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Agriculture & Food Processing

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INDIA SCENARIO

Mega Food Park Projects approved by MoFPI.

  • 100% FDI is permitted under the automatic route in food processing industries in India.
  • 100% FDI is allowed through the government approval route for trading, including through e-commerce in respect of food products manufactured or produced in India.
  • For further details, please refer FDI Policy, Government of India
  • The share of processed food exports in agri-exports has increased substantially from 13.7% in 2014-15 to 25.6% in 2022-23.
  • The total FDI received in the food processing sector from Apr 2000 till Mar 2024 was $12.58 Bn which is 1.85% of the total FDI Equity inflow.
  • By 2025 the Indian Food Processing market is estimated to reach $535 Bn and growing at a compound annual growth rate of 15.2%. Tier-II and Tier-III cities could mirror the trend visible in metropolitan areas, by consuming more processed food in the coming years.
  • India’s consumer spending to grow to $6 Tn by 2030.
  • India's export of agricultural and processed food products rose close to $51 Bn in 2022-23. Major exporting countries include USA, Bangladesh, UAE, Vietnam, among others.
  • India has emerged as world leader in the production of a variety of fruits like mango, banana, guava, papaya, sapota, pomegranate, Lime & aonla and is the second largest producer of fruits and vegetables.
  • In FY 2023-24, India exported 11.1 Mn Tonnes of non-basmati rice and 5.2 Mn Tonnes of basmati rice.
  • Government aims to make India the Global Hub for 'Shree Anna' (Millets)
  • World's largest producer of Spices, Milk and Pulses
  • World's second largest producer of tea and sugarcane
  • World's second largest producer of wheat, fruits and vegetables
  • 0.3%Share of GVA of Agriculture & Alled Sector in Total Economy (at current pices) (2022-23)
  • 0.22% Share in total employment
  • $0BnWorth of agrteutural and processed food products exported in 2022-23
  • 0.6%Cropping Intensity

UTTAR PRADESH SCENARIO

  • 15 Agro & Food Processing Parks/clusters established in Varanasi, Barabanki, Saharanpur, Gorakhpur etc.
  • Mega Food Park, Baheri: 40 KM from Bareilly bordering Uttarakhand. 247.60 Acres have been earmarked for the Mega Food Park
  • 250 Regulated Market; 225 Rural Market; 100 eNAM Mandis
  • 4 Agriculture Export Zones, 10 ICDs, 1909 Cold chains, 35 FPOs
  • Premier institutes like Kanpur University, Ayodhya University, SHUATS Prayagraj, SVPUAT Meerut and Indian Veterinary Institute, Bareilly

DOMINANT INDUSTRY FORCES

KEY DEVELOPMENT IN THE INDUSTRY

  • Top commodities : Buffalo meat, Rice (Basmati and Non-Basmati), Cereal preparations, Wheat and Dairy products
  • Current key markets for UP - South Africa, USA, Australia, Canada.
  • UP’s Production of Basmati Rice : 25.5 lakh MT (#3 in area)
  • UP has GI tag for Kalanamak rice.
  • UP’s production of Kalanamak Rice : 15,000 MT (2021) ~7% leveraged for exports.
  • UP’s Basmati exports (2021-22) :  $0.05 bn; India: $3.5 bn (expected to grow at 6% CAGR)

Production (MT) vs Processing (MT)

Produce UP - Rank in Production UP - Rank in Processing
Wheat 1 3
Paddy 2 6
Sugarcane 1 2
Mango 1 6
Potato 1 6
Peas 1 4
Milk 1 4
Fish 6 10+

POLICIES & SCHEMES

Subsidies & Incentives1

Capital Subsidy

  • Plant, machinery, and technical civil work - 35% capped at INR 5 Cr
  • Expansion and modernization / up-gradation – 35% capped at INR 1 Cr

Incentives

  • Exemption from charges : 2% of the value at circle rate
  • 75% rebate on external development charges
  • 50% fees waived off on CLU (Conversion of Land Use)
  • Stamp Duty Exemption @100%

Infrastructure Support2

  • Cold Chain and value addition infrastructure : 35% capped at INR 10 Cr
  • Frozen storage / deep freezer & value addition: 50% capped at INR 10 Cr
  • Agro processing clusters : 35% capped at INR 10 Cr
  • Creation of backward and forward linkages : 35% capped at INR 5 Cr

Technology & Innovation3

  • Solar power projects : 50% subsidy in rural areas, 90% for women entrepreneurs
  • Promotion of decentralized processing and storage : Assistance for SHGs/FPOs/Farmers capped at 50% of total project cost or Rs. 50 lacs

Market Facilitation4

  • 25% Freight Subsidy on exports excluding Nepal, Bangladesh and Bhutan
  • Exemption from Mandi fees and cess
  • Support for food processing start-ups and SHGs/FPOs/Farmers

Key Supporting Measures

KEY INVESTMENT OPPORTUNITIES

  • Primary Opportunities

    Processing - With strong supply side advantages, local demand, rising export potential and policy support, processing of food products offer immense potential in the State. Considering the abundance of naturally existing agro-resources, investments in mango processing, turmeric processing, aonla processing, breakfast and cereal manufacturing, garlic and chilli processing, etc. is a promising opportunity in Uttar Pradesh.

  • Primary Opportunities

    Manufacturing & Supply of Agro inputs – Given the huge agrarian economy of the State, immense potential exists in manufacturing, production and supply of necessary fertilizers, seeds, agro-chemicals, farm equipment, machinery and irrigation systems to increase production and productivity.

  • Primary Opportunities

    Integrated Units - Investment in developing integrated units with processing, preservation, packaging and warehousing facilities at notified Agro Parks in the state is a promising investment opportunity. These agro parks include Mega Food Park at Baheri, Agro Park at Barabanki, Khemsepur (Farukkhabad), Karkheon (Varanasi) and Barhgarh-II (Chitrakoot).

  • Other Opportunities

    Establishment of Centre of Excellence for Agriculture sector

  • Other Opportunities

    Processing of Potatoes and Mangoes

  • Other Opportunities

    Development of packhouses

  • Other Opportunities

    Development of storage infrastructure

  • Other Opportunities

    Development of Special Agriculture Economic Zones


Nivesh Sarathi Nivesh Mitra