The Indian Processed Food Market: Tradition and Change
A Report for the Rural Industries Research and Development Corporation
By Laurie Smith and Priya Ahuja INSTATE Pty Ltd
RIRDC Publication No 98/053 RIRDC Project No INS‐5A
© 1998 Rural Industries Research and Development Corporation. All rights reserved.
ISBN 0 642 54077 2 ISSN 1440‐6845
“The Indian Processed Food Market: Tradition and Change” Project No: INS‐5A Publication No 98/053
The views expressed and the conclusions reached in this publication are those of the author and not necessarily those of persons consulted. RIRDC shall not be responsible in any way whatsoever to any person who relies in whole or in part on the contents of this report.
This publication is copyright. However, RIRDC encourages wide dissemination of its research, providing the Corporation is clearly acknowledged. For any other enquiries concerning reproduction, contact the Communications Manager on phone 02 6272 3186.
Researcher Contact Details Mr Laurie Smith and Ms Priya Ahuja INSTATE Pty Ltd Level 7, 5‐9 Harbourview Crescent Milsons Point NSW 2061
Phone: 02 9955 2711 Fax: 02 9955 2275 Email: [email protected]
RIRDC Contact Details Rural Industries Research and Development Corporation Level 1, AMA House 42 Macquarie St BARTON ACT 2600
PO Box 4776 KINGSTON ACT 2604
Phone: 02 6271 4100 Fax: 02 6271 4199 Email: [email protected] Internet: http://www.rirdc.gov.au
Published in June 1998 Electronic copy
ii Foreword
The 1990s have seen big change in India with a significant opening of the economy. That said, barriers to Australian food exports remain generally high and, with just a few exceptions, the value ‐ and volume ‐ of Australian food exports remain low in comparison with East Asian markets. This is particularly true for exports of processed food products. This report examines the growth in demand for high quality processed foods in the Indian market and the opportunities that are emerging for Australian firms. It provides a broad assessment of the strengths and weaknesses of the domestic Indian food industry and outlines possible entry strategies for Australian companies and should, therefore, provide a valuable guide to the Indian market for Australian food companies. Australian food exporters are facing challenges on a number of fronts as a result of the recent turbulence in many of our major regional markets. This underlines the need for cool headed assessments of market opportunities in growing markets such as India. This project is part of the Corporationʹs Global Competitiveness program which identifies important impediments to the development of a globally competitive Australian agricultural sector. The program also supports research leading to options and strategies to remove these impediments.
Peter Core Managing Director Rural Industries Research and Development Corporation
iii Acknowledgments
The authors wish to acknowledge the financial support of the Rural Industries Research and Development Corporation. Dr Pradeep Taneja of La Trobe University made valuable contributions to the planning of the project and field research in India. Thanks are also due to their current and former colleagues at INSTATE Pty Ltd ‐ in particular, Denis Gastin, Terry Larkin, Angela Ryan and Amanda Hodges. Michelle Blackwell and Judith Pinder also provided valuable administrative support. The authors also wish to thank executives at a number of Australian processed food companies who provided valuable input before and during the project and to those Indian government officials and food industry executives who made their time available for interviews during a field visit to India in early 1997.
Laurie Smith Priya Ahuja
Sydney March 1998
iv
CONTENTS
GLOSSARY ...... VI
EXECUTIVE SUMMARY ...... VII
2. INTRODUCTION ...... 1
3. INDIAN AGRICULTURE...... 3
4. FOOD PROCESSING...... 15
5. THE INDIAN CONSUMER AND THE MARKET FOR PROCESSED FOOD ...... 43
6. DISTRIBUTION AND RETAILING ...... 60
7. GOVERNMENT POLICY TRENDS...... 77
8. TRADE TRENDS ...... 87
9. CONCLUSIONS AND IMPLICATIONS FOR AUSTRALIA...... 99
APPENDIX A: FOOD MARKET LIBERALISATION MEASURES ...... 106 APPENDIX B: MAJOR FOREIGN INVESTORS IN THE INDIAN FOOD INDUSTRY ...... 141 APPENDIX C: MAJOR DOMESTIC FOOD PROCESSING GROUPS...... 148 APPENDIX D: AUSTRALIAN PRESENCE IN INDIA ...... 151 APPENDIX E: OVERVIEW OF INVESTMENT CONDITIONS ...... 170 APPENDIX F: CONSOLIDATED BIBLIOGRAPHY ...... 172
v GLOSSARY
Category Term Meaning
Money Units Lakh* 100,000 Crores 10 million
Cities Mumbai Name of city formerly rendered in English as Bombay. Chennai Name of city formerly rendered in English as Madras. Pune Name of city formerly rendered in English as Poona.
