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Food processing to attract Rs 5,000 cr

Sapna Agarwal  |  Mumbai 

The economic slowdown does not appear to have affected investments in the food and agricultural processing industry. The sector is expected to attract fresh investments of over Rs 5,000 crore in the next two-three years, according to an industry estimate.

The Ministry of Food Processing Industries has received 42 expressions of interest (EoIs) after announcing the revised Mega Food Park Scheme (MFPS) in October 2008. The ministry had also announced subsidies worth Rs 50 crore for mega food parks.

“We received 42 EoIs, of which 10 were given an in-principle approval in mid-December,” SK Mohanty, under secretary in the ministry, told Business Standard. A quick calculation for the 10 mega parks shows that Rs 500 crore is expected to be invested by the government alone.

“The proposals accepted range from Rs 100 crore to Rs 500 crore,” said Mohanty, who expects detailed project reports for the 10 parks in the next 15 days. According to the MFPS, once the DPR is approved, the project has to be up and running within two years.

“If we peg the average investment in each food park at Rs 200 crore, and add Rs 500 crore from government subsidies, the 10 food parks will get a minimum of Rs 1,500 crore in phase one. Hence, the collective investment for 30 parks can be pegged at Rs 5,000 crore in the next two-three years,” explains Sanjay Seth, vice-president (food and agriculture), Technopak.

Some of those who have planned to invest in the first phase include Baba Ramdev, Pune-based Chordia Food Products, the Yagachi group of Karnataka and Sterling Agro of Punjab. “Each park will have a minimum of five companies, of which at least one should be a food processing company. These projects will be implemented as private-public-partnerships, with the government having a minimum holding. The investments will be made through a special purpose vehicle by the companies,” said Mohanty.

Says Pradeep Chordia, director of Chordia Food Park, who along with four partner companies plans to invest Rs 120-130 crore in a food park in Shirwal for creating cold storage and food processing infrastructure: “The food and beverage industry is not facing any slowdown and is registering good growth.” Chordia expects an additional investment of Rs 350 crore in the mega food park by food & beverage (F&B) manufacturing companies for production of branded products.

Even MNCs are looking at India for growth as they are keen to tap emerging markets for expansion. According to the organisers of the International Food, Drinks and Hospitality Exhibition held on December 2-4 in New Delhi, the F&B sector will be worth $110 billion (globally) in 2008 and is growing at 9 per cent per annum.

MNCs that are looking at India for expansion include Chase Distillery, Dawn Foods, Highland Smoked Salmon, Honeytop Speciality Foods, International Fish Canners, Somerdale International and Walkers Shortbread. “The food parks are attracting investments in juice plants, chips, breakfast cereals, the tea sector and related fields,” said Seth.

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