This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 8/1/2017
Overview

India is an agrarian economy and more than 52% of the land area is considered arable. India is among the highest-ranking countries in production volume for various commodities like rice, cotton, and dairy. Agriculture and related sectors such as forestry and fisheries account for 17% of GDP though this has been declining since 1991. Agricultural related occupations, including those of the textile sector, account for roughly half of India’s labor market. Consequently, the agricultural sector plays an important role in Indian economics, politics and society.

Indian agricultural production for food staples is monsoon dependent. Farm yields are generally below the world average. This low productivity is caused by many factors: heavy government regulation, inefficiency in the food distribution system, poor infrastructure (which results in post-harvest losses of up to 40% for certain products), lack of awareness in the use of modern agricultural practices and technologies, unpredictable weather, small average farm sizes of 2.87 acres and shrinking, and agricultural subsidies that distort market signals and hamper productivity-enhancing investment.

The agricultural sector is witnessing a shift from traditional farming to horticulture and to poultry and dairy production. The
demand for fresh and processed products of all types is increasing as the population urbanizes, incomes rise, and consumption habits change. The growth of an efficient cold chain network from “farm to fork” will help curb the current spoilage rate of agricultural output while helping producers capture value as products retain quality and give extra benefit to consumers.

According to the latest survey of Industries, there are 37,175 registered food processing units in the country. According to the Ministry of Food Processing Industries, the food processing sector accounts for 1.7% of GDP.

While India has stringent food and agricultural import regulations and standards that are often inconsistent with international guidelines as well as high average tariffs on these goods at about 40%, its imports of U.S. food, beverage, and agricultural products are growing. In 2016, Indian imports of American agricultural, fishery, and forestry products were $1.5 billion. Indian imports of consumer-oriented food and agricultural products from the United States were a record $732 million and consumer-oriented imports from all countries were $4.2 billion. Imports of tree nuts from the United States, largely almonds and walnuts, exceeded $580 million. Other strong and/or growing areas in 2016 included: fresh fruits, prepared food products, chocolate and cocoa products, fresh vegetables, processed fruit and vegetables, condiments and sauces, non-alcoholic beverages, as well as snack foods. India’s food retail sector is dominated by small kirana stores and government-run food distribution outlets supplying essential commodities. The emergence of larger chains and stores began around 2005 and the sector has grown to over 3,000 modern retail outlets in 2016.

Also on the rise is India’s casual dining and quick service restaurant sector that has nearly 60 foreign restaurant brands across India,  Another emerging trend is the rise of local “themed” dining restaurants serving cuisines with fusions of national and international foods.

Over the years India has developed export competitiveness in certain specialized products, making it the world’s 14th largest agricultural, fishery, and forestry product exporter.  In 2016, India accrued a $3.8 billion trade surplus of agricultural, fishery, and forestry goods.  Leading exports consisted of Basmati rice, carabeef/meat of bovine animals, frozen shrimp and prawns, cotton, and refined sugar. Read the Agricultural Trade Review for more insight.

 
Table 1. India: Market Size of Indian Agricultural Products by Value in billion $
 2014201520162017 (Estimated)
Total Local ProductionN/AN/AN/AN/A
Total Exports35.129.127.122.4
Total Imports22.222.323.323.7
Imports from the US1.21.31.51.6
Total Market SizeN/AN/AN/AN/A
Exchange Rates65.0065.0065.0065.00
(total market size = (total local production + imports) - exports)
Leading Sub-Sectors

Agricultural Machinery
India is the largest tractor market in the world thus it is a very important market for global companies having tractor in its farm equipment portfolio. It is estimated that tractor production in India accounts for about one-third of the global production.  However, the density of tractor is nowhere near the leading economies of the world.  Hence, the growth potential is immense given the huge weight of agriculture in the overall economy.

Though the tractor is the core of farm mechanization, it has gone way beyond tractorization with more emphasis on increasing productivity by moving away from traditional farming methods to adopting powered equipment and implements, hence will be the prime driver of growth in this sector.

Yet, the widespread use of agricultural machinery is beyond the reach of many farmers due to high acquisition and maintenance costs, as the average size of farms in India is less than two hectares. This small size land holdings is due to land ceiling acts, and in some cases, family disputes, resulting in low productivity per hectare compared to many other countries.

