provider of low-margin raw materials rather than value adding processed goods. 

Developed economies export more value-added food products than India

Big money exports at top economies include baked items, alcoholic and non-alcoholic beverages, cheese and yoghurt, chocolate, processed sea food, maize, edible nuts and pasta. India’s exports feature few of these items, with the country focused on cereals, fish, meat, coffee, tea, spices, sugars, and oil seeds, among other primary goods.

Much of this has to do with the country’s heavy reliance on agriculture – a scenario that governments and businesses alike are trying to change through Make in India and other campaigns. The good news is that food processing numbers in India have been climbing steadily in the last few years – and will likely continue upwards. 

“The Indian food processing market is expected to double from USD 263 billion in 2019-20 to USD 535 billion in 2025),” noted KPMG India partner Harsha Razdan. “India holds a 2.6 per cent share in global exports  as of 2010, growing at a CAGR of 2.6 per cent during 2015-2019.”

Commodity-wise exports of food products from India

And the potential is huge here. ”India’s strategic geographical location gives it a unique competitive advantage when it comes to exports. With abundant raw material supply and a huge domestic market for processed food, the opportunities for food processing industry are innumerable.” 

According to Razdan, now is the time to strategise a food processing boom. “India has the potential to be the food export hub in the post-Covid-19 era and with the right interventions, can become the global leader in this industry.”