FDI in food processing: Govt may put conditions for investors

Food Ministry asks for putting a condition of investing 25% of foreign inflows for creating agriculture infrastructure

The DIPP may put certain conditions for foreign investors in the Cabinet proposal for allowing FDI in food processing sector.

Officials of the Department of Industrial Policy and Promotion (DIPP) and Food Processing Ministry are discussing mutually agreeable conditions to be included in the proposal, an official said.

The development comes in the wake of Ministry of Food processing asking to put a condition of investing 25% of the foreign inflows for creating agriculture infrastructure in the proposal.

The original proposal sent to the Union Cabinet did not have any condition.

Food Processing Minister Harsimrat Kaur Badal is demanding that foreign players looking to invest in the sector would have to mandatorily invest a portion of their investments in building infrastructure at the farm gate level for the benefit of farmers.

The minister is asking for putting a condition of investing 25% of the foreign inflows for creating agriculture infrastructure.

However, another official said that inclusion of any kind of condition in the proposal may hamper investments in the sector.

As per the original proposal, the DIPP had proposed to allow 100% FDI in marketing of food products produced and manufactured in India after approval from the Foreign Investment Promotion Board (FIPB).

The government is also likely to permit business-to- consumer online selling of food products produced and manufactured domestically.

The food processing sector has attracted $5,285.66 million FDI during April 2012 to December 2015 period.

The government had stated that FDI in food processing will benefit farmers, reduce wastage of fruits and vegetables, give impetus to the industry and create vast employment opportunities.

Overall FDI in the country registered a growth of 29% in 2015-16. It stood at $40 billion in that fiscal.