The Indian central government has a vision and aims to double farmers’ income in the next 5 years and has drawn up policies to reduce production cost and increase productivity.  In order to achieve the ambitious target of doubling the income, the government is aggressively promoting rural development with impetus on agricultural mechanization, irrigation penetration through allocation of funds which are all a critical component in improving the state of agriculture in the country.

Also, the government’s efforts in providing easier access to credit for farmers, friendly policies and the new and growing trend of collaborative farming in India have encouraged the farming community to embrace mechanization, leading to a structural shift in demand toward high powered agricultural machineries and implements.

Various state governments, with support from the central government, have embarked on a public private partnership (PPP) model to start custom hire centers to provide agricultural machineries/implements on rental basis to farmers, thus easing the use of mechanization and opening opportunities for used equipment exporters.

Cold Chain Sector
Traditionally, Indian consumers’ prefer fresh meat, vegetables, dairy products and produce.  Currently, the Indian market is on the cusp of change with expansion of middle class and affluence coming in the increase in demand for fresh produce, meat and perishable packaged foods is leading to immense growth in this sector which is increasingly relying on sustainable cold chain network.

India is one of the largest producers of agricultural products and abundant supply of produce.  Yet, it is known for fledgling cold chain, which results in supply chain losses of food and other resources.  The losses in agricultural sector alone are estimated at $14 billion annually due to inadequate infrastructure. 

The key challenges are the lack of cold warehousing infrastructure, lack of standards in construction and operation of facilities, low awareness of handling temperature-sensitive products.  In addition, the cold-chain is energy intensive, because temperatures need to be regulated at desired levels. Energy expenses alone make up about 30% of the total expenses for the cold storage industry in India compared to 10% in the Western countries, and the unreliability of power in many areas of the country hold the sector back.

The Government of India is taking steps to develop cold chain infrastructure in India and has initiated several integrated cold chain projects to reduce post-harvest losses and to develop the storage and transportation of temperature-sensitive goods.  The key challenges in the cold chain sector and the above mentioned initiatives by the government are expected to provide opportunities to American cold chain companies to explore growth opportunities here in India.

Food Processing Sector
India’s food processing sector is poised for growth in response to changing demographics, evolving preferences for branded items, a modernizing retail sector, growing consumer acceptance of processed foods, and government advocacy to develop food manufacturing. Packaged food sales almost doubled between 2011 and 2015 to $38 billion and there is opportunity for further growth.

While India has an abundant supply of food, the food processing industry is still nascent. At present, only 10% of the food produced in India is processed. The Ministry of Food Processing Industries (MOFPI) continues its effort to develop policy to boost food processing and reduce agricultural wastage by 50% by 2022. High food inflation, high post-harvest loss, particularly in fruits and vegetables, and a lack of storage facilities are the main challenges in the food processing sector.
Yet the processed food industry is a significant player in the overall economy at an estimated $258 billion. Processed foods account for 13% of the country’s exports and 6% of total industrial investment.

MOFPI has an initiative to establish 42 mega food parks, 133 Cold Chain projects, 38 Abattoir projects, 101 Food Testing Laboratories and to provide assistance to 7,381 food processing firms for technology upgrades and modernization. The goal is to increase the level of processed food from the current 10% to 20% by 2019. Attractive incentives have been established by central and state governments to include capital subsidies, tax rebates, and reduced custom and excise duties. The government is also encouraging disbursement of loans under a priority sector lending scheme to ensure that entrepreneurs have access to credit to set up food processing units.  Within these initiatives are opportunities for American companies to provide modern food processing equipment and technologies to India.

Commodity Trade (In Alphabetical Order)

Condiments and Sauces:
Indian imports of condiments and sauces in 2016 exceeded $16 million of which nearly $4.5 million were from the United States. Other large suppliers included China, Thailand, Malaysia, and several European countries. Retail and restaurant sector offerings are growing and demand for imported condiments and sauces is on the rise as consumers experiment with how to use these imported ingredients.

