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States not traditionally strong in food processing adding capacities: KPMG

Saturday, 08 May, 2021, 08 : 00 AM [IST]

Ashwani Maindola, New Delhi

A study by KPMG has found that the Indian food processing industry is evolving rapidly with an increase in newer segments along with addition in number of processing capacities in states, which were not traditionally strong in food processing.

The processing capacity is concentrated in few states with top 5 states accounting for more than 50 per cent share in Gross Value Added (2017-18). The share of traditionally stronger states such as Maharashtra, Madhya Pradesh, Punjab and Haryana witnessed a decline while the share of states such as Tamil Nadu, Karnataka, Uttar Pradesh, and Gujarat has risen, signalling addition of processing capacities in these states.

Maharashtra, Gujarat, Uttar Pradesh, Karnataka and Tamil Nadu account for >50% share in GVA (2017-18) while Cereals, Grains & Oilseeds, Packaged foods and Dairy account for 92% share in the food processing segment (2017-18).

The study finds that this trend is an indicator of a shift in consumer preference for processed food. The industry is thus expected to witness an expansion in product types and geographies driven by regional preferences.

All the 5 major sub-segments witnessed strong growth with meat & marine and dairy segments fuelling the growth followed by packaged foods as preference for value added dairy products, frozen meat, RTE and snacks.

In Dairy, Uttar Pradesh has 16 per cent share, Rajasthan: 13 per cent, Madhya Pradesh: 8 per cent, Gujarat: 8 per cent and Andhra Pradesh: 8 per cent. In Meat and marine, Andhra Pradesh: 21 per cent, West Bengal: 12 per cent, Uttar Pradesh: 9 per cent, Maharashtra: 8 per cent and Tamil Nadu: 6 per cent.

In Cereals, grains & oilseeds - Uttar Pradesh: 18 per cent share, Madhya Pradesh: 12 per cent, Punjab: 11 per cent, Rajasthan: 7 per cent and West Bengal: 6 per cent. In beverages (non-alcoholic), Maharashtra: 26 per cent, Uttar Pradesh: 15 per cent, Madhya Pradesh: 9 per cent, Karnataka: 6 per cent and West Bengal: 5 per cent.

In fruits and vegetables, Uttar Pradesh has 12 per cent share, West Bengal: 10 per cent, Madhya Pradesh: 8 per cent, Gujarat: 7 per cent and Andhra Pradesh: 7 per cent while in Packaged foods, Maharashtra has 13 per cent share, Uttar Pradesh: 8 per cent, Karnataka: 8 per cent, Tamil Nadu: 7 per cent and Gujarat: 3 per cent share.

The study says that given the low levels of processing especially in the fruits & vegetables (F&V) segment, increase in consumer income and push from the industry, there is ample growth potential for processed food in India.

The study added that the processing capacities of different states further indicate that growth is concentrated within segments. As such there is ample scope for diversification within segments and expanding to new geographies as the manufacturers shift their focus towards adopting regional cuisines and flavours in processed food.