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India's Only Monthly News Magazine, Portal & App For Agro, Food & Allied Industries

13th

Official Magazine

Vol 13 Issue 05 March 2018

Indian food ingredients industry is at incredible growrh phase

FSNM

Federation of Sweets & Namkeen Manufacturers

100/-

Food Industry outshines in budget 2018-19

Food Processing Induustry & Year of Exceptional Changes Scattered

Mithai & Namkeen Segment Comes Under One Roof -FSNM

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CONTENTS 10

Food processing Industry of India, and the year of exceptional changes

16

Indian food ingredients industry is at incredible growth phase, prime forte is research capability

36

Packaged Planet Analysis of Indian Packaging Machinery Industry 46

24

Scattered Mithai & Namkeen Sector Comes under one Roof-FSNM

“Add to the Cart� The evolving online grocery in India 52

30

Food Industry outshines in Budget 2018-19

Himachal formulates specific schemes to promote horticulture 54

There is still sizeable gap between farm and fork: President 55

Edible oil industry demands hike of soyabean oil import duty


EDITORIAL

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The views expressed in this issue are those of the contributors and are not necessarily those of the magazine. Though every care has been taken to ensure the accuracy and authenticity of the infomation,"Oil & Food Journal" is however not responsible for damages caused by misinterpretation of information expressed and implied within the pages of this issue. All disputes are to be referred to Mumbai Jurisdiction.

ood industry is relentlessly revolutionizing as Digitization, Artificial Intelligence, Blockchain etc. are simply becoming an integral and important part of this sector. Most recent and advanced one is a technology developed by US retail giant Walmart - that is engineering artificial intelligence (AI) capable of examining fresh fruit and vegetable products for defects, accurately predicting the exact date of spoilage for particular items. The new ‘Eden’ technology will revolutionize food waste reduction, and estimated company savings of over $2 billion in the next five years as a result. Eden has so far saved Walmart $86 million during its trial in 43 distribution centres since January 2017. The scientists behind Eden expect the technology to develop into being able to make autonomous decisions by comparing scanned images of products against a library of acceptable and unacceptable versions of said item. As the AI gains experience, it should become more accurate and develop the ability to estimate an exact shelf-life of produce. Using Eden could mean more efficiently ripening bananas, predicting the shelf life of tomatoes while they’re still on the vine, or prioritizing the flow of green grocery items from the back of the store to the shelf. Well talking of technology, India isn’t far behind, as Amul has brought in the first ever remote sensing centre for estimation of fodder crops in Anand and Kheda. Last year, GCMMF had signed a MoU with the Space Application Centre (SAC) of the Indian Space Research Organisation (ISRO) for this project. This is an innovative idea to help milk producers to know when to initiate cultivation of fodder crop by use of satellite images. This would help farmers to estimate fodder production, plan them to grow or intensify fodder production and improve fodder availability leading to increase in milk production and economic benefit. This will also pave a new era of fodder crop management using satellite data for current status of fodder crops grown during one crop cycle like Rabi, kharif and summer in a year. It can be utilized in dairy sector for decision support in drought management also. Gradually it will be scaled up to all districts of Gujarat through respective milk unions of GCMMF. The Amul Remote Sensing Center will work towards estimation of fodder crops in Kheda, Anand and Mahisagar districts and similar centre will also come up at Banas Dairy for Banaskantha and Patan districts of North Gujarat. Digitization is major of online grocery retail and this is booing in India. Hence taking on the opportunity as part of scaling up its grocery service, Amazon India has launched a specialised network of 15 Fulfillment Centres (FC). These are dedicated to AmazonNow, an app-only service with ultra-fast delivery of daily essentials in Bangalore, Mumbai, New Delhi, and Hyderabad. Amazon India now has 56 FCs across 13 states with close to 13.5 million cubic feet of storage space; 15 of these FCs support the AmazonNow business. The new FCs is expected to provide faster delivery. These FCs are equipped with temperaturecontrolled zones to store and deliver perishable products such as and vegetables (F&V), dairy products, and chilled and frozen products. The government had allowed 100 per cent FDI in food retail in the country in 2016. Under this, Amazon can set up wholly-owned subsidiaries in India to retail food. Reports say Amazon is now a vendor on its platform, and is operating from Pune. Grocery is turning out to be the next frontier for ecommerce players, with this category increasingly capturing consumers’ fancy. BigBasket and Grofers are the primary e-grocers in India but order volumes are still low compared to categories such as mobile phones and fashion. Flipkart also recently launched its own grocery category, Supermart but does not retail fresh produce except dairy and eggs. Prime Minister’s dream is to make India digital and is going good; we can see that the country is adapting to it, slow but then steadily. FSSAI have released a draft 'Food Safety and Standards (Safe and Wholesome Food for School Children) Regulations, 2018 that listed dozens of food items in three categories. The foods and beverages categorized as green or yellow above may be included on the school menu and food business operators manufacturing HFSS [high in fat or salt or sugar] food products shall not advertise such foods to children in school premises. The proposed regulations to introduce traffic light health labelling for food products in Indian schools have infuriated All India Food Processors' Association, who has warned that a law like could force manufacturers to use the system for entire ranges of their products, regardless of where they are sold, including jams, juices, butter, pickles and Indian condiments, as well as basic recipe ingredients such as meat and vegetables. This years’ budget has been quite amazing, first its wide attention towards food processing industry and then on promoting digital India. I am not surprised as these two things are getting interrelated at the moment as digitization will promote ecommerce and bring new innovation in the food industry, right from the farm to the shelf and then to the fork.

Agro & Food Processing March 2018


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TRANSITION PHASE

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Food processing Industry of India, and the year of exceptional changes

R

eforms, liberalized foreign direct investment (FDI) policy and strong macro-economic indicators have resulted in the development of the production, processing, distribution and marketing of food and beverages (F&B) in India. The entry of foreign technical know-how, processes and products to India, availability of food through e-commerce, technological advancement through research and development to cater to the local tastes and health benefits, and so on made the marked the Indian food industry in the international map.

“The food and beverage industry is the fifth-largest sector in manufacturing” Between April 2000 and June 2017,the Indian food processing sector received FDI worth $7.81 billion, making it the 13th largest sector receiving FDI in the country. In fact, 80 per cent of FDI in the food processing sector was received in the period since April 2012. FY17-18 is already showing strong promise for foreign investment in this sector, with $263 million invested in the April - June quarter (FY17 Q1), according to Department of Industrial Policy and Promotion

Agro & Food Processing March 2018

(DIPP) Quarterly Fact Sheet (April 2000 to June 2017). Thanks to the entry of multinational companies and their expansion in the market. In fact, the global event World Food event in November, opened new arenas for the food industry, at the same time bringing it in global radar. It is during this event that global and Indian food companies, including Hershey, ITC, PepsiCo, Patanjali, Coca-Cola and Britannia, have assured to invest around Rs 68,000 crore in India’s food and agriculture sector.


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The economic growth of any country usually results in the improvement of its food supply, both quantitatively and qualitatively, and India is no exception to the statute. Domestic firms ITC and Patanjali inked MoUs to invest Rs 10,000 crore each. While PepsiCo said it will invest around Rs 13,000 crore for setting up food and beverage plants, rival Coca-Cola said it will bring in around Rs 11,000 crore for juice bottling infrastructure and fruit processing plants and equipment. Similarly, Amazon, UAE’s Sharaf Group and Yes Bank are also among major investors, the statement from the ministry said. Britannia said it will invest Rs 1,500 crore over the next three years to expand

its manufacturing facilities. With a population of 1.3 billion, India’s consumption market is projected to triple to $4 trillion by 2025 with the bulk of expenditure going into food products. “India is rapidly becoming a production hub for processed foods, which are increasingly consumed in India as well as exported to countries in South Asia, the Middle East and Africa” Within the domestic F&B industry, ten segments have especially gained increasing acceptability among the Indian

Agro & Food Processing March 2018

consumers and all have recorded a high growth rate: According to the Ministry of Food Processing Industries of India (MOFPI) and the Confederation of Indian Industry (CII), apart from India’s strong macro-indicators and production base, it is affluence of working population with increase in disposable income and rising urbanisation leading to changing lifestyles and less time to prepare food at home, which has enhanced the food processing industry.


TRANSITION PHASE

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farmer producer companies and the food processing industry, develop agro-processing clusters, create a robust supply chain infrastructure and promote skill development in the sector. PMKSY has an allocation of USD 901 million and is expected to leverage investment of USD 4.72 billion. handling 334 lakh Metric Tonnes(MT) agro-produces valuing USD 15.6 billion, benefit 20 lakh farmers and generate 530,500 direct or indirect employment in the country by the year 2019-20.

“Also changes in taste and preference of the Indian consumers for local palate to international together with increase in tourism in India are a big factor contributing to the F&B Industry” Food Industry has also benefitted from innovative advertisements, rise in supermarkets and ecommerce boom creating increasing awareness among consumers and also making the products easily accessible to the consumers. According to Food and Agriculture Organisation of the United Nations, alongside the strong demand drivers, India has the largest diversified production base in the food sector. For instance, it is the largest producer of milk in the world, the second largest producer of fruits, vegetables and wheat, and the third largest of eggs, sixth in meat production and is a leading producer of spices, fish and plantation crops. “The contribution of the food processing sector to Gross Value Added (GVA), employment and investments is significant” Additionally, the progressive processes and bold reforms by the government, especially in the last three years, including the introduction of Goods and Services Tax (GST), replacement of the Foreign Investment Promotion Board with the online Foreign Investment Facilitation Portal, permitting 100 per cent FDI for retail trading in the food processing sector for food products that have been manufactured or processed within India; increasing investment in infrastructure projects, Food Safety and Standards Authority of India (FSSAI) aligning itself with Co-

dex Alimentarius (literally, food code) international food standards, and so on. This reflects the government’s positive outlook, and a clear intent to develop the sector. Recently, according to the World Bank’s Ease of Doing Business Report 2018, India jumped 30 spots to the 100th rank (from 130th in 2017) among 190 countries on the basis of certain parameters (excluding reforms due to GST implementation). All the policy changes in the country resulted in the highest jump in a year by any country in the World Bank’s Ease of Doing Business ranking. “India is one of the fastest growing economies in the world, therefore demonstrating a strong business case for the global F&B industry. They can establish presence or plan on expanding operations in India as various segments of the Indian F&B industry will continue to witness tremendous growth in the foreseeable future” Furthermore MoFPI is spearheading the initiatives of Government of India in supporting the food processing sector. The Ministry is making all efforts to encourage investments in the sector. It has approved proposals for joint ventures, foreign collaborations; industrial licenses and 100 per cent export oriented units. The Ministry has also launched the Pradhan Mantri Kisan Sampada Yojana (PMKSY) to supplement agriculture, modernize processing and decrease agriwaste. PMKSY is expected to augment technology infusion, create enhanced forward and backward linkages between

Agro & Food Processing March 2018

“With an increase in demand for food products, abundant supply of raw materials and several incentives offered by the Government, food processing sector has emerged as one of the major growth -oriented sectors in India” Medium and big players in food processing industry mostly import critical components required for their processes. For small players in the industry, cost of the imported equipment is a big constraint and hence they go for local fabricated machines and equipment supporting local food processing equipment manufacturing industry.. However, currently the equipment manufactured in the country lack precision required for complex processes involved in food processing, due to dearth of advanced technology owing to limited research and development facilities available for local manufacturers. The Government is encouraging the technological advancements for the industry by providing specific incentives to the food machinery sector in terms of duty reductions, duty exemptions etc. Given this scenario, there is an abundant opportunity for various multinational companies to explore the manufacturing of equipment for food processing sector in India. ‘’Another important aspect of this sector is employment generation. The availability of skilled manpower has been identified as one of the major challenges, which creates a lot of opportunities for unemployed youth to work as skilled manpower in the food processing sector’’ Ministry of Food Processing Industries is working in close collaboration with Food Industry Capacity and Skill Initiative (FICSI), the Sector Skill Council (SSC) in food processing. The FICSI is working


