Food Processing Ingredients

An Expert's View about Food , Beverages and Tobacco in India

Posted on: 23 Jan 2012

India’s food processing sector continues to expand in response to changing demographics, strong local and international brands, emerging modern retail and growing consumer acceptance of processed food

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 12/29/2011 GAIN Report Number: IN1214 India Food Processing Ingredients 2011 Approved By: David Williams Prepared By: Shubhi Mishra Report Highlights: India’s food processing sector continues to expand in response to changing demographics, strong local and international brands, emerging modern retail and growing consumer acceptance of processed foods. Sales of packaged foods nearly doubled between 2005 and 2010 to $20 billion and the industry has attracted $1.3 billion in foreign direct investment since 2000. Despite the strong growth, per capita consumption of processed foods remains low and a relatively small percentage of India’s sizeable agricultural production is processed, suggesting that there is ample opportunity for future growth. In addition to strong competition from domestically-produced inputs, U.S. exporters of food ingredients face high tariffs and effective import bans in certain categories. Exporters of high quality ingredients that are not produced in India are likely to find the best opportunities. U.S. exports of food ingredients were $50 million in 2010, up 150 percent from 2005. Post: New Delhi Author Defined: SECTION I: INDIA FOOD PROCESSING SECTOR – MARKET OVERVIEW While India is one of the world’s largest producers of fruits, vegetables, cereals and milk, a significant amount of food is lost each year due to the lack of storage, transportation, cold storage and processing facilities. Indian consumers have traditionally preferred fresh ingredients and home-cooked meals. However, rising incomes, a young population, more working women, an expanding food retail sector and steady urbanization are combining to change food consumption patterns with an emphasis on convenience, quality and food safety. According to data provided by the Ministry of Food Processing, the food processing sector accounts for 14 percent of manufacturing gross domestic product and is valued at $58 billion. The modern sector, which is represented by large multinational and Indian brands accounts for 30 percent of production volume and 50 percent of production value. The balance is produced in what is referred to as India’s “unorganized” sector which is comprised of small manufacturers. Traditionally, a significant segment of the food processing in India was confined to primary processing (milling and crushing) of cereals, pulses and oilseeds along with the processing of foods such as traditional pickles, spice mixes and snack foods (cookies and salty fried snacks). Until the late 1990s, most of the food processing sector was limited to small-scale industries (SSI) where only small firms could obtain a license to process foods. In recent years, laws have changed to allow large firms to invest in the sector and Indian and global food companies have entered the sector. Despite increasing investment and modernization in the industry, the level of processing of perishable food products remains low (Table 1). Table 1: Level of Processing in Perishable Products Product Level of Processing (% of total production) Fruits & Vegetables 2.2 Milk* 35.0 Buffalo Meat 20.0 Poultry 6.0 Marine 26.0 Source: Ministry of Food Processing Annual Report 2010-11 and Industry Sources * A large segment of processed milk consists of packaged liquid milk The Government of India has simplified investment procedures in the food processing sector in an effort to attract foreign investment. The number of food products reserved for small scale industries has been reduced; investments are permitted under the “automatic route” which simplifies capital reporting procedures; up to 100 percent foreign equity can be invested for most products; certain taxes have been reduced for investors; and import tariffs on some equipment have been reduced. In turn, the food processing industry has attracted $1.3 billion in foreign direct investment (FDI) over the past 11 years accounting for one percent of total FDI inflows. Source: Department of Industrial Policy Promotion; Ministry of Commerce and Industries A key component of the Government of India’s strategy to reduce food losses and contain persistently high food inflation involves attracting investment in food processing and the food value chain. India’s emerging