Food Atta Packaged wheat flour. Mithai Traditional Indian sweets made from milk. Vanaspathi Traditional and widely used oil made from hydrogenated vegetable fat.
Trade policy Canalisation Refers to Indian government regulations categories which require that certain restricted imports can only be imported/distributed by nominated agencies or corporations, usually state‐owned. Special Import Special Import License refers to the license Licence (SIL) awarded to specific entities for importing products. SIL holders typically include companies involved in imports for re‐exports and some others like bonded warehouse operators. Open General Refers to the license provided for free Licence (OGL) importation of products. Any local agent can import products on the OGL list on payment of the appropriate duties and tariffs. *E.g. 55 lakh Rupees equals 5.5 million Rupees; and 15 crores Rupees equals 150 million Rupees
Source: INSTATE Pty Ltd
vi EXECUTIVE SUMMARY
1.1 AGRICULTURE (CHAPTER 3)
• India’s agricultural endowments are often under‐estimated, as is the country’s pride in its achievements since the Green Revolution in the 1960s. However, recent economic reform has largely by‐passed the agricultural sector. • India is a major agricultural producer with significant shares of global production of some agricultural commodities. By contrast, it has a tiny share of world trade in all but a few agricultural commodities. Seafood, coffee and tea, cashews and some processed fruits and vegetables are the principal exceptions. That said, India does have substantial ambitions to develop its presence in world markets as an exporter. • The agricultural sector is plagued by inefficiencies and faces major challenges. These include the need to improve yields, post harvest infrastructure, and land utilisation and the need to address the inefficiencies caused by historically extensive, and sometimes heavy‐handed, government intervention in the sector.
1.2 FOOD PROCESSING (CHAPTER 4) • Whereas the agricultural sector is large, India’s food processing sector is very small. Valued at current exchange rates, the turnover of the ’organised’1 sector is less than that of Australia’s food processing industry. Small processors and labour‐intensive operations dominate the sector. • With just a few exceptions, India’s food processors are starting from a low base. But the government has expansive plans for the sector and investment is growing. Growth is driven primarily by a growing consumer class, changing lifestyles and attitudes, and plentiful raw materials.
1.3 THE INDIAN CONSUMER AND THE MARKET FOR PROCESSED FOOD (CHAPTER 5) • High value‐added branded products often seize the limelight in the Indian food market, but traditional and lightly processed foods account for by far the largest slice of the market ‐ and will do so for a considerable time to come. • Foreign interest in the Indian consumer market in general, and the food market in particular, was spurred when economic growth stepped up a notch in the early and mid‐1990s, delivering new affluence to many Indians, especially in the major cities: ◊ estimates of the size of India’s new ‘consumer class’ vary wildly and are frequently exaggerated;
1 Refers to the segment of the industry that relates to the operations of large established food processors. vii ◊ the ten million or so households earning more than A $ 2,700 per annum are a realistic target for consumer marketers. • There are indications that the most rapid growth is in the higher income groups, which will create a larger, more affluent consumer base in the years to come. • Broad consumption patterns are also changing, creating new / bigger markets for some commodities like milk and partially processed products like packaged flour. Markets for fully processed products will, however, be strongly influenced by the presence of regional variations in diet and preferred tastes. • Understanding India’s regional diversity ‐ in terms of agricultural endowments, local product specialities and cuisine and taste differences ‐ is a fundamental pre‐ requisite to understanding the market.
1.4 DISTRIBUTION AND RETAILING (CHAPTER 6) • Reaching the Indian consumer is not easy. Distribution and retailing represent one of the most complex issues for both domestic and foreign processors. • The emergence of modern retail and food service formats is beginning to excite attention, and will perhaps lead development of broader tastes, but will still account for a very small share of total sales for a considerable time to come. • Retailing will change more rapidly than distribution. • The luxury hotel segment offers a small but growing market for a wide range of semi and fully processed products.