TRANSITION PHASE

13 scaled up across the world. Industry interface is required for scaling up the technologies, promoting entrepreneurship and skill development in food processing sector in the country. Globally food safety is domineering; this was one weak point that dented the Indian F&B Industry image to some level in international markets. But with restructurings and development of Food safety law in India, safety in food standards has immensely improved and boosted.

on identification of job roles and competencies required for each job so as to develop National Occupational Standards for different sectors of food processing. It is forecast that India’s retail sector will show a growth of $1.3 trillion growth from $600 billion over the next three years; of which 70% will be from food market. Ministry of Food processing is planning to create employment opportunity of around five lakh by 2022 with the

investment under Sampada Yojana programme. Scarcity of food technologists, scientists and researchers with Entrepreneurship background exists in the country. There lies a huge gap between available and required skill in the country. Capacity building will create talent pool. Innovation needs to be linked to market need. Academic and research institutions need to develop technologies, which can be

Agro & Food Processing March 2018

Now the Food Safety and Standards Authority of India (FSSAI), the country’s apex food regulator, is working on a ‘one-nation, one-food-safety-law’ so that every state-level food authority follows a standard practice for the implementation, compliance and surveillance of food safety regulations, which in turn will ensure smoother operations for food companies. FSSAI plan to implement ‘one-nation, one-food-safety-law’ will remove state based problems and make things more transparent. Under this regime, state-level food safe-


TRANSITION PHASE

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ty officers will have to follow a 10-point code-of-ethics set by FSSAI. At present, there is no such thing, and food safety officers across states do things the way they think best. This should not be the practice, and there is a need to standardize this. Also under the regime, FSSAI wants to erase discrepancies in food safety regulations across states, and standardize surveillance, sampling and inspection. This is to enable states with good practices. To bring consistency in food testing, FSSAI is introducing guidelines that food testing laboratories will have to abide by. Under the draft norms, laboratories will have to come under the Indian Food Laboratory Network (InFolNet), a digital solution to connect all food labs in India to a centralised lab management system. So far, 154 laboratories have listed on InFolNet. FSSAI has made this compulsory for all FSSAI-notified laboratories. With this, details of all tests and the results will be available on this. The regulator, which owns and operates two laboratories and has approved 82 others in various states, allocated Rs482 crore earlier this year to strengthen the food testing infrastructure, including upgrading and modernizing laboratories. Besides, FSSAI will also set up 62 mobile testing labs. There are currently four mobile food testing labs in Punjab, Gujarat, Kerala and Tamil Nadu. In 2015, FSSAI questioned safety standards of Swiss packaged food company Nestle In-

dia Ltd’s Maggi instant noodles based on reports by one of its testing laboratories in Kolkata, prompting questions about the capacity and state of the laboratory. Under the new regime, the food regulator also wants to abolish intervention of multiple agencies for things such as import of food products. Going forward, there will be a single standard for every authority. In the End…. India’s food processing sector has the potential to attract USD 33 billion (about Rs 2.14 lakh crore) in investments by 2024. The country’s food and retail market is expected to touch USD 482 billion by 2020, up from USD 258 billion in 2015, with recent reforms making the sector more competitive and market- oriented. There is a huge scope for large investments in food processing technologies, skill development and equipment as total food production in India is estimated to double in next 10 years. While the sector provides opportunity for growth, it needs to focus on product conformity with global standards and quality together with factors like logistics traceability and safety, quality of packaging and delivery. There is a need for policy

Agro & Food Processing March 2018

intervention and field level changes for India to develop global competitiveness in many related sub-sectors and ensure that they are firmly entrenched in global value chains. Fast growth in food processing and simultaneous improvement in the development of value chain are of great importance to achieve favourable terms of trade for India’s agriculture sector both in domestic and international markets. Given the trade in production of food commodities, the food processing industry in India is on an assured track of growth and profitability, and even marginal reductions in post-harvest losses of fruits and vegetables, which are at about 25-30 per cent, will give better returns and improve farmers’ incomes.


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TASTY BLENDS

Indian food ingredients industry

is at incredible growth phase, prime forte is research capability

F

ood ingredients market in India has witnessed rapid growth in recent years amidst the increase in consumption of processed foods and rising preference for ready-to-eat meals.Indian food industry has become one of the fastest growing sectors in the country. It has managed to gain significant growth over the years and expects to maintain a positive development in future. Food ingredients market in India has been growing at a moderate rate in the last five

years because of increasing localisation of food products, development of mega food parks, surging prevalence of the processed food, wide cultural and regional diversities, growing urban middle class population, surging demand for ReadyTo-Eat and Ready-To-Cook products have boosted the growth in Indian food ingredients market. Today’s on-trend flavors, spices, and other ingredients descend from authentic Indian food traditions.Consumers are well aware of the consequences that certain food choices

Agro & Food Processing March 2018

have on their health and hence select their foods accordingly. Urban Indian consumers are looking towards a holistic combination of good food habits and healthy lifestyle habits as a way to balance their hectic schedules. Food products that are more natural, free of additives, fresh and have authentic ingredients in them are bringing back that balance in their lives. Agro & Food Processing got in touch with some of the leading brands catering to the ingredients segment that provided valuable information about this industry.


TASTY BLENDS

Jatin Sharma who is Area Market Manager of India, Middle East, Africa Global Business Unit-FOOD, Roquette briefed about the trends in the market. Demand for naturally healthy food and beverages have been driving the market growth in the past decade and the same has been observed catching up in Indian market. Recent years have seen consumers increasingly opt for naturally healthy packaged foods and beverages. They have been perceived as an offering important natural nourishment without the higher

prices associated with fortified/functional, organic or better-for-you products, or even the artificial ingredients. “The effects of growing health consciousness were not only restricted to Health & Wellness food and beverages, but were also evident in growing number of gym memberships and increased interest of weight control regimes and diets. With the prevailing concern over high obesity and diabetes rates, sales of Health & Wellness have been thriving. To hit into this trend,

Agro & Food Processing March 2018

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the manufacturers enlarged their portfolios by tallying a wide range of innovative products, which has also transitioned from niche to larger segments of the food market.� As per MD of Gujarat Enterprise, Anil Koradia said “if you observe the upcoming trend in India that is a country of young talent (both white and blue collar workers). India is a country where the youth population is high in comparison to other age categories in the world.India


TASTY BLENDS

18 spends high amount of their income on food and groceries as compared to consumers in the country. It is not at all surprising that Indian food industry Anil Koradia will grow significantly in coming years. Several are opting for ready-to-eat foods because of hectic work schedules and unlike previous generation do not prefer to cook meal conventionally. Other segments such as restaurant, organic natural and healthy food, chocolates, dairy, snacks and many other industries will definitely grow further.Due to significant growth of these industries definitely it will bring lot of opportunities in food ingredients industry.” MD - India, Area Director – South Asia, Puratos Food Ingredients India Pvt. Ltd, Dhiren Kanwar stated that with rising urbanization and influences of western culture, the nsumption of baked and confectionary products in India has evolved. “Consumers in India are open to experimenting with new tastes in patisseries, chocolates and breads. Consumers want ‘fresher’ and more ‘natural’ food. Hence products that use natural ingredients ‘made by earth’ and free from additions are in demand. Consumers want more ‘healthiness’ and ‘taste’. As a result, we see an increase in demand for wholegrain, fruit filling, eggs and cocoa; all of which are associated with healthiness and taste amongst consumers in India today. Diversity and innovation in desserts is also growing in popularity which has resulted in fusion and hybrid options like cruffins, Donut Popcorns etc.” FSSAI new initiative – FOODCAST, an online portal FoodCast is the latest initiative by food regulator to promote ingredients and spices in India so that this sector gains prominence. Sharma commented that local Indian food is one of the most diverse in world, which is highly required to be promoted strongly! “It is an amazing initiative taken by FSSAI this year to adopt a structured and holistic approach to pastor, share and propagate knowledge on Indian Food Culture and also to involve people to make more knowledgeable food

choices. It will help to craft an efficient framework for preservation and promotion of India’s culinary heritage and food culture.” The Indian food cuis i n e repository developed by FSSAI accompanied with FOODCAST will broadcast the recipes and also help people understand on what portion, what type and when to be eaten in order to maintain a good healthy lifestyle. Popular Chef Sanjeev Kapoor laid emphasis to focus on food to promote tourism in India. As per research, food is the second most important reason to choose a destination for any traveller. Kapoor believes that India is already blessed with a rich heritage with a wide range of cuisine. “India should be known for its quality of ingredients. Countries like Spain and Australia promote their tourism through their food items.I believe a chef’s role here plays major importance, our Government need to use the chefs into right perspective. We need more culinary trails happening and there is a need to create various pockets in India.” Indian ingredients are as an asset which needs to be greatly promoted in the world. Product offerings for the market Cuisine transformation from simple a n d familiar

offerings to a menu which offers diversity in taste, style and origins has made a difference.Consumers want to experiment with foodnovelties; international cuisines and a fast-paced lifestyle have contributed to changing

Agro & Food Processing March 2018

cuisine preferences. Well known

in i n dustry circles, Roquette carries an ambition of “To be the natural source of innovative plan-based ingredients” and a vision of “Improving well-being by offering the best of Nature”. Roquette serves customers globally in nutrition, food, pharma and other industries. “We bring high-value nutritional and functional ingredients, backed by Jatin Sharma the co-creation services our customers require in baking, beverages, confectionery, dairy, savory, & specialized nutrition segments of the food market. Customers increasingly want satisfying food choices that they can feel good about, also fitting the trend of a healthy lifestyle” Sharma said. At Roquette, food producers only find high-quality ingredients and discover a range of plant-based solutions: plant proteins (pea-or wheat-based), soluble fibers, polyols and much more. It offers nutritional, texturizing and cost-effective solutions to help formulate high-quality food for every find of applic a tion.


TASTY BLENDS

chocolatiers around the world. Three pillars support the core of the company. While closely related, each of the pillars requires specific knowhow and expertise, combined with continuous investments in innovation.

Gujarat Enterprise works as a partner with their customers to help them develop new product range with the help team of technical experts. Koradia proclaimed that “We have state-of-the-Art Application center where our technical team working for developing solutions for our customers. We help our customers to optimize their product through the range of Our Kremaze functional system.”

Below are the products that are provided under each of these pillars: a) Bakery range - Bakery Improvers, Bread Flavour and Sourdoughs and Active bakery components for an authentic taste: O-tentic, Bakery Mixes Bread Improvers.b) Patisserie range - Cake and sponge mixes, French specialty mixes, Mousse and bavarois mixes, Fruit and cream fillings, Flavouring preparations, Glazes, Icings, Fudges & Ganaches, Cake and Sponge mixes. c) Chocolate range Real Belgian chocolate, Real chocolate, Compound chocolate & fillings, Chocolate, Cocoa and nut-based fillings

Puratos develops innovative ingredients and for bakers, patisseries and 19 solutions x 15 cm

Kanwar added that “Apart from products, we also provide support in terms of

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19 marketing intelligence. We continuously screen to analyse new trends and identify new business opportunities for our customers. As per latest findings in consumer trends, the market is dominated by expectations like taste, health, convenience, pleasure and nutrition. Providing effective answers to these expectations is the basis of our R&D and marketing efforts. In addition, we have developed two powerful tools to gain direct feedback and input from end-consumers: our Sensory Analysis service and our Sensobus.” Understanding customers’ responses towards ingredients Ingredients like truffles, asparagus, Australian lamb, Norwegian salmon, black bean sauce have entered the Indian food & beverage industry. The trend is increasing for customers to choose cuisines that reflect their lifestyle. South Indian, Punjabi and Mughlai cuisines mainly dominate the Indian offerings but the demand for traditional dishes has also increased.