modern food retail industry is also creating new demand for processed foods and food processors are introducing new products and improving traditional recipes using improved technology, innovative packaging and aggressive marketing. The expanding industry presents new opportunities for suppliers of products that can be used as ingredients in food processing. Products that have traditionally done well in the Indian market such as nuts and dried fruits are finding new opportunities as ingredients in processed foods such as ice cream, cookies and baked goods. Additionally, the market for high quality ingredients, especially products that are not readily available in India, is reportedly expanding. U.S. exports of ingredients (defined as “other intermediate products” in Foreign Agricultural Service BICO reports at reached $50 million in 2010, a 150 percent increase from 2005. Trade Policy High tariffs continue to boost the cost of imported ingredients and limit opportunities for foreign exporters. Tariffs are many ingredients are 30-40 percent, but can vary. In addition, there are several additional fees tariffs that could apply. Exporters should work closely with their prospective importers to determine the likely landed post-duty cost of their products. There tends to be less opposition to imports of food ingredients, especially those that are seen as complementary to domestically produced ingredients. The Ministry of Food Processing is an advocate of export led investment in the food processing sector, where a firm tests a product or ingredient through exports with the intent to eventually invest and produce in India. In addition to high tariffs there are a number of non-tariff access issues that effectively prohibit imports of U.S. dairy products classified in chapter four of the Harmonized Tariff Schedule, poultry meat, beef, pork, pet food, seafood and foods derived from biotech crops (except soybean oil). Exporters should also ensure that their products comply with India’s food labeling and inspection requirements. The Ministry of Health and Family Welfare regulates both domestic and imported range of processed foods and food ingredients, through the standards laid out in Food Safety and Standards Act (More information is available in the follow GAIN reports: IN1172 and IN1165). Opportunities and Challenges in the Food Processing Sector: Opportunities: Growth in the food processing industry Increasing disposable incomes, dual income households, urbanization, increasing numbers of nuclear families, preference for convenience foods Seasonality of raw materials produced in India Indian consumers are becoming more accepting of foreign foods and flavors Small but growing modern food retail sector Increasing demand for quality and hygienic ingredients and foods Rising number of foreign brands is boosting quality throughout the sector U.S. products are associated with high quality Challenges: Processed foods still seen as inferior to fresh foods by many consumers Forward and backward linkages still developing Fragmented and long supply chain Processing firms source most of their ingredients locally Modern retail sector is relatively small High tariffs and market access issues Despite expanding palates, most consumers prefer Indian cuisine SECTION II: ROAD MAP FOR MARKET ENTRY A. ENTRY STRATEGY The best way to begin exporting to India is to identify a firm that imports and distributes food ingredients. These firms are adept at navigating the import and distribution processes and are able to engage directly with India-based food processors. While a few firms specialize in ingredients, others may handle retail-ready products in addition to ingredients. Some importers are also approved suppliers for multinational food processors and restaurants operating in India. U.S. processors that already supply major food processors in the United States or other foreign markets may wish to investigate similar supply relationships with firms that have a presence in India. Key initial factors to consider when researching the market are whether a product has a market access and the landed post-duty cost of a product. Survey existing and potential opportunities by reviewing FAS policy and market reports and consider engaging a market research firm to assist in analyzing market opportunities and challenges. Determine if your product has market access in India. Analyze the likely landed post-duty cost of a product. Recognize that after local margins and transportation, a product may be significantly more expensive. Establish a relationship with an