FDI In Food Processing Seen Trebling By '09

NEW DELHI: The government is looking forward to a three-fold increase in foreign direct investment (FDI) in the food processing sector over the next couple of years.

“FDI in the sector has almost trebled in the past two years, going up to Rs 441 crore in 2007 from Rs 174 crore in 2005. With the growing interest of international retailers in India, this momentum will further increase,” food processing industries minister Subodh Kant Sahay told ET.

If the government’s estimates come true, the FDI inflow into the sector would be Rs 1,300 crore in 2009. The food processing ministry is demanding more incentives for the sector in the 2008 budget, so that more FDI could be attracted.

“We have had initial discussions with the finance ministry and are hopeful of some more incentives this year. Apart from this, one of our key areas will be to initiate training facilities and capacity building efforts for farmers and entrepreneurs,” Mr Sahay said.

The ministry plans to start a nationwide entrepreneurship development programme. “We will establish food processing training centres at the farm gate level all over the country,” the minister said.

The government will also undertake programmes to provide farmers with linkages to the retail market or industrial users. This will lead to elimination of middlemen and result in substantially higher economic gains to the farmers.

“Today, in the absence of any such linkage, farmers are forced to go for distress sale. This would also reduce wastage of fruit and vegetables, estimated to result in losses of Rs 50,000 crore every year,” Mr Sahay said.

As international retailers like Wal-Mart, Carrefour and Woolworth are taking interest in the Indian market, food processing is emerging as one of the fastest growing sectors.

“We have met representations from most of these companies. India is a major attraction for them, not only as a market, but also as the sourcing hub. Most international companies point out at supply chain infrastructure as the biggest hurdle, and we are working on various ways to address it,” Mr Sahay said.