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TASTY BLENDS

20

travelled around different countries in Asia.

Moreover, a niche segment may be created around specific international cuisines; customization may be needed to ensure that they suit the Indian palate. Sharma pointed that interaction with customers on regular basis is one of the first steps to know customer’s view on ingredients. “It is always good to take a step into your customer’s shoes’, gain insights from conversations by listening, asking & delivering. Next is to categorize the feedbacks. Tools like customer feedback surveys, emails & customer contact points, usability tests, social listening and on-site activity can prove quite helpful. You can also get acquainted with some customer metrics such as customer satisfaction score, customer effort score, customer retention rate, lifetime value, redemption rate, etc for deeper insights. Koradia believes that working closely with repute customers as partner gives better understanding of their product requirement. “At regular intervals, we pick samples of the finished product from market and evaluate at our laboratory. We always try and find if there are any issues with the products such as texture, shelf life, taste, etc and then we suggest them to improve their existing product through Our Kremaze functional system.” Kanwar said that, “at Puratos, we understand the importance of continuous innovation in order to create products that delight our customers. For the same we have developed Sensobox. This is a fully equipped mobile sensory analysis laboratory which goes a step further. It collects consumer preference data at the product locations - shopping mall and helps in building consumer insights, exploring consumer preferences and testing specific concept and product ideas have

The Sensobox had been in different countries in the Asia Pacific region serving these special needs. Customers are delighted to witness or participate in these events, making Puratos an even better reliable partner in innovation.” The emerging food ingredients market in India India is at the beginning of an incredible growth phase and it is expect to witness high growth in the next decade. There is immense opportunity for countless ingredient manufacturers. Sharma is of the view that the prime forte of India in food ingredients market is its research capability. There is an improved focus on research and development which allows food ingredients sector to grasp and advance innovatively. He said, “The global specialty food ingredients market has matured considerably in the last few years and must continue to nurture at a swift pace in the near future. The application of specialty food ingredients are in bakery, confectionery, dairy, convenience foods, beverages, meat & seafood products and functional food products. On the regulations’ front, labelling of health claims has impacted and shall endure to develop on the market. There is a vast demand for sugar-free and lower salt variations in food products. This will generate a new direction for innovation. There are extremely promising signs of progress.” There is substantial possibility to increase manufacturing in the areas of product distinctions for starch and texturizing ingredients going by the huge wheat and corn cultivation capacity in the country. India has an exciting food manufacturing base but the market prospect needs to be tapped like the Western world. MD of Gujarat Enterprise believes that with growing disposable income, India is going to be one of the largest food ingredients market. Ingredients market will be more inclined towards natural and healthy. Koradia explained that companies have started looking for clean label

Agro & Food Processing March 2018

ingredients and for making natural products we need upgradation in technology also. So UHT and aseptic packed products market will grow tremendously in next decade. He said “Food safety regulations is lacking in information and clarity. Food Business Operators (FBOs) especially the tiny, small and medium-scale industries find it difficult to identify relevant procedural and compliance changes and they lack the capacity to track regulatory changes. FSSAI must simplify regulations and standards for FBOs at all levels. Standards must be explicit. Also, FSSAI should place greater emphasis on training food handlers. Even small steps such as washing hands frequently and wearing gloves could do much to improve the hygiene situation.” Government needs to encourage the investment in research and innovation in food ingredients. There has been lot of research happening across the world, but it’s sad to state that there are very few companies in India which are into research. India is fast becoming an essential player in the global food ingredients market. As per data research firm, it has named India, a hotspot for food manufacturers, food producers and food ingredient professionals. Food ingredients market in India has seen rapid expansion amidst increase in consumption of processed foods and rising preference for ready-to-eat meals. The key products in this segment are emulsifiers, sweeteners, flavours and food enhancers and preservatives. Kanwar specified that FSSAI has made a lot of progress in updating its regulatory framework as well as aligning itself to the internationally adopted Codex system. “This allows international companies like ours to operate across geographies seamlessly, knowing well that we are fully complaint. The import clearance formalities can be faster as it still takes 20 days to clear an import consignment versus 2-3 days in other countries in Asia. We have also been proactively working with FSSAI through FFIMI – The Federation of Food Ingredient Manufacturers and Importers of India to actively align on the proposed regulations and make it


21

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TASTY BLENDS

22 industry and consumer friendly.” Innovations will be led by future trends in food based on of Health, Taste and Freshness. For this, Puratos invests 2.2 per cent of its global turnover in R&D. We welcome the support of the government in creating the right environment for innovations as well as allowing companies to bring these innovations to the consumers by approving these quickly through the regulatory framework. Challenges faced by this segment With rise in use of fresh, organic food and ingredients, with India among the top ten countries in terms of demand for such food. But the major drawback is awareness as customers do not the difference between organic and non-organic food. Next to China, India is the world’s second largest producer of food products and has the possibility of being the biggest with food and agricultural sector. Sharma said that although Indian food industry is quickly evolving, still there are a lot of significant challenges that need to be addressed. “The level of food processing in India is inferior in contrast to

the other countries. The food processing industry has a high concentration of unorganized segments, demonstrating almost 74 per cent across all product categories. Small and isolated marketable surplus due to fragmented assets, low farm efficiency, high seasonality, perishability and intermediation result in shortage of distribution on supply and quality, and in return, inhibit processing and export trades. More than 25 per cent of the harvest from farm gate is lost due to poor cold chain infrastructure and inadequate logistics. The government along with the food authorities must address swiftly to these challenges in the coming years.” For Koradia, the challenges in ingredients sector are poor supply linkages, food safety and regulation Act, lack of skilled manpower, infrastructure & technology. Lastly Kanwar added that there con-

Agro & Food Processing March 2018

tinues to be multiple challenges such as enforceability of the laws across the industry equally, removal of protectionist measures, continuous upgrading of the regulatory database, as well as speedier redress of permissions. These issues must be addressed so that these don’t hinder the growth rate of the industry. On a concluding note, the combination of traditional Indian food with modern technology, processing and packaging can help the world rediscover the health benefits and invigorative taste of Indian food ingredients.


23

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WMNC GLIMPSES

24

Scattered Mithai & Comes under one

F

ederation of Sweets and Namkeen Manufacturers (FSNM) along with AIM Events rolled down the carpet for Indian & global namkeen and sweets manufacturers, allied sectors at‘World Mithai & Namkeen Convention (WMNC) 2018’, held at Hotel Eros,New Delhi on February 10th. More than 800 visitors and 300 delegates witnessed the grand show of WMNC. Eminent dignitaries of namkeen and

sweets sectors gathered on a platform to discuss the issues regularly ascending in their business.“The convention provides unprecedented opportunities to allied sectors of our industry by giving them tremendous prospects of growth”,saidManohar Lal Agrawal CMD Haldiram’s and mentor of FSNM in his inaugural note. Focusing on the challenges of industry, desi snacks giant MD said that the past year with GST experience was

Agro & Food Processing March 2018

not good and the council has kept us in high tax slab. Claiming WMNC as the best opportunity for industry, Shyam Sundar Agrawal CMD Bikanervala said that the bridge was needed to fill the gap between manufacturers and allied industries of the country and this convention is now an expressway for us. Virendra Jain, FSNM President in his


WMNC GLIMPSES

25

Namkeen Sector Roof-FSNM

On the lines of Milk Promotion Council & Egg Promotion Council FSNM will also promote a united brand of Mithai & Namkeen among the consumers & to share the nutritional aspects of these food products via electronic & print media and national and international events and shows. welcome note said that “every day, we face new challenges in doing business and FSNM has been able to deal with them for benefit of the trade and industry. Today manufacturers in Rajasthan can dream of supplying in MP or West Bengal. Similarly, due to increase in demand of quality & hygienic products from consumer has opened new avenues for raw material, ingredients suppliers and food safety system providers. This convention

has provided unprecedented opportunity for allied sectors to meet the whole industry, manufacturers and others.” Tech Session This event proved significant for the industry as panel discussions and presentations on several matters related to this segment were covered during the seminar. More than 300 delegates from around the country attended the power pack seminar.

Agro & Food Processing March 2018

Topics like technological advancements in mithai & namkeen industry, choosing right ingredients for the products, global packaging trends, food safety and challenges in mithai & namkeen segment and other issues were discussed. MD of VKC, Gunjan Jain, Vipin Aggarwal COO Saffron Packers, Area Marketing Manager-India of Roquette - Jatin Sharma elaborated on various details during the first session – ‘Modern Ingredients for Ethnic


WMNC GLIMPSES

26

& accredited by FSSAI and fully run by FSNM. He said FSNM and its members will fund this testing lab. To keep safety standard on its peak, FSNM decided to make ‘Food Safety Committee’ with Amit Kumat, Srinivasa Raja, Ashok Chheda, Manish Agarwal, Vikram Agarwal & Firoz H Naqvi. These people will interact with FSSAI about industry related issues. Committee of five members including Bipin Hadwani, Sandeep Sawlani, Vikram Agarwal, Virendra Jain & Firoz H Naqvi will soon draft the constitution of FSNM.

Foods. Following which there was a session on Role of Automation & Modern Technologies in Snacks Industry. Speaker Manoj Paul- Country & South Asia Head Heat and Control, Sanjeev Gupta – MD of Kanchan Metals Pvt ltd., KK Menon - MD MTS Foods, Varun Bajaj of Maschinenfabrik shared the dais and focused on recent advancements adopted by the industry. Decision taken by federation in AGM The committee members in the meeting of FSNM discussed GST and other issues which the industry is facing. Amit Kumat, MD Prataap Snacks proposed that GST slab should be kept at 5 per cent with input credit seconded by Bikanervala CMD. In a major discussion, FSNM has decided that if the government increases GST rates from 12 to 15 per cent, Federation members will keep themselves at lowest slab of 5 per cent with input. It is noted that input is the vital part of GST concept and FSNM will try to keep input credit.

government and should come under same GST slab. Thus, to avoid unhealthy competition, they should be discouraged. Committee members focused on safety standard claiming namkeen as food of common man. D K Gupta of KP Das & Co said that it is important to make the safety standards easier & more understandable to people specially to the rural crowd as the consumer demands for namkeen is increasing. Shyam Sunder Aggarwal and Manohar Lal Agrawal said that food safety is an important issue hence it has become vital that labs for testing samples of Mithai & Namkeen should be established by the committee. Biggies stressed that as different labs show different results of the same sample, so there is a need to establish a lab specifically for Mithai & Nankeen industry. Two labs should be established one in North India & other in the Western region. These labs must be approved

Shrinivas Raja of Adyar Ananda Bhavan stated that all the state representatives and associations should write for the change in GST slab to the government at the same time i.e. will send similar draft across the country in different states. If different states apply for this change at the same time, and then the government might accept it accordingly, mentioned. Treasurer of FSNM,Firoz H Naqvi voiced that branded products give out complete information regarding the traceability, nutritional value & safety measures. On the other hand, a non-branded product doesn’t provide any specific information still they are paying input credit. It was decided that it is better if non-branded products should be discouraged by the

Agro & Food Processing March 2018

It was decided to make the website of FSNM where information of the members, food safety regulations, the government policies and laws, updates, etc should be displayed so that it will be easier for the Mithai & Namkeen manufacturers to understand the various aspects of the industry as well as policies. FSNM will soon link up its contact with APEDA for the promotion of Mithai & Namkeen industry in abroad due to the ever-increasing consumer demand. Committee is also planning to establish a board like Tea Board & Coffee Board for Mithai & Namkeen. For the assurance of quality product, Shiv Ratan Agarwal proposed that the FSNM should start giving its logo for the printing on packaging on the lines of SFA. Federation President stressed on need to celebrate a National Mithai & Namkeen Day to promote the products and nutritional aspects of the mithai and namkeen in media.On the lines of Milk Promotion Council & Egg Promotion Council