Indian importer/distributor that provides services to the food processing sector. U.S. firms should examine all distributor prospects and thoroughly research the more promising ones. Check the potential agent’s reputation through local industry or trade associations, potential clients or bankers. Consider whether participating in an Indian trade show would be an effective means of identifying a distributor. For products with a potentially longer shelf life and/or larger order volumes (e.g., from medium or large food processing chains), U.S. exporters may identify and explore supplying through consolidators based in Dubai, Singapore and Europe. Participation in trade shows offers a good opportunity to get a sense of the Indian market and engage directly with potential importers or distributors. USDA currently endorses two annual trade shows in India. Mumbai-based Annapoorna typically takes place in September and Delhi-based AAHAR which takes place in March. While these shows are not geared specifically to ingredients, they typically draw many of the major Indian importers. Indian importers also travel to major international shows such as SIAL, ANUGA and Gulfood. Food Ingredient India is a trade show dedicated exclusively to the ingredient industry and is gaining popularity within the industry. Ensuring payment is another important consideration when establishing a relationship with an importer. Until a successful working relationship is established, exporters may wish to consider vehicles such as an irrevocable letter of credit. Alternatively, Indian importers are accustomed to operating without credit and may be willing to pay cash prior to shipment. While FAS India receives few queries concerning delinquent Indian importers, our offices do not have the authority or expertise to mediate contractual disputes or serve as a collection agent when differences over payment arise. FAS India can recommend local legal services, but these situations can be avoided with proper preparation and sale terms. For firms that qualify, the Export Import Bank of the United States provides exporter insurance. B. MARKET STRUCTURE The following chart gives an overview of the distribution network for imported food ingredients. C. COMPANY PROFILES Depending on the scale of the operation, Indian food processing sector can be divided into the following categories: Large Indian companies: Wholly owned by domestic players. Wholly-owned subsidiaries of foreign companies or joint ventures. Medium/small domestic food processing companies with a local or regional presence. Small scale companies or cottage industries in the unorganized sector. Table 2: Major Food Processing Players in the Indian Market Company Pro Sales End-Use Production duct Types Brand $Million Channels Location Gujarat Cooperative Packaged milk, butter, milk, Amul 2,000 Retail Gujarat Milk and Marketing fresh cream, milk powder, Export Federation sweets, clarified butter, milk Restaurants spray, cheese, chocolates, Hotels yogurt, infant milk formula, sweetened condensed milk, ice-cream and flavored milk Dynamix Dairy Cheese, butter, clarified Dynamix NA Retail Maharashtra Industries Ltd butter, whole milk powder, Restaurants skimmed milk powder, dairy Hotels whitener, infant food, casein Export / lactose, whey products, UHT plain milk, flavored milk & juices Mother Dairy Fruit Ice-cream, fluid milk, Mother Dairy NA Retail Delhi and Vegetable flavored milk, butter, Export Private Ltd. clarified butter, UHT milk, Restaurants cheese, yogurt, dairy whitener, juices, edible oils, fresh & frozen fruits & vegetables Mahaan Foods Coffee and dairy whiteners, Mahaan 45 Retail Delhi Limited edible casein, Processing Mahaan Dairies pharmaceutical and edible Limited grade lactose, whey protein Mahaan Protein concentrate, milk protein Limited concentrate, clarified butter, SMP, full cream milk powder, dehydrated milk fat, milk powder replacer, functional foods, infant food formulation, sports food, sauces and soups VRS Foods Limited Bactofuged milk (bacteria Paras NA Retail New Delhi and Uttar free), yogurt, butter milk, Processing Pradesh cheese (cottage, mozzarella), UHT milk, clarified butter, SMP, instant dairy mix, dimineralised whey powder, edible casein Pioma Industries Soft drink concentrate, Rasna NA Retail Gujarat instant drink powder, fruit Export jams, cordials, flavors, Processing pickles, curry pastes, snacks, fruit syrups Dharampal Satyapal Spices, snacks, flavored Catch 370 Retail Himachal Pradesh, Uttar Group water, spring water Pradesh, Delhi, Assam and Tripura Dabur Foods Limited Fruit