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"Food processing industry to reach $480 bn by 2020"
Monday, 23 January, 2017, 08 : 00 AM [IST]
Vadilal Industries Ltd is one of the largest frozen processed food players in India with significant exports of frozen vegetables and ready-to-eat snacks, curries and breads, apart from a strong presence in the ice cream sector. The company's aim is to become an Indian multinational in ice creams and frozen foods, and provide products and services at an affordable price without compromising on quality. Rajesh Gandhi, chairman & managing director, Vadilal Industries Ltd, in an email interaction with Anurag More, revealed his company’s plans, future scenario in the Indian food processing industry and more. Excerpts:

How has the Indian food processing industry evolved over the years? At what rate is the industry growing?
As per the estimates of Government of India, food processing industry in India has grown to around US$280 bn in 2015. India is ranked 12th in the world in exports of food and food products in 2015. The industry has grown by around 11% in last decade with shift in economic power, demographic change and empowered consumers. With employment of close to 4 million, the industry’s contribution to economic and social growth, export and driving productivity improvement across entire food value chain is undisputable. Government has also initiated schemes through Make In India which will provide handsome growth in near future.

What is the outlook for the industry?
Going forward, we expect similar growth rate for the industry due to accelerating urbanisation and integration of food supply chains. The food processing industry is expected to reach US$480 bn by 2020 due to growing disposable income, increased investment in food processing infrastructure and policy support by Government of India. One-third of India would be living in urban area in India.

What are the bottlenecks for the industry?
The food processing industry is grappling with multiple challenges, important being power connectivity, proper storage facility, proper infrastructure, wastage of raw material as well as finished goods due to above reasons is higher than other industry.

How is the industry coping with the challenges?
The industry is assisted by government through various policies for coping with challenges of low farm productivity and poor supply chain infrastructure. The industry players are also involved in public-private-partnership (PPP) model for improving procurement, processing and storage infrastructure for food processing products. As far as quality control and safety awareness is concerned, organised sector players adopt measures like brand reputation, marketing and advertising campaigns and strict quality compliance. An important challenge of skilled resources availability is met through training programmes and education to employees.

How are the current FSSAI regulations for the food processing industry?
Current FSSAI regulations and norms are very stringent to follow. Awareness FSSAI is gradually increasing amongst food Industry players. It is better to have such authority because marketers are compelled to maintain quality standards. General Manufacturing Practices are streamlined and this has forced manufacturers to offer best products to consumers. The regulatory authority’s constant check is also there which has put marketers in a condition to offer best qualitative product.

What are the growth factors in the industry?
Rising disposable income because of increased urbanisation, ensuring integration of food supply chain, rising consumer awareness about quality control & safety, and rising export opportunities and policy support are major growth factors for the industry.

Government of India has announced a scheme for skill development in food processing sector to be implemented through state governments under the National Mission on Food Processing, how will it benefit the industry?
The programmes included under this scheme are creation of infrastructure for degree and diploma courses in food processing, entrepreneurship development programme and establishment of food processing training centres. With food technology institutes, part of this programme for training and entrepreneurship, we believe organised sector to benefit from it more as government is also keen on improving growth of organised sector. MSME industry will be the biggest beneficiary as players in this segment face biggest shortage of skilled resources for converting their business into an organised one.

Brief us about your expansion plans.
Market expansion is need of the hour. This is done in Vadilal by focussing over entering new territories, introducing new products, increasing geographical reach, niche marketing in particular products and other areas. Considering all, we are planning to open new outlets and expanding retail networks.

How much will you be investing for the same?
Since we have already invested close to Rs 200 crore in last three years in capacity expansion, we do not anticipate further requirement of capital expenditure on capacity enhancement over the next three years.
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