WMNC GLIMPSES

27

FSNM Members at first AGM

FSNM will also promote a united brand of Mithai & Namkeen among the consumers & to share the nutritional aspects of these food products via electronic & print media and national and international events and shows. Shyam Sunder Aggarwal briefed the committee about a training institute to be set up on the lines of ITI with the help of government to train the workforce for Mithai & Namkeen industry. The courses offered would be certified courses. He also stated that FSNM should also communicate with different hotel management institutions to include these courses among full time courses & crash courses. It was decided and discussed in detail to establish an exclusive training institution fully run by FSNM for providing skilled man power to this sector. A separate fund will be collected to establish the same institution. Later Vice President of FSNM Vasudev Chawla proposed that FSNM needs to link up its contact with APEDA for the promotion of Mithai & Namkeen industry in abroad due to the ever-increasing consumer demand. Hence, a board like Tea Board & Coffee Board should be established for Mithai & Namkeen as well.

will be updated on the website or an app. With the help of this data, members will not appoint wrong people in their factories. Manoharlal Agarwal, Virendra Jain, Srinivasa Raja, Ashok Chheda, Shyam Sunder Aggarwal, Amit Kumat, Sandeep Sawlani, Kunal Jain, Vikram Agarwal, D.K Gupta, Sunil Dutt Kathuria, Vasudev Chawla, Bipin Hadwani and other members of FSNM committee were present for the first AGM. Food safety is an important issue hence it has become vital that labs for testing samples of Mithai & Namkeen should be established by the committee. Different labs show different results of the same sample, so there is a need to establish a lab specifically for Mithai & Nankeen industry. Two labs should be established one in North India & other in the Western region. These labs must be approved & accredited by FSSAI and fully run by FSNM. Business Opportunities The first ever show of its kind provided the best business opportunities for manufacturers and allied industries as all were

FSNM members demanded to maintain data of namkeen and mithai industry. Firoz Naqvi stated that a state-wise data should be maintained which would include the data of industries right from small scale to big multinationals. Also, a comprehensive study of the industry size, issues & growth was needed to be studied by the committee. Further, there was a discussion on data pool to be maintained of the laborers employed in the factories of members. Vikas Jain briefed members about the need to maintain a data pool of black listed laborers; this information

Agro & Food Processing March 2018

present on the same platform. Companies like Testo India, Uma Polymers, Osho Industries, Bakewell Machines, MTS Foods, BW Flexible Systems, Levia Technologies, Saffron.Tatva.Almond, VS International, Alpha Milkfoods, Chandigarh Sweets, Adinath Flexipack, Das Electronics, Kap Cones, Fibrepack, Multivack, Laraon, Dynamech Engineers, Parmanand & Sons, Technofour Electronics, Anoop( G.C.Company), Madhusudan Ghee, Nichrome India, VKC Nuts, BBL Foods, Grace Foods Processing and Packaging, Heat and Control, Balaji Dry Fruits, Rajdhani Flour Mills, Kanchan Metals, Sphere International, Shanti Creation, Fabcon, Saurabh Flexipack, Ultraplast Chain Belt and Karishma Metals participated in the show. WMNC Experiences Various players from snacks and sweet industry attended the World & Mithai Namkeen Convention held in New Delhi. Read on to know what the attendees had to say about WMNC: G. Chandrashekhar, Editor of Hindu Business Line complimented the orga-


WMNC GLIMPSES

28

nizers of World Mithai and Namkeen Convention 2018 as it was one-of-its kind and first in India ushering in a great new beginning for Indian snack industry.The potential for snack market is large and is driven by rising incomes, growing population, and evolving food habits. As a keynote speaker, I was happy to share huge potential of the domestic snack market as well as export opportunities.The snack market provides immense value addition possibilities and several niches to service.A nutrition market is developing in this country and the snack industry must seize the opportunity. Categories such as kids’ food, geriatric food, food for sports persons (energy bars) and so on are set to become popular. He added that, “There are challenges that need to be addressed including compliance, traceability, and supply chain efficiencies. I am sanguine that the Indian snack industry is set to go places in the years ahead; and events such as the one held on February 10, 2018 in New Delhi are important to provide a neutral platform to industry participants.”

Anirudh Malhotra congratulated FSNM and organising team. He said,“It was an excellent experience to be a part of this event and I wish you all the best for future.” Director of Kanchan Metals Pvt Ltd, Sanjeev Gupta commented that WMNC was a good event and well organised and was glad that he participated in it. Industry planning to celebrate ‘National Mithai & Namkeen Day’ for the promotion of products and nutritional aspects of the mithai and namkeen in media. S.V Agri conveyed heartiest congratulations on the success of such a wonderful event for the snacks and sweets industry. Abhishek said it was a pleasure to be part

“I thank organising team for the courtesy extended to me during the meeting at World Mithai & Namkeen Convention on 10th Feb 2018 at Hotel Eros, New Delhi”, DGM - Business Development - Rinac India Ltd, Kr. Vijay Singh. Head of Marketing, Uma Polymers

Agro & Food Processing March 2018

of the event and hear such amazing panels. This is as an opportunity to connect with manufacturers, machinery suppliers and academic institutions. To summarise it in a few lines, he said“we understood the pressing need of this industry to have vocational training specific to the industry among other things. Our existing profile enables us to play a pivotal role in this and we will love to take this forward. We also seek your help in connecting us to the emerging snacks players in the industry, so we can work at a much larger level.” Application Chef MKN, Varun Bajaj stated that the event was well-planned and executed. He expressed gratitude that WMNC gave him the opportunity to share platform with great personalities.


29


BUDGET NOTE

30

India’s agriculture export potential is $100 billion as against today’s $30 billion. Food processing sector is growing at 8 per cent and the allocation for food processing ministry being doubled to Rs 1400 crore

F

struction of rural infrastructure. Hence, a total amount of Rs14.34 lakh crore is directed here from extra budgetary and non-budgetary resources is directed.

Agriculture and the rural economy was the first subject, Jaitley had focused on his speech as he presented his last full budget ahead of the general elections scheduled for 2019, although there is some speculation that the polls could be advanced to December 2018.

Food processing sector definitely outshined many sectors in Budget 2018-19 as the centre doubled the allocation in this sector to Rs.1,400cr from Rs750cr last year. Food processing sector is growing at an average of 8% per annum. Additionally, the agri exports have the potential of $100bn and hence government plans to set up state-of-art facility in 42 food parks.

Jaitley had politically enunciated that government’s complete focus this time would be to provide maximum livelihood opportunities in rural areas by spending more on livelihood, agricultural, food processing and allied activities and con-

The government has plans to link 86 per cent farmers in India who are small and marginal to markets to get adequate remuneration for their produce. One of the first steps was setting the minimum support price at 1.5 times the cost of produc-

inance minister Arun Jaitley charted a slew of measures to boost agricultural production and the rural economy, announcing new projects as well as enhanced support for existing schemes to the tune of Rs14.34 trillion in the Union Budget 2018.

Agro & Food Processing March 2018

tion of the kharif (summer) crops. The Niti Aayog, after discussions with state governments, will put in place a mechanism to ensure farmers get adequate remuneration should crop prices fall. Increase in agricultural credit to Rs11 trillion was also another trump card played by the centre. Or course among the other measures announced were development and upgradation of 22,000 rural haats or markets for which he set aside Rs2,000 crore and a provision of Rs500 crore for “Operation Green” to promote agriculture logistics. The government will also make efforts to link villages and rural roads to agriculture markets, secondary schools and hospitals under the Pradhan Mantri Gram Sadak Yojna (PMGSY). The most alluring one is that it has pledged to give funds for


BUDGET NOTE

31

Food Industry outshines in

Budget 2018-19

women development in self-help groups totally to the amount Rs75, 000 crore by March 2019 which was Rs42, 000 crore in 2016-17. Also an increase in funds allocated for the National Rural Livelihood Mission under the rural development ministry to Rs5, 750 crore in 2018-19, from Rs 4,500 crore in 2017-18 was declared by the centre. The finance minister announced an allocation of Rs2, 600 crore to ensure irrigation facilities in 96 irrigation deprived districts, besides funds to boost fisheries and animal farming. The raft of measures comes after farmers in several states protested a crash in crop prices last year. Food processing industry to shine out The central government had announced

several schemes in the past four years for the farming sector, but was not able to find a true solution to non-realisation of remunerative prices by farmers for their produce. As a result, 2017 was a year of acute distress for a large number of farmers in India and I think this would go down the history. After two consecutive drought years, they were hoping to realise a good income in 2017/18, but low prices of most agricultural produce left them high and dry. Sugarcane farmers are best placed in terms of profitability as they are assured of buyers in the form of sugar mills, and they realise at least the fair and remunerative price (FRP) fixed by the Government of India (GoI). In some states, they get the state-advised price, which is higher than the FRP. Cotton farmers are also better off as cotton is procured at minimum

Agro & Food Processing March 2018

support price (MSP) through Cotton Corporation of India when prices are below MSP. While Punjab and Haryana have efficient procurement systems in place, other states like Madhya Pradesh, Chhattisgarh, Andhra Pradesh, Odisha and Uttar Pradesh have also improved their procurement infrastructure for wheat and paddy in the last 10 years. But, the farmers growing perishable crops depend entirely on market forces and prices. Those growing pulses, onion, potato, soybean and groundnut often sell at lower prices in many states. In Madhya Pradesh, farmers’ agitation took a violent turn, and the government procured 8.76 lakh tonnes of onion at Rs800 a quintal, which was then disposed at a loss of about Rs785 crore. Finally, it prompted the government to bring in the Bhavanter Bhugtan Yojana for eight kharif crops under


BUDGET NOTE

32

of the Ministry of Food Processing Industries. The government’s thrust on boosting the rural economy will most definitely have a trickling effect on the private sector, and certainly on the food and beverage space. The food processing sector is currently at 8 per cent and has been allocated Rs 1400 crore, that is, the double of what was before. This is expected to have an indirect positive impact on the restaurant industry as well.

which by March 2018, payment of Rs.2, 000 crore might be made to farmers who sold their crops at less than modal prices. Even after getting a humungous recognition in 2018-19 budgets why are the Indian farmers troubled? Apart from the monsoon, it is the threat of low prices that haunts them. Data shows that annual retail food inflation rose 4.96 per cent in December 2017 and vegetable inflation touched 29.1 per cent. As the RBI is now mandated to keep retail inflation in the 4-6 per cent range, in case of price rise, there is a possibility of export bans, minimum export pricing, setting up of stock limits and even raids by police or the Income Tax department. Weak monsoon in 2018 may also affect prices. It is believed in the finance and consumer affairs ministries that price rise is caused by manipulation and hoarding by ‘unscrupulous’ traders. The Indian Council for Research on International Economic Relations (ICRIER) has also found that between 2004/05 and 2013/14, prices of rice, groundnut, cotton, buffalo meat, onion, banana and potato were below export parity prices in most of the years. Though the cotton farmers profited from booming exports in that period, restrictions on the export of rice and edible oils affected others by the depressing domestic prices. In November 2017, import duties were raised on chana, tur, and crude and refined edible oils. It has not seen a rise in domestic prices so far but that may happen during the year. India’s policy on agricultural trade will be tested in such an event. While other schemes will take several

years to materialize as their implementation lies with states, the trade policy are entirely in the central government domain. Increased production of agro-commodities can be absorbed either by finding new markets for exports or by using the product in the food processing industry. Therefore, the government should have a stable trade policy and should consider at least a threefold expansion of the budget

Recent food trends have seen a shift towards organic and healthier food items. This boost from the government will further encourage healthy food. Organic farming, fresh production, and horticulture will be given more focus. Cultivation of horticulture in clusters helps in scaling the operations and can prove beneficial for the entire chain from production to marketing. Organic farming by Farmer Producer Organizations (FPOs) and Village Pro-

Highlights of Budget 2018-19 in respect of Food Processing sector DAC & FW would reorient its ongoing schemes and promote cluster based development of Agri commodities and regions in partnership with the MoFPI, commerce and other allied Ministries. Pradhan Mantri Kisan Sampada Yojna (PMKSY)- Allocation has been increased from Rs. 715 crore in RE 2017-18 to Rs. 1400 crore in RE 2018-19. Tomato, Onion and Potato processing- Operation Green has been launched to promote FPOs, agro logistics, processing facilities and professional management with a sum of Rs. 500 crore. State-of-the-Art testing facility would be set up at 42 Mega Food Park to promote Agri export from current US $ 30 billion to US $ 100 billion. Corporate Income Tax has been reduced from 30 per cent to 25 per cent to companies having annual turnover up to Rs. 250 crores for all sectors. 100 per cent income tax exemption from profit derived from activities such as post-harvest value addition to agriculture would promote operation Green as well as PMKSY. This provision is applicable to FPOs’ having annual turnover up to Rs. 100 crores. Setting up of Fisheries and Aquaculture Infrastructure Development Fund (FAIDF) for fisheries sector and an Animal Husbandry Infrastructure Development Fund (AHIDF) for financing infrastructure requirement of animal husbandry sector. Total Corpus of these two new Funds would be Rs. 10,000 crore.

