The food processing sector in India accounts for a third of the country’s total food market and 10% of its GDP. According to India’s Ministry of Food Processing Industries, the industry will reach $344 billion by 2025. The most promising food sectors in India include grain milling and grain-based products, tomato paste, edible oils, and dried and preserved fruits.
Shifts in consumer behavior contribute to the growth of this sector—urbanization leads to an increase in nuclear families as opposed to the traditional Indian joint family system with three or even four generations living in one home. This results in a younger population, a larger number of working women, and increased awareness about health. With little time to cook, young mothers turn to quality convenient foods, while being receptive to foreign flavors and brands.
Despite its growth, the food processing sector remains underdeveloped. In 2014, India lost 40% of fruit and vegetable produce due to inadequate supply chain infrastructure and cold storage. To resolve this, the Indian government is establishing mega food parks across the country to promote private investments for storage unit construction.
Backed by government support, the industry is increasingly appealing to investors. India’s government allows 100% foreign direct investment and offers fiscal incentives such as tax exemptions and reductions. For example, dairy companies using machinery for pasteurization, drying, and evaporation are exempt from excise duties. According to Food Processing Minister Harsimrat Kaur Badal, this sector received $421 million in foreign direct investments in 2014.
Illinois-based Archer Daniels Midland acquired Madhur Agro, Geepee Agri Pvt. Ltd., and Tinna Oils Ltd., expanding Indian oilseed processing capabilities. In India, ADM primarily processes oil seeds including soybean, rapeseed (such as canola), mustard, sunflower, and cotton into crude oils, which is refined into edible oils and sold under Health Fit and Parampara brands.
Based in Minnesota, Cargill acquired the Leonardo olive oil brand from Dalmia Continental Pvt. Ltd. Cargill India Pvt. Ltd. processes, refines, and markets vegetable oils, fats, and blends, crushing soybean and rapeseed in western and central India before selling them under the Sweekar, Gemini, and Nature Fresh brands, in addition to Leonardo.
Companies of Indian origin are also expanding facilities to increase processed food production. The world’s largest basmati rice processing company, REI-Agro Limited, executes the entire process from drying and de-husking to milling and polishing to packaging and distribution. It has a 22% market share in Delhi, Gujarat, Tamil Nadu, and Maharashtra and vibrant exports to the U.S., Europe, and Africa.
Ruchi Soya Industries, a top exporter of soy meal extractions processes a quarter of India’s soy crop and is a major player in the edible oil industry. In the first of many partnerships, it established a joint venture with Kagome, a Japanese tomato processing company, to introduce tomato products to the Indian market. This was followed by agreements with J-Oil Mills and Toyota Tsusho to process and produce healthier cooking oils and fats. Last year, Ruchi Soya released Sunrich, its own brand of sunflower oil.
