India to emerge global hub
for food products
TIMES NEWS NETWORK[ TUESDAY, DECEMBER 16, 2003 04:42:40 AM ]

CHENNAI: The Indian food industry needs to roll out mass consumption basic and ready-to-cook foods, localise Western products like ketchup and pasta and customise export products to suit the foreign palate in order to scale the high-growth ladder.

These recommendations are part of a sequel to McKinsey’s famed Food and Agricultures Integrated Development Action (FAIDA) report.

Mckinsey’s principal Mike Fernandes said at the inaugural session of FoodPro 2003, the last six years have seen tremendous change in organised retailing, consumption patterns and product proliferation. Share of processed foods have increased over 37% in the last 7-8 years.

While there have been several pluses in institutionalised retailing and product innovations, none of them have reached a large scale, Mr Fernandes said. New large players have not yet emerged, profitability levels remain low, the core wheat, dairy and horticulture industries remain unorganised and there has been limited addition to infrastructure, the report says.

As per the trends, food retailing is expected to grow with more and more people warming up to the idea of convenience stores. It is also expected that India will emerge as the global outsourcing hub for food products along with domestic deregulation and further liberalisation.

Mckinsey’s prescription is that Indian companies should create market-driven linkages rather than do-it alone or building new infrastructure. Second, companies should develop an asset-light manufacturing model and innovative distribution system. Third, they should develop a low-cost business system to acquire pricing flexibility and compete with the unorganised sector.

The report has also proposed rationalisation of tax structure, equal access to farm produce, cutting down of intermediaries between corporates and farmer and an integrated food law.