Agro & Food Processing March 2018


33


BUDGET NOTE

34

22,000 rural haats into Grameen Agricultural Markets. The budget also sets apart Rs. 2000 crores for an agricultural market and infrastructure fund. Several steps have been proposed for promoting sustainable agriculture such as organic farming. Horticulture will be promoted with greater attention to the marketing of tomato, potato and onion and similar perishable commodities through ‘Operation Greens’ with Rs 500 crore allocations.

ducers’ Organizations (VPOs) in large clusters will also be encouraged. The government also proposed to launch an ‘Operation Greens’ on the lines of ‘Operation Flood’ that shall promote Farmer Producers Organizations (FPOs), agri-logistics, processing facilities and professional management. A budget of Rs 500 crore is proposed to achieve this aim. This is expected to not only promote the agricultural activities but also simplify the entire logistics, from producing the raw materials to packaging and selling to the vendors and masses. Through this a higher quality of the agricultural produce is expected. Union Budget 2018 has brought about several positive changes, especially for the agri-food sector, and this is most certainly likely to improve the supply as well as the quality of the raw materials. Does the budget respond to all challenges faced by agri food sector? With India becoming seventh largest economy globally, there is much more in the room for food processing and agriculture sector. But agriculture is very sensitive to climatic conditions. Both climate variability and market volatility affect the income of farmers. In fact, Economic Survey points out that farm income may decline by over 4 per cent in a year. Heavy rainfall reduces income by 13.7 per cent and 5.5 per cent for kharif and Rabi respectively. What can be done to impart both market and income stability for National Food Security? The Economic Survey identifies the potential adverse impact of climate change on agriculture as most important. Farmers all over the country are also asking for higher prices in order to improve their income.

They would like the implementation of the Swaminathan Commission to provide a procurement price of C2 + 50%. The Prime Minister has been advocating steps that would help farmers double their net income in five years. Climate Change The budget provides for greater use of clean and renewable energy sources but does not deal with the management of climate change in relation to farming. It is important to set up climate risk management R&D centres at least one at every block level. Such centres should be supported by trained Climate Risk Managers, one woman and one man from each Panchayat. Climate Change could become a mega catastrophe and there is need for immediate steps both in the areas of mitigation and adaptation. Pricing and procurement as major issues Budget contains provisions which can shield farmers from distress sale and poor income. The Government has decided to keep the MSP for all unannounced crops of kharif at least at one and half times of their production cost. It is essential that if price of agriculture produce in the market is less than the MSP, then in that case Government should purchase either at MSP or work in a manner to provide MSP for the farmers through some other mechanism. If income is less than the support price, the government has said that it will make efforts to buy the surplus produce of the farmers. More allocation will be made for building warehouses and by upgrading

Agro & Food Processing March 2018

Another welcome feature is to integrate attention to fisheries and animal husbandry with Kissan Credit Cards. The National Bamboo Mission will be restructured in order to enhance the cultivation and consumption of the bamboo products. The emphasis placed on Self-Help Group formation, cooperatives and other organizational methods which can provide the power of scale to the small scale producers is welcome. In the promotion of organic farming, the greater encouragement will be given to Self Help Groups of women farmers under NRLM. In the case of employment and income greater emphasis will be placed on post-harvest technology and value addition to primary products. Rs. 10,000 crore corpus will be provided for the fisheries and animal husbandry sectors. Since agriculture promotes job-led economic growth, greater support will be given to both on-farm and non-farm employment. The priority given to rural infrastructure and irrigation will help impart stability of income and employment. Malnutrition is another serious problem and we need to promote symbiotic linkages among agriculture, nutrition and health. On the whole, the Budget addresses some of the ‘hotspots’ in the field of farming, the most important being management of monsoon and market.


35


WORLD OF PACKAGING

36

Packaged Planet

Analysis of Indian Packaging Machinery Industry

P

ackaging is indispensable when it comes to protecting the product from any possible damage that will reduce the product to useless. Some well-known brands plan their packaging solutions that can enhance the product & customer experience, while aligning with their branding.

Also

cially for the food and beverage industry. The global packaging machinery market valued USD 41.0 billion in 2016 and is expected to witness robust growth during the forecast period. Increasing demand for pouch packaging in food & beverages, cosmetics, pharmaceuticals and other industries is propelling the growth of pouch packaging machinery market. The global pouch packaging machinery market accounted for USD 16.4 billion in 2016 and is projected to reach USD 24.6 billion in 2024, growing at a CAGR of 5.2 per

o n l i n e brands will reinvigorate their packaging in order to enhance the e-commerce experience. Brands who adopt clear and succinct package messaging will be rewarded as consumers prefer brands that embrace minimalism. Packaging machinery hence play a vital role in the packaging industry, better the equipment, best the packaging material, the more consumers friendly, espe-

cent over the forecast period. Based on end-user segment, food and beverage industry is the dominating segment for the pouch packaging machinery market in 2016 accounting for USD 10.49 billion in 2016. North America and Europe together accounted for 65 per cent revenue share of global pouch packaging machinery market in 2016. Increasing demand of processed and packaged foods in North America and Europe regions are

Packaging is one of the major factors that enhances the food industry and in 2018 packaging will play a pivotal role in reducing global food and product waste and brands will be called to keep marine conservation at the forefront of packaging development and to anchor the circular economy for future generations.

Agro & Food Processing March 2018

contributng in the expansion of pouch packaging machinery market in the region. However, rising number of manufacturer for food & beverage and personal care product in Asia-Pacific region is likely to increase demand for

pouch packaging machinery in the region. Asia-Pacific pouch packaging machinery market is expected to grow at a CAGR of 8 per cent during the forecast period. Latin America and Middle East & Africa pouch packaging machinery market expected to reach USD 2.5 billion by the end of 2024, owing to the expansion of


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packaging industry in countries such as Brazil, Mexico and South Africa. Overview Packaging machinery allow packaging end-users to increase productivity while capitalizing the potential of manufacturing. Hence to accelerate their productivity, packaging end-user extensively relies on packaging machines. These end users strive t o

worker safety challenges

that a r e likely to increase due to expanded manpower. Due to these advantages that packaging m a chinery of-

fortune the market promises for years to come; the Market Research Future recently published a meticulous study report giving out complete market prognosis up till 2027. According to which the global Packaging Machinery Market is estimated to observe a humongous growth by 2027 with a phenomenally striking CAGR during the forecasted period (2016 – 2027). Current trends observed during the MRFR analysis include SMART Packaging Machinery, Digital Packaging Machine Solutions and Convergence of flowpack packaging machines and robotics. The Global Packaging Machinery Market is predominantly driven by advantages the packaging machinery offers coupled with booming end-users industries such as food and beverages, pharma, cosmetic and personal care industry.

have such machines developed that can support to accelerate packaging operations further increasing their productivity while expanding their operational bandwidth that can cover extended product line and diversified packaging sizes. All at once, allowing them to focus on increased productivity and deal with the

fer coupled with the technological innovations that have transformed these machineries in to a more advanced or SMART form; the global packaging machinery market is growing brilliantly, enjoying enormous market grip. Recognizing exponential increases, the packaging machinery market is currently effervescent with and the

Agro & Food Processing March 2018

Changing life style coupled with the economic growth defines the increased demand for packaging solutions across industries ultimately driving the packaging machinery market growth. Technological advancements escorted the packaging machinery market to greater heights introducing SMART machines. Moreover, rising investments transpired by the manufacturers and end users, to develop Packaging Machinery with adept technology, unrivalled design and features. Stronger support from govern-


38

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beverages. The flexible packaging segment is estimated to be growing at a rate of over 35 per cent annually. The food processing sector is one of the biggest users of flexible packaging, accounting for more than 50 per cent of total demand. The challenges this industry is facing today include a lack of clarity in food packaging regulations, consumers’ opinions on sustainable packaging, and stress on eco-friendly packaging materials.

ments and funding programs worldwide (one like Make in India) is further accelerating the market size of the Packaging Machinery Market globally. Highly competitive market of packaging machinery is inflated by the presence of several well-established and small players. Well-established players incorporate acquisition, collaboration, partnership, expansion, and technology launch in order to gain competitive advantage in this market and maintain their market position. Many key players in the industry are expanding their existing production capacities in response to the increased demand for innovative and sustainable biopolymers by brands and consumers. To achieve excellence, these players try to master futuristic technology. Through their sedulous work of research and development, these manufacturers develop various types of packaging machines for liquid, viscous, and solid product. Indian Scenario The packaging industry in India is very dynamic and influences all other industries directly or indirectly. The packaging industry stood at $32 billion in 2015, had grown at a compound annualized growth rate (CAGR) of 15 per cent for the last five years, and is expected to continue growing at a CAGR of 13 to 15 per cent in the coming years. According to the Packaging Industry Association of India, the Indian packaging industry was the fifth-largest in the world in 2016. The rise of Indian middle class, growth of organized retail, rapid growth of exports and India’s e-commerce boom are all fueling industry growth. Thus, adopting better

packaging methods, materials and machinery to ensure quality has become very important for Indian businesses. The Indian packaging industry constitutes about 4 per cent of the global packaging industry. The industry is underpenetrated, and thus offers significant business opportunities, since India’s per capita packaging consumption is only 10.5 kg per year, as compared to 109 kg in the U.S., 65 kg in Europe, 45 kg in China and 32 kg in Brazil. Manufacturers of packaging machinery and materials in India find demand for their products mostly in food processing and pharmaceuticals sectors. About 45 per cent of the packaging machinery and materials produced is absorbed by the food processing sector alone, 25 per cent by the pharmaceuticals sector, and 10 per cent each by personal products, tea and coffee, and industrial products industries. India’s imports of packaging equipment currently stand at over $130 million a year. India’s imports of packaging equipment for food processing are mainly automated machines and systems. Flexible packaging is the fastest growing subsector of India’s packaging industry. Plastics dominate the Indian flexible packaging industry, as plastic is aesthetically attractive, cost-effective and sturdy. Furthermore, plastics improve the hygiene quotient and shelf life of products, especially foods and

Agro & Food Processing March 2018

There are between 600 and 700 packaging machinery manufacturers in India, of which 85 to 90 per cent are from small and midsize companies. Due to growing demand for packaging, the industry is gearing itself to adopt scientific and functional packaging. Three specific segments can be identified for opportunities in the packaging equipment market in India: • First, the unorganized sector, which represents the largest opportunity, given increasing quality consciousness among consumers. The cost of equipment and upgrades hold the key to success in this segment. • Second, large companies, primarily multinational corporations are guided in the choice of such equipment by the global policies and standardization of their parent companies. • Third, the organized segment, which caters to the major food and pharmaceutical companies, and is conscious of quality and the ability to produce various packaging products, thereby, enabling them to tap a larger market. Due to increasing domestic consumption and high potential, India is emerging as one of the prime destinations for plastics companies and downstream

players worldwide. Huge investments in the Indian food processing, personal care and pharmaceuticals industries create significant scope for expansion and development of the Indian pack-


