By IANS
New Delhi : With a booming retail industry and a strong middle-class with more purchasing power, India’s food and beverages (F&B) segment is growing by leaps and bounds, says a survey.
In the current fiscal of 2007-08, the sector is growing at a rate of 8.5 percent, with a major contribution made by branded foods that is growing by about 15-20 percent, according to the Food & Beverages survey conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI).
Last year, products such as semi-processed, cooked ready-to-eat products grew by about 23 percent, organised branded milk products 20 percent, ice cream 26 percent, wine 24 percent and sugar 20 percent, the survey noted.
Other products that also witnessed growth during 2006-07 are bakery items, snacks, chocolates, confectionary, beverages and branded edible oil among others.
The chamber attributed the rise of the F&B sector to a liberal and flexible policy environment that has been given a catalytic effect in the entire developmental process.
The sector has been able to scale newer heights due to various reform measures and tax benefits, according to the survey based on feedback provided by over 300 sector-specific industry associations, companies, representatives of the industry and experts from firms both in the private and public sectors.
Measures such as de-licensing of the sector, allowing 100 percent foreign equity in some products, duty exemptions and free permission for using foreign brand names have all acted as propellers for growth.
“The excise exemption for 10 years and income tax exemption for five years for units located in backward regions under section 80IA have encouraged many companies to set up new units and helped growth,” FICCI said in a statement.
One of the most important factors that has acted as an engineer for growth is the rise of the middle class with greater purchasing power which in turn has resulted in change in their lifestyles, driving demand for more sophisticated products such as ready-to-eat Indian-style foods.
“The results of large-scale socio-economic changes have spurred growing demand for ready to eat Indian-style foods,” the statement said.
According to the industry body, northern India has emerged as one of the most important markets for the F&B segment in terms ready-to-eat foods. It has also become one of the most strategic destinations for setting up manufacturing units and retail chains.
Technological enhancement, emergence of modern machinery and upgrading of the manufacturing and packaging techniques have also created a huge impact in pushing the industry towards development.
However, the survey also highlighted certain problems that continues to act as deterrents in the growth of the sector such as lack of infrastructure, absence of a dependable cold chain system, high cost of raw materials and packing materials, high railway freight, non-availability of modern technologies and shortage of skilled labour for certain high value-added products.
FICCI also cautioned against the widespread brand duplication, which has become a major cause of concern, that takes place in the sector and are flooding major Indian cities and rural markets.