India News and Features Alliance (INFA)

India is almost sitting on a goldmine of processed food, which can become top foreign exchange earner provided we follow appropriate policies and capture foreign market. The effort is totally indigenous, does not involve any significant import of inputs and with little investment one can earn lot of hard currency. The world processed food business runs into billions of US dollars and India's share in it is not even one per cent.

India, as a signatory to the WTO has already opened up its economy a little to imports of agricultural products from all over the world. Similarly, India has also started exporting some of its agricultural products. When the WTO agreement was signed it was said that India stands to gain by the opening of the agricultural sector as the country’s agricultural products will be relatively cheaper than the similar agricultural products produced elsewhere. The reasoning was that other countries, especially the developed ones, will be forced to eliminate or lower down their subsidies on agricultural products while the subsidies on agricultural products in India are already much lower than allowed by the WTO.

But this has not happened as the developed countries, especially the USA, are not willing to reduce the subsidies to their agriculture while developing countries including India are also not willing to allow free import of agricultural products as they feel would hurt the interests of the farmers. The negotiations are still going on and hopefully some way would be found to tackle the issues. Therefore, India should be prepared to take the advantage of international trade in agricultural commodities.

However, whether India will be able to exploit this advantage will depend upon a number of factors. The relatively lower prices on their own will not be of any help unless we make a sustain attack on the international markets and produce goods which are in demand in those countries. This implies increasing the productivities of various agricultural products, improving their quality, tastes, etc., application of highly efficient processing technologies and improving the packaging of those agricultural

Both developed and developing countries have increased their pressure on India to open up its economy to their agricultural products sooner as India has comfortable foreign exchange position. For instance Malaysia is keen to increase its export of palm oil while Mexico is keen to increase its export of soybean oil to India. Australia and New Zealand are looking for opportunities to export milk and milk products as well as kiwi fruit to India. USA is looking for exporting its almonds and orange juice to India.

India itself is an exporter of agricultural products (though not up to their level) like basmati rice, fruit and vegetables, milk and milk products, tea, coffee, spices and so on. But India is not yet a major player in these products in the international market even though it has the potential. Its record of consistency in quality, adherence to supply schedules is very bad which puts off the foreign importer.

This is a minus point with our exporters who come in our way of tapping export market. Thailand and the Philippines are exporting Pineapple juice on a large scale for the past several years while India is unable to do so on any significant scale because of the non-professional attitude of our business community. How can we enter the international markets with this kind of attitude?

Sometime back, a study carried out by the Union Food Processing Ministry indicated that India is the largest or the second largest producer in the world of Tea, Milk, Cattle, Fruit and vegetables, eggs, rice, wheat, bananas and mangoes. However, not much has been done to develop international markets for these products. It is true that most of these items are being exported to West Asia but there is very large international market for these products outside West Asia.

Though incentives have been provided in the past to encourage the growth of food processing industry yet it is still lagging behind by international standards. The excise duty on some of the inputs like packaging is very high. The food preservation technology in most of the cases is more than two decades old. Similarly, packaging of the products is much below the international standards. On the top of it no attempt has ever been made to develop brand names in foreign countries. It is only recently that some of the companies like Tata and Amul have started marketing their products in the international markets under their brand names.

Therefore, what the country needs to do immediately is to chalk out a concrete programme for the development of processed food products industry so that it can become a major player in the international market in the next few years.

As a first step India should concentrate on increasing the productivity of those agricultural products in which it has a comparative advantage. It could be Bansmati rice or tea or coffee or it could be mangoes or bananas. Some of the energies of our agriculture research centres should be concentrated on developing high yielding varieties of these products.

Second step should be the development of new preservative technologies which are of international standards and can prolong the shelf life of those products without any much refrigeration. For instance, we are producing large number of oranges yet 30% of this fruit goes waste as we have not been able to develop any technology to preserve its juice. Therefore, before bottled orange juice from other countries flood the Indian market we must perfect the technology to preserve the citrus fruit juice in India so that we can compete effectively the foreign producers not only in our own domestic market but also in the international market. Third step needs to be to improve the food processing technology and bring it up to international standards. If need be the technology can be imported.

Finally, the food processing industry will have to pay attention to packaging of the processed food products. At the moment the packaging of most of the processed food products is so repulsive such that even if we have very good product to offer it will not sell in the international market because of its poor packaging.

India has a comparative advantage in selling its agricultural products at competitive prices in the international market. But it will not be able to capture by itself the vast international market without first improving the quality of its products and its packaging in every aspect. We have a lot to learn in this respect from countries like Thailand, the Philippines and Malaysia.---INFA