Cotton:
India is one of the world’s largest producers and exporters of cotton. However, India will continue to import extra-long staple (ELS) and quality long staple cotton (28-34 mm), with occasional imports of medium staple cotton when international prices are favorable. The United States has been one of the leading suppliers of cotton to India over the past few years. U.S. cotton exports to India in 2016 were valued at about $250 million. Other major suppliers include Australia, Egypt, CIS, and West Africa. Indian mills that import U.S. Pima and upland cotton are appreciative of its superior quality, consistency, and higher ginning yield.

Craft Beer and Beer Ingredients:
The Indian microbrewery sector is experiencing strong growth with microbreweries opening across the country. Currently, the sector consists of ~65 microbreweries and on premise brew pubs; an increase of 44% since March 2016. Supplying ingredients like malt, hops, yeast for these businesses and supplementing these breweries/pubs with imported beers is an emerging market opportunity as evidenced by growing trade and industry demand. Preferences for and acceptance of craft beers is expanding as the sector sees growth and market penetration across India in states that allow alcohol. Sales volumes from domestic brewers were about 300 million cases (12 bottles per case at .65 liters per bottle) or 2.34 billion liters of beer in 2016. In 2016, imported beer volumes and values doubled from the previous year to 11.1 million liters and $11.8 million.

Fresh Fruits:
 India provides market access for most fresh fruits. With a growing segment of consumers insisting on high standards and year-round availability, there is increasing demand for imported fresh fruits. Imports of U.S. fresh fruits (mostly apples and table grapes) into India in 2016 were valued at $64 million with apples occupying the maximum market share at $56 million. Market sources expect imports to continue to show growth over the coming years, with new products expected to enter the Indian market.

Hides and Skins:
India imported hides and skins worth nearly $624 million during CY 2016. These were primarily used by the leather goods export sector. Imports of hides and skins from U.S. suppliers were $11.3 million in 2016, up 5.7% over previous year. Raw hide imports attract a zero tariff in India while wet blues have a tariff of 14.7%.

Pulses:
India is the world’s largest importer of pulses (peas, lentils, and beans), with annual imports ranging from 2.5-5.8 million tons. In Indian Fiscal Year (IFY) 2015/16 imports totaled a record 5.8 million tons. India is primarily a price (rather than quality) market with imports sourced largely from Canada, Myanmar, Australia, Russia, China and the United States. Typically, higher-priced U.S. green and yellow peas, lentils and garbanzo beans (chickpeas) have become more price competitive in the Indian market in recent years. As a result, imports of pulses from the U.S., mostly of dry green peas and some yellow peas, witnessed significant growth during the past 5 years, reaching a record 369 thousand tons in 2014. Since 2013, India is the largest export market for U.S. pulses, with imports in CY 2016 estimated at 285 thousand tons. Pulses are exempted from import tariffs.

Snack Foods:
Evolving consumer lifestyles and the increasing disposable income levels are leading to increased demand for imported snack foods even with competition from local players. 2016 imports of snack foods into India (including cookies, chocolates, chewing gum, sugar confections, etc.) exceeded $98 million with nearly $1.3 million from the United States.

Tree Nuts:
Tree nuts (primarily almonds) have been one of the leading U.S. agricultural exports to India.  In 2016, imports of tree nuts from the United States exceeded $580 million. The United States is the largest supplier of almonds (mostly in-shell) to India, with a market share of about 87%. Other suppliers include Australia, Syria, China, Iran, and Afghanistan. Almonds are a preferred nut in India and are gaining popularity among the growing middle-income population due to their nutritional and health benefits. India also imports small quantities of walnuts, pistachios and hazelnuts; mainly from the United States, Iran, Afghanistan, Pakistan, and the Middle East.

Opportunities

Popular Trade Events:
Food Biz India 2017, June 16-17, 2017, Fortune Murali Park, Vijayawada, Andhra Pradesh
The Food Biz 2017 organized by Confederation of Indian Industry (CII), is an international conference and exhibition on Food Processing and allied industry which provides a platform for international companies in the entire value chain of Food Processing.  The show also provides networking opportunities for stakeholders to work towards the growth and development of the sectors.

Agri Tech India 2017, Aug. 28-30, 2017, Bengaluru International Exhibition Centre, Bengaluru.
The Agri Tech India is a leading trade show, with concurrent events in dairy tech, grain tech and poultry livestock expo.  The show attracts 400 plus exhibitors from 30 plus countries and, is organized by the Media Today Group.  The show primarily focuses on Agriculture, Farm Machinery, Dairy Technology, Agricultural Processing Technologies and Poultry & Livestock.

