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FDI in Indian food processing netted 43% growth last fiscal

Updated: August 01, 2017

India has already attracted over US$180m in foreign direct investment in the new fiscal year and has been witnessing growing interest from foreign food companies, according to the food processing minister, Harsimrat Kaur Badal.

Referring to the decision to bring full FDI to multi-brand retail as “the biggest policy reform to have come to the food sector”, she revealed that US$183m had been invested by multinationals since May.

This follows a bumper 2017 financial year, which saw a 43% increase in foreign investment over the previous year, to US$727m.

Of all the segments open to FDI, the food processing sector saw the biggest jump in performance.

She said that India’s growing middle-class is providing a lucrative market for foreign companies to invest in, to the benefit of the local economy.

And by being part of the Indian supply chain, international food processors can help reduce domestic wastage and increase the income of farmers.

“Smaller countries like Malaysia and Thailand process about 60-70% of the food produced in their country, whereas we only do about 10%. Therefore, we have a long way to go and need to partner with global players for technology and know-how," Badal added.

The minister will now turn her attention to attracting interest from overseas companies to invest in 42 new mega food parks, for which the government has set aside an INR60bn (US$937m) development fund.

More from South Asia…

FSSAI told to forget about America and learn from China and Vietnam

The World Bank has urged India to be more self-aware and learn from middle-income countries to help it improve its food safety standards.

Currently, it closely follows the US Food and Drug Administration to set standards and rules regarding food safety, though these are not appropriate for India’s level of development.

Following an audit of the FSSAI’s regulations, World Bank agency the Global Food Safety Partnership found that India should look beyond American regulations.

Instead, it should forge closer partnerships with nations like China and Vietnam, which “are facing similar issues at present or have faced them recently and moved through them”.

The GFSP’s report said India could learn from China how to deal with scaling up operations for 1.3 billion people, and how to adapt modern systems and coordinate between the government, states, and municipalities.

From Vietnam, the FSSAI could gain a better understanding of the impact of slow urbanization. With 70% of Indians living in rural areas, it could also find out how best to deal with large, non-urban populations, and how to establish better surveillance plans for nationwide sampling.

The GFSP also said the regulator should follow the United Kingdom for regulatory delivery, and learn risk communication and compliance support from Netherlands and New Zealand.

Source: Food Navigator

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