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Hilly regions – Destination for investment in food processing sector
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Monday, 03 January, 2022, 08 : 00 AM [IST]
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Ashwani Maindola, New Delhi
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The food processing industry, which is marked by the Union government as one of the key sectors that would help India in achieving its target of a five trillion dollar economy, is, despite several policy challenges, moving with a steady pace.
And, northern states of India, with varied agro climatic zones provide ample opportunities for the investors. In recent times, hilly regions have emerged as a destination for investment in the food processing sector. The regions like Jammu, Himachal, and Uttarakhand are attracting investments.
Himachal has got its first Mega Park recently, and Uttarakhand despite being a hilly and small state has two functional Mega Parks.
Focus State –Uttarakhand
According to the Department of Horticulture and Food Processing –DoHFP-Uttarakhand, Horticulture is very important component of Uttarakhand’s economy. The major horticultural crops are Apple, Pears, Peach, Plum, Apricot and other stone fruits; Strawberries, Mango, Litchi, Aonla & Guava and off-season vegetables such as Tomatoes, Peas and Cauliflowers, Cabbage and Hill Capsicum while spices including Ginger, Turmeric, Garlic and Chilli are also grown at large.
Besides, the state provides opportunities for a variety of other horticultural crops including fruits, vegetables, floriculture, spices, mushroom, bee-keeping, sericulture, tea and medicinal & aromatic plants.
The state ranks at number one in production of pear, peach, plum and apricot, second in walnut and third in production of apple in the country. Moreover, the state has taken lead in grading and packing of apples.
According to DoHFP Uttarakhand, the state produces about 1 lakh tonne of apple per annum.
However, it is pertinent to note that state horticulturists have preferred to remain the suppliers of primary products rather than diversify into value-added finished products.There is high scope for setting up of industrial units for primary/minimal processing, juice concentrate, jams, jellies and marmalade.
Also the area under horticultural crops has increased from 1.17 lakh ha in 2002-03 to 2.96 lakh ha in 2019-20 and production increased from 8.90 lakh MT (2002-03) to 17.91 lakh MT during 2019-20. However, demand for fruits, vegetables, flowers and spices is increasing much faster than growth in production.
Similarly, the state has been classified into various agro climatic zones according to the elevation, as Uttarakhand situated in the North - Western Himalayan region consisting of mountainous tracks with elevation ranging from 350 – 7816 m above mean sea level.
Zone A, up to 1000m having scope of all seasonal vegetables, and tropical fruits like mango, Zone B, mid hills, 1000m to 1500m having ample scope of off season vegetables and citrus fruits, Zone C, high hills 1500-2400m, good for off season vegetables and fruits like apple, pomegranate, peach etc. and Zone D, very high hills, above 2500 -3500 meters elevation, good for European vegetables.
Also, Uttarakhand has more than 2.5 lakh hectare of land under organic farm.
Presently, a total of 148 major food processing units (which include all the segments of food) have been established in the State out of which 102 units are horticulture based and 2 Mega Food Parks (Patanjali Mega Food Park, Haridwar, & Himalayan Food Park, Kashipur) are operational.
Road ahead
Meanwhile, as the world is moving out of the pandemic phase, there has been an increased interest towards food processing industries. According to DV Malhan, a food industry expert and president of the Society of Indian Bakers, there are many people who are now moving towards processing industries as they witnessed difficulties in running their business due to pandemic.
“Certain places like Jammu and parts of Uttar Pradesh have seen increased industrial activities in the food sector. And this trend is likely to move upwards,” he said.
According to Ministry of Food Processing Industries, UP has currently 22 units approved or sanctioned under the PMKSY scheme, which is 9 for Uttarakhand, 8 for Punjab, 12 for Rajasthan, 17 for Himachal Pradesh, 15 for Haryana, and 19 for J&K.
Similarly, under the PMFME scheme 10 Incubation Centers have been approved in the districts of Agra, Aligarh, Ayodhya, Bareilly, Basti, Gorakhpur, Jhansi, Lucknow, Meerut and Varanasi with an outlay of Rs.33.26 crore.
However, despite the efforts, the Northern states weren’t receiving enough foreign direct investment. According to the figures available with the MoFPI, UP got 2.51 million US$, for Himachal it was 0.16 million US$, Haryana got 19.16 million US$ and Rajasthan 80.37 million US$ in 2020-21 (April to March).
According to a reply by MoFPI in Parliament, as per data reported by Department for Promotion of Industry and Internal Trade (DPIIT), Foreign Direct Investment (FDI) in food processing sector declined from US$904.7 million in 2019-20 to US$393.41 million in 2020-21 (a decline of 56.5%).
“Foreign direct investment inflow is dependent on many factors including global economic conditions and economic scenario of the country. The year 2020-21 was affected by Covid pandemic. The Government reviews the FDI policy on an ongoing basis and makes suitable changes from time to time, to ensure that India remains attractive and investor friendly destination,” reads the MoFPI statement.
Hopeful about the future, Manish Bandlish, managing director, Mother Dairy Fruit & Vegetable Pvt. Ltd, says “The year 2021 was yet again a dynamic year. However, the revival has been remarkable for us at Mother Dairy. Preparedness coupled with collaboration, resilience and agility played a vital role in the pandemic stressed quarter of this year, to ensure well being of each and every employee as well as business continuity in order to serve our consumers. The year saw new products, markets and experiences, both for the business as well as the consumers. Despite the happenings, this year saw consistent supplies as varied channels such as e-commerce continued big-time. In addition, the consumption trend of consumers which began witnessing a change last year are persistent this year as well with in-home consumption and preference for packaged foods going strong.”
“To further cater to the evolving consumer needs, we introduced new products across the indulgence, convenience and health & wellness spaces – extension of varied value-added dairy products such as ice creams, packaged sweets & cheese spreads, strengthening of our portfolio of nutritional offerings with the launch of Nutrifit Probiotic Yoghurts as well as the introduction of new Safal frozen vegetables. In 2021, we launched around 20 new products in line with the growing consumer preferences. With focus towards convenience and nutritional offerings, we will continue to launch new products going ahead. We also expanded our milk sales operations across more towns of Bihar and West Bengal. For our home-turf, i.e., Delhi/NCR, we embarked upon a journey of strengthening our network of consumer touchpoints mainly in the form of kiosks and franchise shops and have set course to cover the length and breadth of this region with a collective count of over 2500 exclusive Mother Dairy consumer touchpoints by FY22-23".
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