Italian food processing firms sending major delegation to India

Ferrero and D'Orsogna are looking at both retail trading and processing part of business

Taking note of liberalisation in the foreign investment rules for the food processing sector in New Delhi, Italian companies are looking to secure a bigger piece of the Indian market.

A 150-company trade delegation led by Ivan Scalfarotto, the Italian deputy minister of economic development, will be in India from Wednesday. Looking to step up engagements will be chocolate maker Ferrero and food processing giant D'Orsogna, among others, said sources. The companies, they said, were looking at both the retail trading and processing part of the business.

Food processing industries minister Harsimrat Kaur Badal and industrial promotion secretary Ramesh Abhishek visited Italy over the past year. Last June, the government decided to allow up to 100 per cent foreign direct investment (FDI) in multi-brand food retailing, including through e-commerce. However, the products have to be produced, processed or manufactured in the country.

"Italian companies are absolutely aware of the recent reforms in FDI, as well as the mega food parks (scheme) and are looking to increase business likewise," said Francesco Pensabene, commissioner for India at the Italian Trade Agency.

Signalling investments in logistics and back-end infrastructure in the sector, he added that companies were waiting for details to emerge regarding the government plan for at least 101 new cold-chain projects.

Till now, the FDI rule changes in food processing have drawn little interest from international retailers, who say 'food only' stores isn't viable. As of now, only global e-commerce major Amazon has committed a major investment plan, of $515 million over the next five years.

Badal had earlier indicated the government was considering a proposal to allow FDI in non-food items, too, and that a decision was possible ahead of the mega world food event here in November. Her ministry wants FDI rules to be eased in multi-brand retailing and to allow food retailers to sell non-food items, too, up to a specified proportion. Other ministries are examining the matter, a senior food processing industries official said.

Of the Rs 30 lakh crore retailing pie in India, food constitutes Rs 4 lakh crore. The processing sector received $5.76 billion in FDI equity inflow from 2010-11 to 2015-16, according to government figures. In the first nine months of 2016-17, incoming FDI was $663.2 million.

"However, the manufacturing part of the sector has seen more interest from foreign investors in the past six months, with Japanese companies also aiming to set up shop," said the official quoted earlier.

The visiting delegation will heavily feature companies from the leather, textile and automotive component sectors. Also, while Italian firms had evinced significant interest earlier in the Smart Cities programme, infrastructure majors Todini and Astaldi are also tipped to be looking at India seriously.

There are around 140 Italian companies operating in India; investments from that country are $2.2 bn. In terms of trade, it is the third largest partner for India within the European Union. While exports were $4.2 bn in FY16, imports were $4 bn.