juices, vegetable Real, Nature 840 Retail West Bengal, Nepal pastes, tomato ketchup, Care, honey Capsico, Homemade, Dabur United Breweries Beer, Spirits Kingfisher 911 Retail Punjab, Uttar Pradesh, Limited (UBL) Hotels Maharashtra Goa, Restaurants Karnataka, Kerala, Tamil Nadu, Andhra Pradesh, Madhya Pradesh, West Bengal and Nepal Britannia Industries Biscuits, bread, cakes, Britannia 580 Retail Delhi, Maharashtra West Limited cheese, dairy whitener Bengal & Tamil Nadu Britannia New Zealand Foods Pvt. (50:50 JV between Britannia Industries Ltd. and Fonterra , New Zealand) Indian Tobacco Fruit Purees/Concentrates, Sunfeast, 3,045 Retail Karnataka and West Bengal Company (ITC) IQF/Frozen Fruits, shrimps, Kitchens of prawns, spices, biscuits, India, salty snacks, wheat flour, Aashirwad, RTE foods, confectionary Candyman, Mint-o, Bingo MTR Foods Limited Soups, RTE Foods, rice MTR 260 Retail (Owned by Norway- meals, spice powders, instant based Orkla) sweet mixes, instant ice- Karnataka and Maharashtra cream mixes, vermicelli, pickles, ice-cream Al-Kabeer Exports Seafood, RTE meals, cottage Al-Kabeer NA Retail Hyderabad, UAE & UK Private Limited cheese, snacks, nuggets, burgers, french fries Hind Agro Industries Boneless meat and other NA Uttar Pradesh and Delhi Limited meat and meat products (goat, buffalo, sheep) Suguna Poultry Farm Poultry and poultry products Suguna NA Retail Tamil Nadu, Karnataka, Limited (fresh, chilled, frozen and Kerala, processed) Uttarprades,Chandigarh, Gujarat, Maharashtra and Andhra Pradesh Venkateshwara Poultry and poultry products Venkys 103 Retail Maharashtra and Madhya Hatcheries Group (fresh chilled, frozen and Pradesh processed) Darshan Foods Skinless sausages, Meatzza NA Retail and Haryana Private Limited pepperoni, German salami, HRI sausages, lemon pepper breaded burger patty, black forest ham, chicken breast roll, imported French turkey Hindustan Unilever Tomato ketchup, fruits Kissan, 708 Retail Maharashtra Madhya Limited (Unilever drinks, vegetable soups, ice- Annapurna, Pradesh, Uttar Pradesh holds 51.5 % equity cream, jams, ready to drink Knoor in HUL) products etc. Godrej Hershey Confectionery, soymilk, Maha Lacto, NA Retail Madhya Pradesh and Foods and Beverages juices, tomato puree, edible Sofit, Andhra Pradesh Limited / GHFBL (A oils, vanaspati Jumpin, JV between Hershey (hydrogenated vegetable oil) Smart Cook Company of North biscuit shortening, margarine America and Godrej beverages and foods limited) AVT McCormick Spices, oleoresins NA Export, Kerala Ingredients Ltd. Retail GlaxoSmithKline Health food drinks, biscuits Horlicks, NA Retail Punjab, Andhra Pradesh, Consumer Boost, Haryana Healthcare Maltova, Viva Weikfield Products Custard powder, baking NA Retail Maharashtra Co. (India) Pvt. Ltd. powder, drinking chocolate, cream caramel, chutneys, sauces and natural ayurvedic health foods Nestle’ India (Nestlé Dairy whitener, yogurt, Nescafe, NA Retail Punjab, Haryana, India is a subsidiary noodles, tomato ketchup, Maggi, Milky Uttaranchal, Goa, of Nestle’ S.A. of packaged milk, multi grain bar, Milo, Karnataka and Tamil nadu Switzerland) breakfast cereal, energy Kitkat, drinks, chocolates Barone, Milkmaid and Nestea Perfetti Van Melle Confectionery and chewing Center Fresh, NA Retail Haryana, Tamil Nadu and India (a subsidiary of gum Alpenlebe, Uttarakhand Perfetti Van Melle, Mentos, Italy) Chlor Mint, Big Babool etc. Indo Nissin Foods Noodles Top Ramen NA Retail Haryana and Karnataka Ltd. (a subsidiary of Nissin Food Products Company Ltd., Japan) Agro Tech Foods Edible oil, RTE pudding, Sundrop, 150 Retail & MaharashtraNew Delhi, Ltd. (A public dried green peas, popcorn, ACT II, HRI Andhra Pradesh and West limited company, cocoa mix, frozen potato Hunt’s Snack Bengal affiliated with products Pack, Crystal ConAgra Foods Inc., USA) Heinz India Private Tomato ketchup, baby food, Complan, NA Retail Uttar Pradesh and Limited energy drink Glucon-D, Karnataka Heinz Kellogg’s India Breakfast Cereals, biscuits Kellogg’s NA Retail Maharashtra Private Limited (A wholly owned subsidiary of Kellogg’s U.S.A.) Godrej Pillsbury Cereal flours and bakery NA Karnataka Limited Nederland foods BV (Pillsbury), Cargill India Private Vegetable oils, wheat flour, Nature Fresh NA Retail Haryana Limited flavors etc. Adani Wilmar Vegetable oils Fortune, NA Retail Rajasthan, West Bengal and Limited (50:50 JV King’s, Andhra Pradesh between Adani Bullet, Group, India and Fryola, Raag, Wilmar Holdings, Jubilee Singapore) Cadbury India Chocolate, confectionery, 5 Star, Perk, NA Retail Maharashtra Madhya Limited (Cadbury milk based drinks and Celebration, Pradesh, Karnataka and Schweppes Group of candies Éclairs, Himachal Pradesh Britain) Bytes, Bournvita Pepsico India Aerated beverages, fruit Pepsi, Lay’s, NA Retail Holdings Limited juices, potato chips, Tropicana, breakfast cereals Aliva Coca- Cola India Aerated beverages, fruit Coca-Cola, NA Retail Limited juices, energy drinks, tea and Diet Coke, coffee etc. Kinley, Georgia Note: Most information has been sourced from company websites. This list is neither exhaustive nor ranked according to the order of importance. Sales figure data are mentioned only for those companies for which information is available in the public domain. D. SECTOR TRENDS With the spread of cafés, chain restaurants, modern retail and efforts to attract investment in cold chains and food logistics, the food processing industry is expected to expand. Incentives and subsidies are offered for a variety of programs. The Ministry of Food Processing Industries has set targets to increase the level of processing of perishables from 6 to 20 percent, value addition by 20 to 35 percent and the share in global trade from 1.5 to 3 percent by the year 2015. The Ministry of Food Processing is also supporting the development, through subsidies and other incentive programs, of the cold chain infrastructure, storage facilities, modern slaughter houses, food parks and laboratories. A list of food processing research centers is provided in the following table. Table 3: List of Food Processing Research Centers and Institutions in India Paddy Processing research Centre Central Food Technological Research Institute National Research Centre for Sorghum (NRCS) National Dairy Research Institute CIFT (Central Institute of Fisheries Technology) The Central Marine Fisheries Research Institute, Kochi Central Avian Research Institute, Izatnagar The Central Inland Fisheries Research Institute (CIFRI) The Defense Food Research Laboratory (DFRL) Central Potato Research Institute Central Plantation Crops Research Institute Indian Agriculture Research Institute Indian Institute of Horticulture Research National Research Center for Mushroom Directorate of Wheat Research (ICAR) Indian Institute of Packaging, Mumbai Indian Veterinary Research Institute IIT, Mumbai Integrated Fisheries Project, Cochin National Institute of Nutrition, Hyderabad Central Leather Research Institute Source: Ministry of Food Processing, India. Consumption In volume and value terms, sales of every category of processed foods increased significantly between 2005 and 2010. A number of factors have combined to spur the increase in the consumption of packaged foods such as strong economic growth in recent years, more working women, urbanization, the nascent development of modern retail, the emergence of foreign and international brands, significant improvements in packaging and quality and savvy marketing campaigns. Expansion is being driven by domestic and multinational companies. Urban areas account for over 75 percent of sales as consumers seek convenience and quality in processed foods. For higher value, frozen and refrigerated foods, sales are almost exclusively in urban areas. Rural areas tend to have lower incomes and a preference for fresh ingredients. Nevertheless, rural areas are emerging as a market for well-prices shelf stable foods. Table 4: Sales Volume of Packaged Foods 2005 and 2010 (Thousand metric tons except where noted) Category 2005 2010 Percent Change Bakery 2,800 3,700 32 Canned Food 22 31 41 Confectionary 150 254 69 Dried Processed Food 490 810 65 Frozen Processed Food 10 15 50 Ice Cream (million liters) 70 160 130 Meal Replacement 17 27 59 Noodles 112 224 100 Oils and Fats 1,390 2,060 48 Pasta 0.9 1.7 88 Ready Meals 2.1 4.1 95 Sauces, Dressings, Condiments 133 216 62 Snack Bars 0 1.3 1,300 Soup 1.7 3.2 88 Spreads 15.3 20 31 Sweet and Savory Snacks 102 183 80 Meal Solutions 175 277 58 Source: Euromonitor Table 5: Sales Value of Processed Foods 2005 and 2010 (Billion Rupees) Category 2005 2010 Percent Change Baby Food 10.7 17.4 63 Bakery 113 181 68 Canned Food 2 3.1 55 Confectionary 33.2 68.4 106 Dairy 154.9 369.5 138 Dried Processed Food 28.3 56.5 100 Frozen Processed Food 1.4 2.5 79 Ice Cream 9.3 24.4 160 Meal Replacement 5.3 9.9 87 Noodles 9 21.9 143 Oils and Fats 101.6 172.6 70 Pasta 0.09 0.2 120 Ready Meals 0.37 0.82 121 Sauces, Dressings, Condiments 20.9 36.3 74 Snack Bars 0 0.67 na Soup 0.56 1.47 162 Spreads 2.3 3.9 70 Sweet and Savory Snacks 18 36.4 102 Impulse or Indulgence Products 130.7 252.9 93 Staples 343.6 683.5 99 Meal Solutions 26.7 