KPMG Predicts Positive Future Ahead for Indian Food Processing Sector Post COVID
Food Processing is India’s flagship MSME intensive sector along with Textiles, Garments and many others. Like many others, this sector is also witnessing a negative impact from pandemic on itself. But there are positive times ahead. According to a KPMG report on the Indian food processing industry, “The post-Covid-19 world looks promising for India’s food processing industry as it recalibrates itself to capitalize on increased opportunities in the industry and ears up to capture new markets.”
The report also says optimism for the industry emanates from the projection of exponential growth in demand for processed food in rural areas and countries Tier 2/3 cities. Moreover, a lot of untapped potential remains to enhance India’s export to the top 10 food importing countries of the world where the country at present has a limited presence.
The report had recommended that government can support the exporters by negotiating Free Trade Agreements (FTAs), lowering Non-tariff barriers (NTBs), and expeditious implementation of Remission of Duties and Taxes on Exported Products (RoDTEP) scheme. This will help in larger penetration of Indian value-added food products in bigger global markets.
According to the report, the food processing industry is one of the mainstays of the global economy with value addition of $ 1.7 trillion. Also, the Indian processed food market is expected to grow to $ 470 billion by 2025 from $ 263 billion (2019-20).
The report titled “Indian food processing industry – growth opportunities post the Covid-19 pandemic”, further said that the pandemic had provided an opportunity to the Indian industry to scale but the success would also depend on the development of high-quality food testing and certification infrastructure in the country as hygiene needs grow in the post-Covid world.
Innovative products focused on wellness, health and nutrition are likely to see a huge opportunity in the domestic market, the report said harping on the importance of increasing cold storage capacity in the absence of which scalability of perishable products has been challenging. Moreover, Digitalised Supply chain, Smart warehousing and logistics using industry 4.0 technologies can help India reduce wastage during storage and transit, it said.
According to KPMG, thr pandemic has given rise to a new normal with sustainable food chains, growing preference for healthy food and localized food supply with increased trade barriers.
“In the post Covid-19 era, there is likely to be a surge in non – tariff measures including stringent Sanitary and Phytosanitary Measures (SPSs) and Technical Barriers to Trade (TBT) by major economies to ensure food safety against transmitted chemicals and diseases,” the report said.
It also recommended government partnership with private players through appropriate PPP models to ensure a faster scale up of quality infrastructure in line with industry requirements.
Adopting a focused approach with collaboration from diverse stakeholders is required for catalytic growth of the industry. An inter-ministerial committee led by MOFPI and consisting of various ministries may be constituted to bring various stakeholders together in a coordinated manner, the report said.