39


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40

(MSMEs). As this industry grows and matures, there will a need to upgrade the technology & performance to match the global standards.

aging industry. Market size and the growth rate India is one of the top five markets for packaged food in the world and second-largest in Asia with a sales volume of 34 million tonne in 2016. Researchers expect that the total sales of packaged food will increase by roughly seven per cent annually within next five years. With a turnover of $ 32 billion and growth rate of 15-18 per cent annually, the Indian packaging industry is expected to reach $73 billion by 2020. These figures show the wide scope of opportunities for Indian packaging machinery industry. India still imports significant packaging equipment which consists mainly of highly automated advanced machines and systems from countries like Germany, Italy, Switzerland, Japan, South Korea and the US. Presently, in India about 85 per cent of these machinery manufacturing firms are micro, small & medium enterprises

F e w global companies like Leepack from Korea & Topack from Japan are catering widely to quality & automated driven markets. The driving factor for this industry is the fast-growing Indian population who wants to use well packed & hygienic essential products like food, beverage, milk, vegetable, food grains, and pharma. According to research forecasts, India will become the third-biggest market for packaged food in 2020, after China and the United States and in the year 2020, packaged food sales will reach 47 million tonne. The growth of Indian packaging industry will be heavily influenced by changing demographics such as growing urbanization and rising proportion of middle class consumers. These changes drive the need for new packaging formats, such as different sizes, materials, and strength. During the period 2016-2021, the soft drinks and food industries will be highest packaging market share gainers (by units) with share growth of 3.4 and 1.3 per cent

Agro & Food Processing March 2018

respectively. The growing organized retail sector has been a significant driver of the growth of Food & Beverage industries, which in turn drives the growth of Indian packaging industry. In addition, innovations in packaging industry, such as development of lighter packaging with better barrier properties, add to the growth of packaging industry. In terms of packaging material, Glass and Rigid Plastics will be among the major share gainers, with share growth of 0.7and 0.6 per cent respectively during 2016-2021. Flexible Packaging is the leading pack type in the Indian packaging industry and will grow at a healthy CAGR of 8.9 per cent during 2016-2021, with major contributions from the Food, Household Care, and Cosmetics & Toiletries industries. This growth is largely driven by its low cost and flexibility to suit multiple shapes and sizes, convenience (zip-locks, plastic closures), and low-carbon foot print on the environment as compared to Rigid Plastics. In addition, the increasing prominence of low-density flexible packs in high protein foods is expected to drive the growth in the future. The per-capita consumption of packaged beverage and food in India is around 8.5 kg per person per year which is still very low compared to other countries like Japan, China & the USA. Within the next five years, it will increase by another 18-


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24 per cent per cent annually, as the demand for processed food is rising due to

growdisposable urbanisation, young population.

i n g incomes, and the

These figures indicate an immense opportunity to Indian machinery industry & challenge from global packaging machinery industry. The Indian food, beverage, cosmetic & pharma companies strive for high quality packaging with optimum investment which must be used as an USP for Indian packaging machinery manufactures. The need of automatic lines with high efficiency on long run, safety features & good service back-up is the need to stand head to head with global companies.

ing, retort packaging and aseptic technology which are the requirement of Indian customers as per the conditions prevailing here. The packaging machinery industry must tap these new trends and invest in new innovations, technology upgradation to cater to these requirements. The ready-to-eat & serve market is the most demanding product where retort packaging & packaging in premade bags are in trend. A wide array of products, coupled with increasing global connectivity, has led to a change in the tastes and preferences of domestic consumers. This trend has been bolstered by rising incomes, increasing urbanisation, a young population and the emergence of nuclear families. Food packaging has enabled today’s consumers to look for various options, and compare the value offerings thereof, before making a purchase. Packaging has also helped enhance the carry ability of products and increase their shelf life. Vice

Latest trends in packaging machinery industry With the new trends in consumer taste and product interests, to remain competitive in the global market, packaging companies are required to update their machines to satisfy today’s demands. One of the latest trends in food packaging machinery market is surging demand for smart packaging solutions. Growing concerns over the wastage of food is propelling use of smart packaging in the food industry as it reduces loss of food during packing. Owing to the demand for longer food preservation, vendors have been compelled to use barrier layers and germicidal films. Safety and hygienic benefits provided by smart packaging techniques will boost its demand among end users over the next four years. With rigid & flexible packaging technologies, the latest trends are into PET packag-

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41 versa, the rising demand for food and beverages boosts packaging industry as well. The technological advancements have been rapid with advent of the space and information technology age, which gradually required and also facilitated the changes in consumer food habits and preferences across the world. These changes brought in technologies like juice concentrates, preservatives, colorants, self-cooking meals (ready-to-eat/cook foods), reconstituted foods, fruit juices, etc. While some of the Indian players are making use of the newer technologies to increase production, meet international quality standards and thereby increase profitability, since the industry is largely unorganised the adoption has been sporadic. Even though, the market opportunities have been emerging in the recent past, requirement of investments, lack of bank credit facility and long gestation period have been impeding the adoption of newer technologies.


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42

protection for the product but that would force a higher retail price. Rigid and flexible are the two most significant types of packaging in use today. Rigid packaging dominates with about 80 per cent market share. However, there is a shift in demand and flexible packaging demand is increasing. The key advantages of flexible packaging over rigid include light weight, small pack size, and energy savings, ease of storage and transportation and convenient disposal.

Factors driving the packaging machinery sector in India The Indian middle-class is growing rapidly and it simply loves to buy. They are on the lookout for premium brands, especially for confectionery products like chocolate. But the premiumization trend is not only noticeable in chocolates but also in biscuits. These trends are expected to continue even years from now. Rural India provides growth opportunities for packaged food and beverages. Almost 65 per cent of the Indian population lives in rural regions. The rural population benefits from investment in infrastructure and rising wages. Food processing companies are realizing the potential of rural India and are trying to expand their presence in these areas. They are launching their products in smaller pack sizes and at low price points to attract consumers. As India’s soft drinks market is slowly reaching maturity in urban India, rural India is the new target for most of the manufacturers of soft drinks. Packaging machines such as automatic form-filling and sealing machines, tetra pack aseptic packaging machines for sterilised filling and packing of liquids, and testing instruments offer considerable business opportunities. The Indian packaging machinery manufacturers in unorganised sector mostly fabricate general-purpose equipment to serve basic needs of the industry. One area that has been identified as having good market potential is equipment for manufacturing aluminum beverage

cans. Machinery for cleaning and drying containers; automatic high speed labelling machines and capping machines; sealing machines for cans, boxes, and other containers; machinery for filling, and closing bottles and cans; packing/wrapping machines; and moulding machines also offer good prospects. Challenges and Overcoming The key challenges that packaging industry is facing today include lack of regulatory clarity in packaging, insufficient consumer awareness of sustainable packaging, and uncertainty about green packaging materials. Whereas, the main challenges faced by packaging machine industry are: lack of sources of credit, high cost of packaging materials, lack of skilled labour, irregular power supply, and an underdeveloped sense of how to market, brand, and distribute. For raw and processed foods, India needs packaging material which is suitable to the country’s climatic variations. The country’s heat and high humidity are two problems that can reduce the shelf life of packaged goods. It would be particularly important to focus on the seals and maintaining their integrity. But more important than the climate is perhaps lack of a good supply chain or refrigeration in retail outlets and at home. This is a big barrier to many of the packaged food formats familiar to consumers in the West. At the same time, a heavy focus on cost means that cheaper flexible packaging formats are often chosen over rigid packs that may offer greater

Agro & Food Processing March 2018

Moreover, spouted stand-up bag is a smart innovation for packaging liquids of all kinds. After pouring, the caps can be tightened to keep the product safe. For sauces, etc., stand-up pouches can be fitted with pour spouts and easy screw-on caps. As the Indian food and beverage industry is growing rapidly, creating awareness of product possibilities by utilising advanced packaging and processing technologies is very important so that the latest and best technologies can be adapted. With India being the second-biggest producer of food and beverages after China, the market has a huge potential for foreign direct investment (FDI) concerning the technology of food processing and food packaging machines. Threat by domestic market Indian imports of packaging equipment consist mainly of highly-automated advanced machines and systems. The major equipment suppliers to the Indian market include Germany, Italy, Switzerland, and others including Taiwan and the United States. Technology, price, delivery, and performance standards are critical factors that determine whether packaging equipment can be sold in the Indian market. Due to intense competition in the end-user market, cost of equipment and low running cost remain one of the primary factors that influence sale of the packaging equipment. Upgrading would be another extremely important factor in the buying decision of Indian end-users. After-sales service is also a key concern of buyers. The unorganised segment probably represents the largest opportunity in terms of volume. As buyers/end-users become more quality-conscious, it will become imperative for this segment to upgrade its equipment. The key factors that affect sales to this segment are the cost of the equipment, lower processing cost and


WORLD OF PACKAGING

cept the opportunities to fulfill all the new requirements of packaging industry. Essential commodities like edible oils, dairy products and alternatives contributed significantly to the double digit growth posted by packaged foods during 2017.

being able to seamlessly incorporate the equipment in facilities. As in all cases, the presence of after-sales support would be treated as a prerequisite. Conclusion With great emphasis on Make in India, many global packaging machinery companies are interested in technological JVs & get associated with Indian packaging machinery companies to vouch the local support on manufacturing of these machines. Parle & Lee pack went into technological JV in 2014 to manufacture cost competitive & quality machines in India. The need of the hour is to innovate & ac-

The shift towards packaged food from unpackaged unbranded products, premiumization trend, competition among bigger brands and performance of smaller categories is fuelling growth within packaged food. The perception of packaged foods is changing among consumers as there has been a significant rise in the convenience, availability and affordability of such products across the country. With the onset of information sharing through various sources like social and printed media, consumers are more informed about the benefits and downsides of packaged foods, leading to better informed deci-

43 sions while consuming products. Growth continues to be fuelled by entry of new players, with vast opportunities on offer within packaged food attracting companies and fuelling a trend towards competitive pricing and new product launches. Companies are looking to attract consumers within areas like olive oil, spreads and ready meals by offering promotions, new product developments and attractive packaging. Packaged food will continue to post double digit growth over the forecast period, mainly due to rising demand for convenience as a result of the increasingly hectic pace of modern life, as well as growing awareness and availability. Essential commodities like edible oils, dairy, rice, bread and breakfast cereals are dietary cornerstones and will fuel demand among consumers, while products like biscuits, savoury snacks, confectionery, spreads, soups, noodles, pasta and ice creams will remain the most dynamic categories over the forecast period.

www.heatandcontrol.com info@heatandcontrol.com Chennai: +91- 44 4093 1100

Agro & Food Processing March 2018


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44

“Add to t

The evolving online

W

hile e-commerce represents, at best, roughly onetenth of total $28 trillion global retail market, it’s growing so rapidly that driving most of the growth. Global fast-moving consumer goods (FMCG) retail—both online and offline is a $4 trillion sector, growing at a rate of just 4 per cent with signs of continuing sluggish performance in developed markets. On the other hand, total retail e-commerce is predicted to grow by 20 per cent (combined annual growth rate) to become a $4 trillion market by 2020. In dollar terms, this is an additional $2.1 trillion over the next four years, compared with $0.7 trillion across the FMCG segment. This growth outlook begs the question, are brands and retailers treating e-commerce as a bigger growth opportunity than the whole FMCG industry itself? Relative to sectors like apparel and electronics, it’s still early in the evolution of e-commerce for most FMCG categories. The grocery category is even earlier along the chain of evolution. As a result, even in

some of the most developed markets we will see significant growth of online channels. The prospect of online retail industry equaling FMCG industry in size globally represents a massive shift in consumer habits from the perspective of manufacturers and retailers. It’s the

Agro & Food Processing March 2018

biggest change we will see in our lifetime.