Foodpro 2017, Sept. 7-9, 2017, Chennai Trade Centre, Chennai, Tamil Nadu
The Confederation of Indian Industry (CII) is a leading organizer of events in different major industry sectors. Foodpro a biennial event and is billed as the ‘Largest food processing show in South India with 200 exhibitors,  5000 business visitors and more than 25,000 general visitors. It focuses on Processing Technology, Equipment & Machinery, Refrigeration & Cold Chain Systems, Processed & Packaged Foods, Dairy Equipment and Technology, Packaging Materials, Retailing and Vending Systems, Hotel and Kitchen Equipment, Bakery Machinery and Bakery Technology.

India Cold Chain Show 2017, December 12-14, 2017, Bombay Exhibition Centre, Mumbai
The India Cold Chain show is a leading trade show, with 150 plus exhibitors and 7000 plus business visitors and, is organized by Reed Manch Exhibitions. The show is focused on Cold Storage Infrastructure, IT Solutions for Cold Storage/Warehouses, and Material Handling Solutions. 

Agricultural Trade Shows:
There are numerous food and agricultural-themed trade shows in any given year. USDA endorses the Annapoorna World of Food India show in Mumbai, India, as it is one of the country’s largest and most diverse food and beverage shows. The show runs in September.

USDA India offices and Cooperator groups participate in additional food and agricultural product shows throughout the year. In recent years, USDA India has had booth space at AAAHAR in New Delhi and the India Food Forum in Mumbai. For a list of additional annual or biennial trade shows see the linked Trade Show Report.

E-commerce Regulations and Guidelines
India is the fifth largest online grocery market in the Asia Pacific region and one of the fastest growing.  India’s online food and drink market grew to $135 million in 2016 and is expected to cross $464 million in 2021.

In June 2016, the GOI allowed 100 percent foreign direct investment (FDI) in trading of food products, produced and manufactured in India, through e-commerce. Food Processing Minister, Harsimrat Kaur Badal, stated that foreign direct investment in the food processing sector could cross $1 billion in the next two years, helped by reforms in FDI space and streamlining of regulations by food safety regulator, Food Safety and Standards Authority of India (FSSAI).  In January 2017, FSSAI mandated that ecommerce retailers with food products listed on their portals hold an FSSAI food business operators (FBOs) license for their entire supply chain and that “last-mile” delivery should be undertaken by trained personnel so that the safety of food products is not compromised at the time of delivery.  In addition, FSSAI indicated that entities that are providing listing/directory services (i.e., a market platform) may not be required to obtain a license/registration under the Act. Although they should ensure that no misleading information or false claims pertaining to the sellers or brand owners, vendors, importers or manufacturers or any false images are included on their platform.  The notification stated that the ecommerce FBOs will have to possess a signed agreement with the sellers, brand owners, manufacturers that the products comply with the FSSAI Act and its rules and regulations.  Ecommerce retailers are required to notify the sellers/brand owners/importers/manufacturers of any consumer complaints that would be liable for expeditious resolution.

Best food and grocery e-commerce product prospects: exotic fruits and vegetables; fresh fruits and vegetables; snack foods; biscuits and cookies; ready to eat/serve convenience foods; sauces and condiments; “natural” or gourmet foods and beverages, health and nutrition bars; chips; jams and spreads. Source: Trade contacts

Web Resources

USDA Cooperators and State and Regional Trade Groups Active in India
For more information on export opportunities in agricultural machineries, equipment, cold chain sector in India. Please contact Commercial Specialist Srinivasa Murthy at: Srinivasa.Murthy@trade.gov .

For more information on commodities and agricultural items, please contact USDA’s Foreign Agricultural Service in New Delhi and Mumbai.

Shubhi Mishra - New Delhi  AgNewDelhi@fas.usda.govi
Priya Jashnani - Mumbai AgMumbai@fas.usda.gov.

Please also review the USDA FAS Exporter Guide  and the Food and Agricultural Import Regulations and Standards – Narrative report

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



India Agricultural Commodities Trade Development and Promotion