An Appetite For Growth

Quality Tea Plantations has been in the tea business for almost 25 years in the Dooars, north Bengal. Recently, the company thought of diversifying, and it was the country's surplus and underutilised potato crop that attracted its attention.

Quality Tea set up a $ 12-million joint venture, Farm Frites Quality Limited, with Farm Frites BV of the Netherlands to produce french fries, potato croquettes and potato cones waffles. Halfway through the project, Quality discovered that the India doesn't produce the right quality of potato, so it tied up with another Dutch firm to import high-yielding seeds.

The problem is that private enterprises in India are not allowed to import seeds. Result: the company is hoping the government will liberalise its policies so that the project can take off.

 

Like Quality Tea, there are hundreds of food processing hopefuls who are waiting to cross policy hurdles like this before they can take advantage of the huge, untapped Indian food processing industry.

Despite policy shortcomings this is emerging as a sunrise industry in India. Nearly 11 per cent of foreign investments approved so far has been in the food processing industry. Consider the potential. Estimates by the Confederation of Indian Industry (CII) show that processed food accounts for just two per cent by volume and 10 per cent by value of total food production. And of the total value of domestic foods market of Rs 1,75,000 crore, processed food accounts for Rs 17,500 crore.

India's food processing basket is still structured on conservative lines. Traditional items like sugar, edible oils, vanaspati, tea and dairy products constitute 60 per cent of production. Beverages and tobacco products account for 12 per cent, fruit and and vegetable for 1.6 per cent and bakery products 2.5 per cent.

But the future of the Indian food processing doesn't depend on the domestic market, which is limited by conservative eating habits. Says Anand Naik Kurade, consultant and president of the Confederation of Indian Food Trade and Industry,