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45

the Cart”

e grocery in India

A n y FMCG strategy that’s not already factoring in e-commerce is missing a big part of the growth story. When it comes to the grocery category, supply is more important than demand on the e-commerce front. Compared with total e-commerce, grocery e-commerce is less affected by connectivity and mobile. An array of other factors comes in to play when it comes to grocery e-commerce, and those factors vary from region to region For example, consumers in the U.K. are accustomed to buy groceries online because of two very early entrants (Tesco and Ocado) to the space. Comparatively, India is at opposite end of the spectrum despite country’s very high smartphone penetration rate. In fact, retail e-commerce providers currently deliver to just 200 cities in India, with grocery e-commerce available in just

30 cities. However, In India with a focus on technology in budget 2018, the government has provided great support to the digital industry. The government’s decision to create 500,000 Wi-Fi hotspots in rural India will enable broadband access to those with no or little access to the realm of internet. This will help grow the digital commerce industry and encourage more people to adopt cashless economy. The next frontier for great Indian e-commerce battle could be food, cereals, fruits, and vegetables.

Harsimrat Kaur Badal staged roadshows in London to woo retailers such as Tesco and Marks & Spencer but the response was muted. Global retailers including Walmart have shied away from the segment, arguing that selling only low-margin food items does not make economic sense and such ventures should be allowed to stock non-food items such as shampoos to detergents and soap.

The online grocery retail segment is currently estimated at around $1 billion, with a projected compound annual growth rate of 55 per cent over the next four years.

This is because online delivery of grocery has been the toughest model to crack for startups owing to multiple reasons. The top among the reasons are high costs of delivery, wafer-thin margins and highly perishable inventory. As India’s entrepreneurial ecosystem goes through a correctional phase and achieving unit economics or profitability per user has become top priority for entrepreneurs and investors, the online grocery model is seeing quite a few tweaks.

Amazon enters food retail venture in India When India opened food-only retailing to foreign direct investment (FDI) in 2016, food processing industries minister

But Amazon had other plans; Last year it secured the government’s permission to invest $500 million in a wholly-owned venture to retail locally produced and packaged food products through offline

Agro & Food Processing March 2018


46 and online channels. It is the only global entity to have applied for the food-only retailing business, an area where the government allowed 100 per cent overseas investment in 2016 to help producers and generate employment. Amazon has rolled out its own food retailing business in India with a pilot in Pune, becoming first foreign e-commerce firm to stock and sell food items directly to consumers. The products are sold by Amazon Retail India Pvt. Ltd. Amazon is now a vendor on Amazon.in and is currently operating in Pune. The government, while clearing Amazon’s proposal in July, asked it to maintain separate management and offices for the venture and keep them distinct from its marketplace business which is not allowed to sell products directly to consumers. For-

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eign-funded BigBasket, Grofers and Supr Daily have also received similar approval for food retailing. Amazon’s grocery segment has seen a 250 per cent growth in demand since its launch and currently offers 1.9 million products in this segment from 9,000 sellers. AmazonNow in its current form is a pure marketplace of grocers — large and small. Grocers sign up on the platform, get orders based on location, and fulfill them. It has local sellers over India. Amazon is a large player… Some changes are happening. Investors and e-grocers are taking notice, but Amazon takes its own time to analyse and expand in the market. In its groceries segment, Amazon will focus on three inputs: 1. Technology: get the delivery routing, which it is already doing; set up the delivery process and apply machine learning to the process. In the US, it deploys machine intelligence on vegetable and fruit sorting. For example, strawberries are sorted using ML-powered software. 2. Warehousing: Once it starts food retail and gets its sourcing right as also start private labels, it will

stock its own inventory. In doing so, it will combat Big Basket’s inventory-led model and prepare itself for rival Flipkart’s entry into the

Agro & Food Processing March 2018

grocery business. Flipkart has plans to quickly scale the e-grocery business. 3. Controls: The problem with the grocery marketplace model is that if a product is undelivered or returned, many a times the delivery boy does not return it to the merchant. This happened with PepperTap, with the company losing as much as Rs 1 crore on this account even though its scale of operations was relatively small. Over time, Amazon has plans to set up the food supply chain. But in the interim, it will set up collection centres and consolidation centres to procure fruits and vegetables and even staples. Eventually, it will reduce its dependency on merchants. It will contend with competition from other e-grocers in India, who have weathered the storm so far. While in each city where Amazon is present in there is a local e-grocer: Satvacart in Gurgaon, Urdoorstep in Bangalore, and Grocerkart in Hyderabad. Then there are the larger ones: Bengaluru-headquartered BigBasket, the largest e-grocer in the market, which Amazon wanted to acquire, but could not close the deal differences on valuation. There is ZopNow, which is present in 10 cities and commands 2.2 per cent market share. The Indian e-commerce in groceries retail In the first wave of e-commerce growth in India, electronics and apparel emerged as the highgrowth segments. Companies could attract customers with deep discounts, easy payment schemes, and by bringing international brands within their reach. But grocery has remained largely untapped. Even after 15 years of e-commerce in food retailing, it is still at about 3-5 per cent market share (of overall food retail), compared with 50 per cent in travel or 35 per cent in electronics in mature markets and this leaves huge headroom for growth. Moreover, grocery retail is a high-volume business, since customers shop for items like bread, flours, and cleaning supplies weekly or monthly, but buy new phones or large electronics only once in a while. If you want to transform a person’s shopping experience you need to


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47 kart, is once again experimenting with online grocery retail with a service called Supermart. The company is running Supermart in a pilot stage for its employees in Bengaluru and has the plan to scale Supermart up to all customers in Bengaluru and take it to other cities in the future. Flipkart’s move into the segment comes after its fierce rival Amazon India launched grocery sale. This is one of the “fastest-growing categories for” Amazon. The two giants queuing up for online grocery retail is a bit odd, especially given the fact that this segment has seen a high number of casualties over the last couple of years, and that companies that did survive have struggled to grow.

look at where a customer spends the most time. The answer is FMCG (fast-moving consumer goods) and grocery. Customers interact and engage on a daily basis in this category. You don’t buy a mobile phone or a fridge on a daily basis. But selling fruits and vegetables online is a very different challenge from hawking smartphones. From wafer-thin margins to expensive logistics, grocery retail has its own requirements, which have led to the death of several startups, including Sequoia Capital-backed PepperTap. Clocking high growth in a handful of cities, especially metros, is possible. Yet, expanding online grocery retail to a largeenough scale across hundreds of cities is extremely tedious because it requires tying up with local suppliers, hiring hundreds of delivery staff, and ensuring proper storage facilities in each market. And such attempts have failed in the past in India. In 2015, Flipkart had launched its groceries delivery app, Nearby, as a pilot in Bengaluru. But just five months later, the company shut the business down reportedly due to poor demand and tight margins. In January 2016, Grofers shut operations in nine cities as it was unable to generate enough demand to sustain its business in those places. And a few months later, the country’s then third-largest online grocery retailer, PepperTap, shut shop despite having raised over $51 million.

quire them to build separate capabilities. Unlike non-grocery retailers, online grocers cannot have a marketplace model for any of their fresh foods. Furthermore, perishability of the products makes it time-bound to be delivered. espite a failed attempt two years ago, India’s largest homegrown e-commerce major, Flip-

For example, Gurugram-headquartered Grofers had to downsize its business, its one-time competitor PepperTap closed down after just 17 months, and other pilot projects have failed. But, if executed properly, getting into the pantry could be the next growth lever for Flipkart and Amazon India. E-commerce grocery shopping is expected to grow rapidly,

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48 particularly among the digitally-centered millennial generation. Consumers are beginning to change where and how they buy groceries, and multi-channel supermarkets have to meet these emerging needs. If an e-commerce retailer is not jumping on board the grocery train, it may not be around to catch that ride a year or two later. Big basket and Grofers Innovative Retail, which runs BigBasket has more than doubled its business to cross the Rs 1,000-crore sales mark in FY17, indicates growing preference for online grocery-shopping in India despite sluggish trends in the broader consumer market. BigBasket has two operating entities. Supermarket Groceries sources products from companies and sells them to Innovative Retail, which in turn runs the consumer-facing portal and makes the last-mile delivery to comply with norms on foreign direct investment (FDI) in direct online retail. With fill rates and on-time delivery over 99 per cent, Big Basket’s performance is the best even among global retailers and has invested heavily in marketing and creating infrastructure to help maintain focus on customer experience. The six-year-old e-grocer signed up Bollywood actor ShahRukh Khan as its brand ambassador in 2015. Now the Competition Commission of India approved Chinese ecommerce giant Alibaba to purchase a stake in BigBasket. The purchase will help further cement Big-Basket’s position as market leader in the grocery segment while allowing Paytm Mall, backed by Alibaba, to get a beachhead in this market. Alibaba Group Holding Ltd., China’s e-commerce giant, plans to invest about $200 million in India’s largest online supermarket, BigBasket, leading a $280 million funding round in the startup. Alibaba is taking a stake of about 25 per cent in BigBasket after months of negotiations, said the people, asking not to be identified because the matter is private.

The Bangalore-based grocery business had previously been in talks for an investment from e-commerce pioneer Amazon which in June agreed to acquire U.S. grocer Whole Foods Markets Inc. The investment marks an escalation in the competition between the world’s two largest e-commerce companies in India, one of the world’s fastest-growing and as yet unconquered -- online retail markets. Amazon founder Jeff Bezos has vowed to

isting backers include the Dubai-based Abraaj Group as well as Sands Capital. Grofers has a presence in in 23 Indian cities today, a geographical presence that rivals BigBasket. Grofers started off as logistics providers to grocers. It was a marketplace, much like AmazonNow. Once the order was placed by a customer, it would pick up goods from a neighbourhood grocer listed on its platform, and deliver it within 90 minutes. It did not hold inventory, did not have warehouses and did not manage the supply chain. In 2014, when Grofers started, Instacart in the US was one of hottest e-grocery startups with a marketplace model. That June, it had raised $44 million from Andreessen Horowitz and barely six months later another $220 million from Kleiner Perkins Caufield & Byers valued at $2 billion.

invest $5 billion in the country as he challenges local leader Flipkart Online Services Pvt. Alibaba has invested in One97 Communications Ltd., which runs digital payment and e-commerce businesses. The deal values BigBasket, a purveyor of groceries and household needs like toothpaste and freshly-ground masala (spice) powders, at $800 million. An affiliate of One97’s Paytm E-commerce Pvt may join Alibaba in its $200 million stake with a small investment. Grocery and daily essentials is a challenging business the world over, even in advanced markets like the U.S. and China. BigBasket operates in a country where expansion is difficult beyond the biggest cities because of rudimentary logistics and a shortage of refrigerated trucks and warehouses. The company now delivers in over two dozen Indian cities and offers 18,000 products from over 1,000 brands. Its ex-

Agro & Food Processing March 2018

More than two dozen companies in India wanted to be clones of Instacart. Most of them had a slow death, without being able to raise more funds — LocalBanya, Atmydoorstep, and PepperTap were a few of them. Others dabbling in the business too burnt their fingers: Ola stopped delivering grocery and Paytm shut down Zip. Grofers claims an average order value of Rs 1,400 and monthly revenue of Rs 65 crore. Dhindsa says Grofers sells 260,000 items a day. Grofers is said to have $100 million in the bank today and doesn’t need to raise more. The company wants to be the Sadar market (the largest wholesale market for household items in Delhi) in online grocery — focusing on affordable and cheaper everyday essentials. It has started its own private labels in staples and has partnered with lesser known local brands. For example, there is mustard oil brand called Pansari for Rs 88, which clocks Rs 2-2.5 lakh sales every day. There is Clean, a bathroom cleaner at half the price of market leader Harpic, a


