Agri-Business & Food Processing

Agro and food processing is a sunrise sector with its domestic as well as export opportunities addressing the demand and supply gap. With the global food processing industry being pegged at USD 3.2 trillion, there exists a large market opportunity for export -led growth through development of high value-added products. This is also reflected in India's total exports in the segment, growing from $13bn to $37bn from 2009 to 2013. Karnataka is well poised as a front runner in this sector due to a diverse agricultural economy equipped with a substantial raw material base and an increasingly high growth rate in the industry with a CAGR of 20% outperforming even the national average. The access to raw material, a skilled workforce, a strong supporting ecosystem and an industry- friendly policy environment with world class infrastructure makes Karnataka the favoured destination for the Agro production and Food Processing industry.

Key drivers for growth in the segment:

Key drivers for growth in the segment: The need to feed over a billion people in India along with India's active participation in the global economy is a key driver to growth in the sector.Domestic food processing is on the cusp of explosive growth fueled by changing food habits and increasing consumption. Increasing disposable income and changing socio-economic structure of families are expected to be another key growth driver of the food processing industry added with organized retailing and availability of better processing technologies.

Karnataka has an integrated supporting ecosystem with raw material bases spread all over its lands. The state's infrastructure; including food parks and production clusters make up a holistic supply chain for the sector. Presence of prominent R&D institutions like the Central Food Technological Research Institute (CFTRI), the National Dairy Research Institute (NDRI), the Defence Food Research laboratory (DRFL), the Indian Veterinary Research Institute (IVRF), the Indian Institute of Horticulture Research (IIHR) etc., is an important USP of the State and levies to significant growth in the sector. Ten agri-climatic conditions with 6 soil types make Karnataka conducive to grow a large variety of crops. Great opportunities exist in the strong hold commercial segments like dairy, wine industry, coffee, silk, organic farming etc; to name a few. Availability of skilled labour, advanced technology support and transport connectivity along with advantageous initiatives, policies and support by the Karnataka government makes the state a prime candidate for investors to invest and grow.

Track Record:

Among all the sectors housing in Karnataka, the Agro production and Food Processing sector deems to be one of the fastest growing. Abundance and variety of fruits complemented with a high quality harvest makes Karnataka a leading horticulture producer. Karnataka boasts to be the largest producer of pomegranate, arecanut, rose-onions and various spices, aromatic and medicinal plants and the second largest producer of grapes in India. Being the leading exporter of Gherkins and other flowers, it is no surprise that the state harbors the first and only Flower Auction center of the country.

The state has also put focus on R&D in the field with seven National horticulture and Agriculture institutes residing on its lands.

Karnataka is the quintessential producer of high quality Indian coffee contributing up to 70% of the country's total coffee output.

An output of 28708 MT makes India the second largest producer of silk in the World and the largest in the country.

The state consists of 7 food parks, a spice park and has a seafood park and a rice technology park on its way to establish. Karnataka is also the only state with a unified platform for commodity trade (ReMS), leading the country in market reforms.

Karnataka contributes to ~6% of the nation's fish production.

Karnataka is a prized producer of quality wine and is world renowned for its award-winning flavors.

The state also has 2 Million Metric tonne installed warehousing capacity and 300,000 MT of cold storage.

The State is the proud recipient of many domestic and international awards in the field of Productivity, Quality and Excellence in Oilseed production.

Karnataka Milk Federation (KMF), also recognized as the largest cooperative federation in South India single-handedly produced milk amounting up to 6.1 Million tonnes in the year of 2014-15.

Karnataka has investor-friendly, proactive and well defined sector-specific policies, namely:

Karnataka Agribusiness and Food Processing Policy 2015

Aim to maintain a sustained growth path in Agri Business & Food Processing sectors through use of global technologies, innovative mechanisms, frameworks and world class infrastructure facilities. The highlight of this policy is the exemption it provides to investors with respect to Stamp duty, Entry tax and Electricity Tax. To further decrease the expenses of the investor it provides them with 35% subsidy on investment promotion of fixed assets. Also, the policy promises to reimburse 75% of the net VAT within a period of 5 years.

Pioneering Market Reforms & Policies

The Rashtriya e-Market Services Limited (ReMS) was introduced as a unified e-trading platform. Focusing onto further improving its already renowned wine, the state has established the Karnataka Wine Board and formulated the Karnataka Wine Policy 2007, witnessed for the first time in India. Also in 1955, Karnataka became the very first state to put up its own Agricultural Policy.

Integrated policy framework creating a favourable investment environment for entire value chain and niche sub-sectors

Leaving no stones unturned, medium and large agro production units are given governmental support through the Karnataka Industrial Policy 2014-19. Also, the Karnataka State Policy on Organic Farming, 2004 was formulated so as to meet the quality and safety standards of the nation and beyond. Government's soil revitalization scheme Bhoochetana has increased the yield from 20% to 60%, highlighting its success.

Investment Opportunities:

  1. PPP projects
    1. Operation & Management of 1Million MT installed capacity of State Warehouses
    2. 150 MW PPP Warehouse solar roof topsĀ 
    3. PPP Integrated Horticulture development (PPP-IHD) Farmer Producer Organization
  2. Dedicated Product Food Park
    1. Sea Food Park near Mangalore
    2. Rice Technology Park at an estimated infrastructure project cost of INR 128 Crore ( USD 22 Million)
  3. Diary projects
    1. INR 4455 Crore (USD 700 Million) diary projects in various districts under KMF and other cooperatives
  4. Technology collaboration
    1. Farm productivity improvement machinery, GrainĀ  & Stock handling equipments
    2. Food Processing machinery, Food Engineering
  5. Land Bank Availability
    1. Availability of developed land bank under KIADB
    2. Land available at multiple Food parks
  6. Other collaborative opportunities highlighted in the Agri-Business and Food Processing Policy
    1. Technology collaboration
    2. Infrastructure creation

Facilitation:
Refer the ppt/Link

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