1. www.pwc.com Food Processing Industry in India 8 September 2014 Strictly Private and Confidential Draft

2. Agenda Page 1 Significance of Indian Food Processing sector 1 2 Market scenario7 3 Key players across the food processing value chain10 4 Gap in the food processing sector12 5 Growth prospects in the sector14 6 Opportunities in the sector17 7 Challenges facing the sector20 8 References23

3. PwC 8 September 2014 Significance of Indian Food Processing sector 1 Section 1 Food Processing Industry in India

4. PwC 8 September 2014 Draft 2 Food Processing Industry in India Section 1 – Significance of Indian Food Processing sector Value addition of agricultural produce Creation of skilled and unskilled employment Remunerative price to farmers Food security Food processing sector is known as the Sunrise Sector of India The sector provides link between agriculture and industry Export earnings Significance of Indian Food Processing sector

5. PwC 8 September 2014 Draft 3 Food Processing Industry in India Section 1 – Significance of Indian Food Processing sector Advantage India Potential to grow as the largest sector in India Supportive government policies and initiatives Large scientific and research talent One of the largest food producers in the world Large and diverse raw material base Significance of Indian Food Processing sector

6. PwC 8 September 2014 Draft India's Competitive advantage 4 Food Processing Industry in India Section 1 – Significance of Indian Food Processing sector Geographical location 15 major climates, 20 agro climatic regions 2nd largest arable land in the world, 46 out of 60 soil types 52% cultivable land in India v/s 21% of world average Good connectivity to major export destinations Production Largest producer of milk, livestock, pulses and buffalo meat Second largest producer of fruits & vegetables Third largest producer of food grains and fish Cost Low labour and manufacturing cost

7. PwC 8 September 2014 Draft Supporting Environment 5 Food Processing Industry in India Section 1 – Significance of Indian Food Processing sector Government policies and initiatives In the 12 th five year plan, there is an allocation of 1 b USD made by the Government for the expansion of food processing industry Approval of National Mission on Food Processing Focus on infrastructure development: Agri Export Zones, Mega Food Parks etc. Investment opportunities: 100% FDI permitted under automatic route in food processing industry and food infrastructure 100% export oriented units are allowed to sell up to 50% of output in domestic market Export earnings exempted from corporate taxes

8. PwC 8 September 2014 Draft India’s economic strength in the sector 6 Food Processing Industry in India Section 1 – Significance of Indian Food Processing sector Food processing industry in India is estimated to be worth 135 b USD; around 35% of the total food market Industry provides employment to 13 million people directly and 35 million people indirectly Estimated number of registered FPI units in India are 36881 India's exports of Processed Food was 37.79 b USD in 2013-14 (12.1% of total exports With over 1 b population and more than 35% of population between the age group of 20- 44 yrs, human resource is an abundant factor in Indian economy Right skillset development would be a key parameter As per IMF, democratic dividend could add 2% points to per capita GDP growth per annum Human resource

9. PwC 8 September 2014 Market scenario 7 Section 2 Food Processing Industry in India

10. PwC 8 September 2014 Draft 8 Food Processing Industry in India Section 2 – Market scenario Key segments in the food processing sector Key segments and their contribution Fruits and vegetables (4%) Dairy products (16%) Meat and Poultry (10%) Consumer foods (32%) Grain processing (34%) Fisheries (4%) Beverages, juices, concentrates, pulp, slices, frozen & dehydrated products, potato wafers/chips etc. Snack food, namkeens, biscuits, ready to eat foods, alcoholic and non alcoholic beverages Flour, bakeries, starch glucose, cornflakes, mated foods, vermicelli, beer and malt extracts, grain based alcohol Whole milk powder, skimmed milk powder, condensed milk, ice cream, butter and ghee, cheese Frozen and packed- mainly in fresh form, egg powder Frozen and canned products mainly in fresh form

11. PwC 8 September 2014 Draft Classification of the Indian food processing industry 9 Food Processing Industry in India Section 2 – Market scenario

12. PwC 8 September 2014 Key players across the food processing value chain 10 Section 3 Food Processing Industry in India

13. PwC 8 September 2014 Draft Key players across the food processing value chain 11 Food Processing Industry in India Section 3 – Key players across the food processing value chain Inputs Production Procurement & storage Processing Retail Kirana shops

14. PwC 8 September 2014 Gap in the food processing sector 12 Section 4 Food Processing Industry in India

15. PwC 8 September 2014 Draft Gap in the food processing sector 13 Food Processing Industry in India Section 4 – Gap in the food processing sector Inadequate level of processing: Only 8% of the total food produced in India is processed which is far lesser than other major countries Despite the recent developments, food processing industry still withholds a huge untapped potential Wastage of food products leading to revenue loss of approximately Rs. 44000 crores/ annum CommodityWastage (%) Cereals4- 6 Pulses4- 6 Oilseeds3- 10 Fruits & vegetables6- 18 Milk0.8- 1 Fish6- 9 Meat2- 2.5 Poultry 3.5- 4 Source: CIPHET Study on post-harvest losses, 2010 Source: FnBnews.com