ONE CLICK MART

brand owned by Reckitt Benckiser. As far as bigger brands are concerned, Grofers procures directly from Patanjali, HUL, and other brands, like BigBasket does. Conclusion Online food and grocery penetration is less than 1 per cent suggesting that the category is still in its infancy in India. Morgan Stanley expects online food and grocery segment to become the fastest-growing, expanding at a compounded annual growth rate of 14.1 per cent by 2020 and contributing $15 billion or 12.5 per cent to overall online retail sales. But this opportunity offered by $500-billion retail market is attractive for any player — foreign or local. Food and grocery account for almost 50 per cent of overall retail basket in India, although general merchandise, personal and home products fill up a bulk of the profit pool at retailers. According to a recently released research report, ‘Online Grocery Market in India’ - the online grocery market in India is projected to grow at a CAGR of 55 per cent during 2016 - 2021. Easy availabil-

49 constraints barely get time for grocery shopping which is increasing adoption of online grocery stores especially in metro cities. Consumers in urban centres like Delhi, Mumbai & Bangalore are driving substantial growth in India online grocery market, a large chunk of Indian consumers, residing in tier II and tier III cities, still remain untapped due to lack of confidence, low awareness and price-conscious behaviour.

ity of a wide product range at one place and improving logistic services offered by companies are anticipated to fuel the country’s online grocery market in the next five years. With growing e-commerce market, increasing consumer awareness, rising disposable income and advent of various technological advancements over the last few years. Over the last couple of years, online grocery companies operating in India have been spending heavily on digital marketing to increase their visibility and consumer awareness. India has a large base of young consumers who form majority of the workforce and due to time

To remain competitive in the market, an increasing number of e-grocers are strategically targeting these markets to increase their footprints in the country. In India, BigBasket, Grofers, and PaperTap are the leading players in India online grocery market. These players are anticipated to maintain their dominance in the market through 2021. Few companies are expanding their operations by partnering with local retailers in numerous Indian cities, while others are adopting inventory business model to address the growing demand for everyday consumer products across India.

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52

Himachal formulates specific schemes to promote horticulture ies of fruits which could be grown in different parts of the state and as many as 35 species of different verities of fruits could be successfully grown in the state.

H

imachal Pradesh is preparing area-specific schemes to promote horticulture as the state has diverse climatic conditions to cultivate different species of fruits. Horticulture Minister Mahender Singh Thakur said diverse geo-climatic conditions of the state are conducive for cultivation of wide variet-

The field officers and specialists have been issued specifically to visit the farms of farmers in their respective areas and conduct research to explore the possibility of maximum coverage under horticulture activities. These specialists will go in the fields and prepare area specific plans for different regions, keeping in view agro climatic conditions of the area to ensure that optimum survival of plants, the Minister said.

Robust plants of fruits of high yield varieties will be provided to farmers in the state after proper soil testing and more and more farmers will be covered under floriculture and horticulture activities, and this endeavor would also open more self-employment avenues in rural areas and strengthen economy. The government has also decided to increase procurement prices of citrus fruits in the state under market inventor scheme (MIS) and the government would encourage food processing industries for optimum utilisation of horticulture crop. The horticulture department would develop nurseries as per demand of the farmers and according to the climatic conditions of the region and over 4.5 lakh plants would be distributed to the farmers during the next three months through departmental nurseries as per their requirement, Thakur said. He also directed officers to prepare a plan for widening the horticulture activities in the State and farmers would be provided plants after soil-testing in the respective areas. This would ensure greater income to the farmers as they would be able to grow more cash crops suited for their area. Thakur further highlighted the need to provide quality plants to the farmers. Strict action would be taken against those supplying plants of poor variety. The department has to ensure that only high quality plants are provided to the farmers. The state government was making sincere efforts to ensure remunerative returns to farmers of their produce and Apple, Mango and citrus fruits have been brought under Market Intervention Scheme (MIS). Integrated Horticulture Mission was being effectively implemented in the state for development of horticulture and various activities such as plant nurseries, construction of water sources, and increase in horticulture area, protective farming under green house, organic farming, post harvest management and food processing activities would be executed effectively under the mission.

Agro & Food Processing March 2018


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India can provide to global processed food market

C

ommerce Minister Suresh Prabhu was present at the inauguration of the 11th edition of “FICCI Foodworld India 2018” with the theme ‘Capitalising Food Processing in the Digital Era’. The Minister said with increasing output from the agriculture sector leading to a rise in food processing activities, India will be able to cater to the international markets by exporting more processed foods. “Among other sectors, food could be a very important sector (for exports) because now when we have large quantity of agriculture and horticulture products coming in, we will have to process it. When we process it, we need not only cater to the domestic market but we can export it.” The minister said the food processing industry professionals should develop processed food items that appeal to the palate of the consumers in export markets. “This segment needs to be exploited aggressively apart from exporting Indian food products for use by Indians overseas.” Prabhu said the processed, ready-to-eat food produced under good regulation on safety and standards was a great opportunity for the manufacturing sector with the attendant benefit for downstream industries. Although technology will bring in lot of redundancy and many sectors will be impacted, food processing is a sector which will survive all such transitions. “We are trying to identify sectors which would be growing at a much faster rate than before, and clearly in my opinion, food is one such sector,” he said. Laying stress on the need for exports of marine products, Prabhu said he had urged the Marine Products Export Development Authority to prepare a strategy for export of marine products from India.

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Import duty on cotton seed oil, olive oil raised

T

he import duty on crude soyabean oil is 30 per cent, crude sunflower oil 25 per cent and crude rapeseed oil 25 per cent until the Budget was announced wherein the import duty was raised. The government increased import duties on certain crude and refined vegetable oils like cotton seed oil, olive oil and groundnut oil to 30-35 per cent to check shipments. Import duty on crude edible vegetable oils like groundnut oil, olive oil, cotton seed oil, safflower seed oil, saffola oil, coconut oil, palm kernel/

babassu oil, linseed oil, maize corn oil, castor oil, sesame oil, other fixed vegetable fats and oils has been raised from 12.5 per cent to 30 per cent. Similarly, import duty on these refined edible vegetable oils has been raised from 20 per cent to 35 per cent, according to the Budget document. Solvent Extractors’ Association of India’s B V Mehta said the country mainly imports cotton seed oil and olive oil. India imports about 14-15 million tonnes of edible oil annually to meet domestic demand.


NEWS

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There is still sizeable gap between farm and fork: President

P

resident of India Ram Nath Kovind was the key person at the first convocation of National Institute of Food Technology Entrepreneurship and Management (NIFTEM) at Sonepat in Haryana. He stressed on the need to provide benefits of global food trade to farm and farmers of the country. Haryana governor Kaptal Singh Solanki, Union Minister for food processing industries Harsimrat Kaur Badal, Union Minister of State for Food Processing Industries, Sadhvi Niranjan Jyoti, Women and Child Development Minister Kavita Jain were also present at the event. Emphasizing that there is still a sizeable gap between farm and fork, justice must be done with the growers to make their lives better, Kovind stated. The President

Month

wondered why advantages of human talent and low cost as in the case of services sector cannot be replicated in agriculture and agro-based industries. “In our country, there is still a sizeable gap between the farm and the fork. This gap is not just a matter of prices or of technology. It is also a gap of justice - justice that we as a society must do to our fellow citizens who toil in far-flung farms.” He further noted, “as a society and as people, we are obligated to make life better for our farmers and to free them from the fickleness of nature and of weather patterns and to the degree possible, of the unpredictability of demand and supply. This is the resolve of the government, and it has instituted policies and programmes to further this. Use of science and technology along the food chain is essential to

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April 2018

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these programmes. And this is where institutions such as NIFTEM and those who graduate from here will play a vital role.” Indian food and grocery market was the world’s sixth largest, was expected to touch USD one trillion by 2025.Food items constitute over 11 per cent of the country’s exports. To take this sector to the next level, the government has sanctioned 42 mega food parks. Kovind said “today, our country is the world’s largest producer of milk. It is the second largest producer of rice, wheat, fruits and vegetables, sugarcane and tea. It is the third largest producer of eggs and sixth largest producer of meat.”In services sector, India has taken advantage of its enormous human talent and lower cost structures to build world-class industries. Kovind noted “there is no reason why we cannot replicate this in agriculture and in food and agro-based industries. Indian farm products - whether rice, milk, fruits and vegetables, or even chillies can flood supermarkets and feed households across the globe. This can help us create numerous employment opportunities for our young people in cold storages and in preservation, in food processing and along the food supply chain.” In recent decades, the global food trade has undergone revolutionary changes and there is a need to bring the benefits of these changes and potential of this trade to every ‘khet (farm) and every kisaan (farmer)’. Demand for packaged and ready-to-eat food products is rising in India as social habits are changing and nuclear families emerging in larger numbers in cities, Kovind noted. The challenge is to maintain quality, safety and labelling standards for food and ingredients that are up to global benchmarks. It is to make certain that packaged foods promote both convenience and health. They keep alive the nutritious grains and traditional food items that can be found in every state of India. Kovind said, “It is for the food industry to innovate and find easy to-use solutions to the epidemic of lifestyle diseases in our country. And we have to do all this while being conscious of building our own brands, especially for traditional and nutritive food items that have been the pride of India for centuries and can reach far greater consumers at home and abroad.”


NEWS

55

Edible oil industry demands hike of soyabean oil import duty tween CPO (crude palm oil) and palmolein to minimum 15 per cent from existing 10 per cent. The Oil Palm Developers & Processors Association (OPDPA), the nodal agency for oil palm development in India, said the duty increase will benefit oil palm farmer and result in higher income for their produce.

T

he government has recently increased import duty on crude palm oil to 44 from 30 per cent, while custom duties on refined palmolein and refined palm oil has been raised to 54 per cent from 40 per cent. Edible oil industry body Solvent Extractors’ Association (SEA) seeks increase in import duty on crude and refined palm oils but sought hike in custom duties on soybean and sunflower oils as well to protect farmers’ interest. SEA said in a statement, “We had been representing to the government to increase duties on imported oils as our dependence on them has reached alarming levels of almost 70 per cent of our consumption. We are happy at this hike.” India imports oer 14 million tonnes of vegetable oils annually to meet domestic demand. However, the association was surprised that duties of only palm oils have been increased, stating this step might defeat the objective of doubling farmers’ income by raising domestic values of all oils.

cent. The duties on refined soybean oil, refined sunflower oil and refined rapeseed oil are 35 per cent. The industry also demanded to raise the duty differential be-

President, Sanjay Goenka said, “through the course of this year, the price per ton of fresh fruit bunches supplied by the farmers has gone up from Rs 6,781 per ton in July 2017 to around Rs 9,000 per ton due to increase in import duty. This has translated to a net increase of 33 per cent in the take home income for the farmers.”

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“With mustard crop getting harvested our farmers will feel cheated if import duties on soya, sunflower and canola oils are not increased in same proportion as palm oils, it would be difficult to encourage farmers to grow more oilseeds if duties on these oils are not raised.” At present, import duties on crude soybean oil is 30 per cent and that on crude sunflower and rapeseed oils are 25 per

Agro & Food Processing March 2018

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Firoz H. Naqvi : +91-9867992299 Seema Shaikh : +91-7021555160 121, 1st Floor, Rassaz Multiplex, Mira Road (E), Thane - 401107. India. Tel: +91-22-28555069 / 28115068.Email: info@indianicecreamcongress.in Web: www.indianicecreamcongress.in

INDIAN ICE CREAM MANUFACTURERS ASSOCIATION Sudhir Shah-+91-9849025027 (Secretary IICMA) Samrat A. Upadhyay- +91-76988 69800 (Secretary General � IICMA) Regd. Ofce : A/801, 8th Floor, �Time Square� Building,C. G. Road, Nr. Lal Bunglow Char Rasta, Navrangpura, Ahmedabad - 380 009, Email: info@iicma.in Web: www.iicma.in


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