46.3 163 Total Packaged Food* 500 983 97 Source: Euromonitor, one dollar equals Rs. 50 *Total does not equal sum of individual categories because of overlap between categories. Fruits, Nuts and Vegetables: India is a large producer of fruits and vegetables, but only two percent are processed and a significant portion of annual harvests are lost due to the poor handling. Processing is relatively diffuse with many small-scale industries involved in processing. The major processed items are fruit pulps, juices, Indian-style pickles, dehydrated vegetables, curried vegetables, dried fruits and processed mushrooms. The United States, Australia and Afghanistan are major suppliers of dried fruits and nuts. Meat and Meat Products: The processed meat sector, which was formerly regulated by the Ministry of Food Processing, is now regulated by the Food Safety and Standards Authority of India (FSSAI). There are around 4,000 municipal slaughter houses in the country along with a number of modern private sector slaughter houses and meat processing plants. Over 100 of India’s meat slaughter and meat processing plants are registered exporters of meat, primarily buffalo meat and, to a lesser degree, mutton. Dairy India is the world’s largest dairy producer, but according to the National Dairy Development Board India, demand for dairy products is growing at twice the rate of production. Sales of dairy products grew from Rs. 155 billion in 2005 to Rs. 370 billion ($7.4 billion) in 2010. Sales of ice cream increased from Rs. 9 billion in 2005 to Rs. 24 billion ($500 million) in 2010. Western cheeses and yoghurt are small but emerging dairy categories. Edible Oils Most of the edible oils purchased by households or institutional users are sold in loose form or as vanaspati (partially hydrogenated vegetable oil). According to industry sources, 35 to 40 percent of the Indian edible oil market is branded. India usually ranks as the world’s first or second largest importer of vegetable oil. Milling and Baking Approximately 90 percent of the grains undergo primary processing and wheat is the major grain processed in India, largely for wheat flour. Milling of rice and pulses makes up the balance of the grain processing sector. Most of the grain processing is carried out in unorganized sector but, some large players are active in the market and sell the processed produce in branded retail packs. With changing lifestyle breakfast cereal segment is showing slow and steady growth and is mainly confined to corn flakes and oat products. Bakery and snacks industry is governed by small and medium unorganized local players and very few organized units. As a result of growth in baking and retail industry imports of ingredients such as malt, starches, food flavoring agents, and wheat gluten are increasing. India also imports a significant amount of pulses from Myanmar, Canada, Australia and the United States. SECTION III: COMPETITION India’s domestic industry is the primary competitor for U.S. exporters of food ingredients. India, with its diverse agro–climatic conditions, produces a variety of foods and ingredients, the quality of which is expected to improve as firms invest in the food processing and logistics sectors. In addition, some competing suppliers enjoy a freight advantage and consolidators in markets like Dubai and Singapore offer quick delivery of small quantities. High import duties and restrictions on number of imported raw materials pose as an additional challenge for the U.S. exporters interested in Indian market. Table 6: Competition in Major Product Categories Product Net Major Strengths of Key Advantages (A) and Category Imports Supply Supply Countries Disadvantages (D) (In US$ Sources of Local Suppliers Million) IFY Apr/Mar 2009/10 Local production is A Indonesia nimal or vegetable A inadequate and more rgentina Major production hubs oils, fats and their 5,650 M than 40 % of total edible alaysia and competitive prices cleavage products USA oil consumption is dependent on imports.(A) M Price Competitiveness, Local production is yanmar Ca freight advantage (for countries inadequate and more nada Pulses 2,249 A like Myanmar) and the ability to than 20 % of total demand for ustralia USA produce specific kind of pulses pulses is demanded in India. met through imports.