16. PwC 8 September 2014 Growth prospects in the sector 14 Section 5 Food Processing Industry in India

17. PwC 8 September 2014 Draft Growth prospects in the sector 15 Food Processing Industry in India Section 5 – Growth prospects in the sector With a CAGR of more than 7%, share of Food processing sector in India is estimated to increase to 6.5% of GDP by 2015 Food industry size in India is estimated to increase from 135 b USD in 2012 to 200 b USD in 2015 Value of exports in the sector has been showing an increasing trend with AAGR of 20.53% for the preceding 5 years ending 2013- 14 Source: DGCI&S, Kolkata

18. PwC 8 September 2014 Draft Growth prospects in the sector 16 Food Processing Industry in India Section 5 – Growth prospects in the sector Government initiatives Investment opportunities Increasing demand Government plans to raise value addition of food products from 20% in 2005 to 35% by 2015 FDI in the sector from April 2000 up to July 2013 has been 1.97 b USD Government expects 1.9 b USD of investment in infrastructure by 2015 The demand for processed food is expected to increase by about 8.5% by the end of 2017 Consumption expenditure is likely to reach USD 3.6 t by 2020 up from USD 1.0 t in 2010

19. PwC 8 September 2014 Opportunities in the sector 17 Section 6 Food Processing Industry in India

20. PwC 8 September 2014 Draft Opportunities in the sector 18 Food Processing Industry in India Section 6 – Opportunities in the sector Infrastructure development Capacity building Storage: Warehouses, cold storage facilities etc. Processing: Value added centres, irradiation facilities and modernised abattoir etc. Marketing: Packaging centres, Food Parks etc. Skill development: Setting up of Food Processing Training Centres, trainings at recognized institutions etc. Commercialization of farming community: contract farming, transfer of technology, best cultivation practices etc. International market linkages Services Information technology: Market linked, weather based, etc. Extension services

21. PwC 8 September 2014 Draft 19 Food Processing Industry in India Section 6 – Opportunities in the sector Opportunities in the sector Investments Infrastructure development: Incentives available for setting up processing plants in Agri Export Zones, exemption of service tax for setting up mechanized Food Grain Handling Systems, processing units for agricultural produce etc. Logistics: Truck Refrigeration units manufacturing refrigerated vans/trucks exempted from basic customs duty, grants available for Integrated Cold Chains etc. Processing: Key segments include fruit & vegetable, meat, fish & poultry, packaged, convenience foods & drinks, milk products etc. R & D: Financial assistance available for : Creation of infrastructure for running degree/diploma courses in food processing sector) Strengthening of institutional mechanism for human resource development in the sector Transfer of Technology/ technology commercialization: Grants from the government available for Entrepreneurship Development Programme Setting up of Food Processing Training Centres Training at Recognized National/State Level Institutions etc.

22. PwC 8 September 2014 Challenges facing the sector 20 Section 7 Food Processing Industry in India

23. PwC 8 September 2014 Draft Challenges facing the sector 21 Food Processing Industry in India Section 7 – Challenges facing the sector Inadequate infrastructural facilities Implementation of Food safety Laws and policies Unavailability of trained manpower High pressure on highways due to excess traffic volumes leads to delay in transit Rail transport suffers from lack of availability of wagons, lack of last mile connectivity from rail transporters etc. Dependence on manual labor and low technology usage at ports affects turnaround time and cost Expected shortfall of workforce in Indian Food Processing industry could be more than 9million workforce by 2022 Unawareness amongst various stakeholders about the Food Safety and Standards Act

24. PwC 8 September 2014 Draft 22 Food Processing Industry in India Section 7 – Challenges facing the sector Challenges facing the sector Constraints in raw material production Lack of Applied research R & D institutions need to develop more innovative products, processes and machinery Developments also required in the areas of industry interface, collaborative efforts with global peers etc. Availability of right quality of produce at the right time is an important issue in the sector Precision farming practices, better harvesting methods need to be adopted by the farmers

25. PwC 8 September 2014 References 23 Section 8 Food Processing Industry in India

26. PwC 8 September 2014 Draft References Ministry of Food Processing Industries Federation of Indian Chambers of Commerce and Industry National Skill Development Corporation FnBnews.com Corporate Catalyst India Agricultural and Processed Food Products Export Development Authority Indian Brand Equity Foundation 24 Food Processing Industry in India Section 8 – References

27. Thank you This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, [insert legal name of the PwC firm], its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © [Year] [insert legal name of the PwC firm]. All rights reserved. In this document, “PwC” refers to [insert legal name of the PwC firm] which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. Warning: The following disclaimer and copyright notices must be customised for the local territory, contact local Risk Management or Office of General Counsel to get the appropriate wording. DELETE THIS GUIDANCE BOX ALSO!