Walmart keen to enter Indian food processing sector

Global retail major Walmart has shown interest in entering India's food processing sector after the government relaxed foreign investment norms, a top government official said Wednesday.

"Walmart is showing lot of interest. Now we are hoping that they will come on their own and they will add to the growth story of this country," food processing secretary A K Srivastava said while briefing reporters about the investments in the sector in the last two years.

He also said that a leading Brazilian poultry company has expressed keen interest in joining hands with Kishore Biyani's Future Group to sell their products in the country.

"A Brazilian company claiming to be world's leading exporter in poultry sector met us Tuesday. They want to tie up with Biyani's Future Group to use their retail outlets," he said.

However, when contacted, a Future Group spokesperson said there is no such development.

To give a boost and attract foreign investments in the sector, the government recently permitted 100 per cent foreign direct investment in retailing of processed food produced and manufactured in India.

The US-based Walmart is present in the cash-and-carry retail format in the country.

Talking about the food processing sector, Srivastava said that government is taking lot of steps to boost the sector.

"Our projects are quite power intensive. Be it our mega food parks or cold chains. We have requested Solar Energy Corporation of India to formulate a proposal for providing solar energy in mega food parks and cold chains. We are preparing a proposal of 47. It will help in reducing consumption of power," he said.

The ministry has also floated expression of interest for six new mega food parks. To promote foreign investment in the sector, he said "we have kept a special condition (in the EoIs). So to promote foreign investment, we have said that we will give 2 or 3 extra marks to the marking scheme if you bring in foreign equity of 26 percent or more".

He also said that FDI in the sector will give a huge boost to the sector and also job creation.

Speaking at the briefing, special secretary in the ministry Jagdish Prasad Meena said that PepsiCo is growing potatoes with farmers and they are also talking to develop clusters for citrus production.

Meena said that in the next few months, the ministry will come out with new schemes to improve infrastructure.

The food processing sector received FDI worth $1.04 billion during April 2014 to March 2015. Food processing industry contributed around 9 percent to the manufacturing GDP. The industry was valued at $39.71 billion in 2013 and it is expected to grow at a CAGR of 11 percent to $65.4 billion by 2018.

"Thirty-two lakh tonnes capacity of cold storage has been created with an expenditure of Rs9,000 crore within the last two years. This is expected to reduce wastage by 10 percent per annum or Rs9,200 crore every year," Srivastava said.

Over the last two years, 51 cold chain projects have been completed and six mega food parks have been operationalised since June 2014. Some of the major investments received in the last two years include Linde Group investment of $200 million in seafood segment in Andhra Pradesh; US-based Mondelez International has inaugurated its new manufacturing plant in Andhra Pradesh.

This plant has been set up with an investment of Rs 1,265 crore with an annual capacity of 250,000 tonnes. Mars International India, a leading chocolate maker, has invested $114.63 million in Pune. With a total investment of $33.96 million, Kellogg's unit in Andhra Pradesh provides employment to 500 persons.

The company is also planning to set up an R&D facility and their third cereal facility in Mumbai. Fresh dairy products player Danone Asia Pacific Holdings has invested $24.24 million and is expanding its manufacturing facility in Lalru near Chandigarh.

Domestic companies, including Patanjali Ayurveda, have also announced major investments in the last two years. Patanjali is planing to set up a Rs 500 crore food processing unit in Madhya Pradesh. The state has cleared 400 acres of land for this. It is expected to provide jobs to about 700 people.

Balaji Wafers is investing $61.5 million in building a plant for wafers and snacks in Madhya Pradesh. It has acquired land and would employ 1,000 people.