(A) USA Growing market Domestic production of Ed Afghanistan demand, preference ible Fruits and Nuts 1,247 Ch some of the major fruits nuts is ina for specific quality, A insignificant (A) ustralia popular at certain holidays Sugars and sugar Brazil a net exporter of 671 m India is usually petitiveness confectionery T Price cohailand sugar (D) Products of the milling A Growing domestic industry ustralia industry, rice Competitiveness, high (A), Increasing awareness m 28 Ch P ina alt, starches, USA quality about health & quality food (A), insulin, wheat gluten Stringent food laws (D) Indonesia Coffee, Tea, Mate And Srilanka Price Competiveness and Most imports are for re-export. 315 Spices Nepal proximity (D) Domestic production is not Dairy produce; birds' New keeping pace with demand (A). eggs; natural honey; Zealand Price Competiveness, sanitary The Indian import protocol is very 70 edible prod. Of animal Australia requirements stringent and effectively prohibits origin Denmark imports of dairy products from the United States. (D) Source: Ministry of Commerce and Industry and FAS India analysis SECTION IV: BEST PRODUCT PROSPECTS Table 7: Best Product Prospects for the Food Processing Ingredients Product Types Import Import 5 -yr Basic Key Constraints Market Attractiveness Value Volume Import Import For USA ($Million) (Metric growth Tariff CY 2010 Tons) CY 2010 Nuts (mainly 392 144,663 95 In shell Competition from other High demand and Almonds) Almonds suppliers exists but is not growing retail industry (Rs. 35/Kg) substantial Pistachios (10%) Cocoa and cocoa 115 31,454 420 30% Strong competition from Strong quality and brand preparations domestic and international preference suppliers Products of the 28 43,336 250 30% Competition from domestic Growing bakery and milling industry, suppliers retail industry and Malt, starches, increased popularity for insulin, wheat processed foods gluten Pulses 1,865 2,999,907 220 Zero Price Competitiveness, freight Local production is advantage (for countries like inadequate and more Myanmar) and the ability to than 20% of total produce specific kind of pulses demand for pulses is met demanded in India. through imports. Apples, Pears and 134 140,537 480 Apples Competition from domestic and Seasonal shortages and Quinces Fresh 50% Pears foreign suppliers like China, high prices, increasing 30% Chile, and New Zealand interest in quality fruits and growth of organized retail Grapes Fresh 21 12,843 110 30% Competition from domestic and Seasonal shortages and foreign suppliers high prices, increasing interest in quality fruits and growth of organized retail Pasta 11 8,867 30% Competition from domestic Increasing popularity 120 manufacturers and foreign suppliers Fruit Juices 27 18,999 237 30% Competition from domestic Increasing health Liters manufactures and foreign awareness and shortage suppliers from neighboring of quality products countries Sauces, 9 5,256 200 30% Competition from domestic Preference for imported preparations, organized and unorganized brands and growing food mixed condiments manufactures processing sector & seasonings Beverages, Spirits 235 19,245,019 Up to 150% High import duty and Growing consumption and Vinegar Liters 2 competition from domestic and lack of domestic suppliers production *Includes almonds, walnuts, pistachios, hazelnuts, chestnuts etc. Source: Ministry of Commerce and Industry, GOI and Post analysis Products Not Present Because They Face Significant Barriers U.S. exports to India of dairy products classified under chapter four of the Harmonized Tariff Schedule, pet food, pork and pork products (cooked and uncooked), poultry and poultry products (cooked and uncooked), and seafood are effectively prohibited because of sanitary protocol requirements. Imports of beef are prohibited for religious reasons. Except for soybean oil, imports of products containing ingredients derived from biotech crops are also prohibited. SECTION V: POST CONTACT AND FURTHER INFORMATION The following reports may be of interest to US exporters. These, and related reports prepared by this office, can be accessed via the FAS Home Page,( by clicking on "Attaché Reports," and typing the report number. Report Number Subject IN1215 India: Exporter Guide 2011 IN1005 India: Retail Food Sector 2010 IN1186 India: HRI Food Service Sector Annual 2011 IN1112 Dairy and Products, Annual IN1184 Livestock and Products, Annual IN1165 FAIRS: FSSAI releases Draft Food Safety and Standards (Import) Regulations IN1134 Product brief: Indian Wine Market IN1189 Tree nuts Annual For additional information and guidance please contact: Agricultural Counselor Foreign Agricultural Service Embassy of the United States of America Chanakyapuri, New Delhi - 110 021 Ph: (91-11) 2419-8000, Fax: (91-11) 2419-8530 E-Mail:
Posted: 23 January 2012

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