The entire Indian agriculture value chain is set to change drastically and food processing is going to be a main industry in the future, Finance Minister Arun Jaitley said on Friday at World Food India 2017, even as event's first day here saw the signing of 13 MoUs worth Rs 68,000 crore ($10.5 billion).
"The farm to kitchen chain is going to change in India, like elsewhere, with increased agricultural production, better storage facilities, more food processing and changing consumer food preference," Jaitley said at the inaugural session of the World Food India 2017 here.
"Food processing is going to be one of the principal industries of India in future, and an entrepreneur in 2017 should think of the industry from the perspective of where it will be in 2040, 2050," he said.
In terms of market size, the Indian food market was worth $193 billion in 2016 and is expected to cross $540 billion in 2020, officials said here. The sector has been growing at the rate of 12 per cent annually.
"There is a silent revolution ongoing in India. There is an expanding middle class and below that there is a growing aspirational class, which is building up reasonable purchasing power," the Finance Minister said, noting that this provided an enormous potential market for food products in the country.
About the potential, Food Processing Minister Harsimrat Kaur Badal said that only about 10 per cent of agricultural produce is processed in the country, leading to a lot of wastage. There is a 120 million tonne shortfall in the cold chain capacity, for instance.
The industry enjoys many fiscal incentives, including preferential credit under priority sector lending, she said.
"There is 100 per cent FDI (foreign direct investment) allowed into the sector through the automatic route and we have seen inflows increase 40 per cent over the last year," she said.
"The proposal for a Food Processing Bank is also under active consideration."
MoUs worth Rs 68,000 crore were signed in the presence of the Food Processing Minister.
The companies indicating intent to invest in India included PepsiCo, which signed an MoU worth Rs 13,300 crore for setting up a food and beverage plant, Coca Cola for investing Rs 11,000 crore in juice bottling and fruit processing plants and equipment, while ITC and Patanjali committed to investing Rs 10,000 crore each in the sector.
Other MoUs signed included by Amazon in the food retail business, Sharaf Group of the UAE for farm produce collection, processing and export and Yes Bank for financing food processing projects across the sector, according to a release by the Confederation of Indian Industry (CII) here.
In the presence of delegates from many countries, the event was inaugurated earlier by Prime Minister Narendra Modi, who pointed out that India is the biggest producer of milk in the world and the second in rice, wheat, fish and vegetable output.