1.5 GOVERNMENT POLICY TRENDS (CHAPTER 7) • Since the mid‐1990s, Government policy trends have moved in favour of foreign food companies and larger domestic companies that are involved in, or wish to enter, the processed food market. • Policies intended to reserve certain industries for the small‐scale sector have been removed and foreign investment conditions have been progressively liberalised. • High tariff barriers and numerous complex non‐tariff barriers had traditionally limited trade in all but a few basic commodities or for the supply of privileged sectors such as luxury hotels: • However the process of trade liberalisation has begun. In April 1997, the Indian Government eased import restrictions on over 150 food products, including: ◊ a range of seafood products, including lobster, crabs and scallops; ◊ butter oil and certain processed cheeses; ◊ certain nuts and dried fruits; ◊ certain milled grain products, including some flours, meals and gluten; ◊ other cereal preparations, such as breakfast cereals, breads, biscuits and doughs; ◊ most major vegetable oils. • Agreements reached under the auspices of the WTO by early 1998 provided for the total phase‐out of all quantitative (quota) restrictions by April 1, 2003.
viii • Economic policy‐making was put on hold during the run up to the March 1998 election. The election of a BJP‐led coalition may slow the pace of reform ‐ its ideal of swadeshi or self‐reliance and electoral slogan computer chips not potato chips underline its reservations about foreign investment in the consumer sector and across‐the‐board trade liberalisation. • International capital markets will closely monitor early policy developments under the new Government and could react strongly to any signs of a retreat from the process of economic and trade policy liberalisation. In the medium‐ term, it is questionable how effective a selective policy on foreign investment would be ‐ whether ‘non‐essential’ sectors could be quarantined from further foreign investment liberalisation without affecting flows into stated ‘priority’ sectors such as infrastructure. Further negotiations under the auspices of the WTO can be expected to add to the pressure on the Government to accelerate its current timetable for trade liberalisation.
1.6 RECENT TRADE TRENDS (CHAPTER 8) • Australian exports to India have grown strongly during the 1990s. However this growth has been off a small base and India remains a relatively small market for Australia in the context of total Australian food and beverage exports. • Although India is not a big importer of food and beverage products by international standards, Australia’s share of India’s food import market is small. • India’s major food and beverage exports include grain (wheat and rice), marine products, fruit, vegetables, tea, coffee and spices. Grain exports (and imports) vary significantly each year in line with seasonal conditions but fruit and vegetables exports in particular are growing strongly.
1.7 CONCLUSIONS AND IMPLICATIONS FOR AUSTRALIA (CHAPTER 9) • Products in which Australia is internationally competitive and should do well in the Indian market in coming years include: ◊ cereal preparations such as breakfast cereals, breads, biscuits and doughs; ◊ higher value‐added dairy products such as specialised milk powders, processed cheese, cheese powders etc; ◊ malting barley and, possibly, malt; ◊ high value fresh seafood; ◊ specialised baking flours, mixes, fats and oils; ◊ other edible oils and fats; ◊ some dried fruit and nuts; ◊ wine. • In the longer term, developing an effective in‐market presence, normally via direct investment, will emerge as the biggest challenge for Australian processed
ix food producers wishing to create and sustain a significant position in the Indian market. • India, like China, is a market in which all big international food companies will build a presence during the first decade or so after the market opens; ◊ for these big players, the route to success is likely to involve investment in domestic production or, at least, re‐packing; ◊ domestic production will pull through imports of some key raw materials or ingredients; ◊ but most inputs will be sourced locally, leaving imports to fill specialised niches or cyclical shortages. • Over the next decade or so, India can also be expected to emerge as a bigger exporter to Middle Eastern and East Asian food markets of a wider range of food products, including some in which Australia has traditionally been a competitive supplier to Asia Pacific markets. • Strong export growth is likely to be achieved in products ranging from processed fruit and vegetables, some processed dairy products, new niche products and traditional export items such as seafood spices and nuts. India will also remain a significant trader (both importer and exporter) of grain.
x 2. Introduction
BACKGROUND The past six or seven years have seen a broad opening of the Indian economy to foreign investment and significant unilateral tariff reductions. The agricultural sector has been sheltered from the full force of reform as, to a lesser extent, have some parts of the food processing sector. Steady change in the food sector is now underway ‐ fuelled by rising incomes and an influx of foreign investment to the food processing and fast food sectors together with foreign input to the development of new retailing models. External impacts will increase as a result of the 1997 negotiations under the auspices of the World Trade Organisation whereby India’s ‘balance of payments’ defence of restrictive trade policy measures governing a range of sectors, including food, has been disallowed.
OBJECTIVES The objectives of this project were, in summary: • to identify opportunities for the Australian processed food industry arising from the rapid growth in demand for processed foodstuffs in the Indian market; • to define indicative entry strategies for Australian companies wishing to participate in the growth projected for the sector; • to highlight areas in which India may emerge as a rival to Australian suppliers in regional markets of traditional strength for Australia.
METHODOLOGY AND SCOPE The study examines a range of factors driving change in the processed food market in India including • reductions in tariff barriers to imports of processed foods scheduled under the Uruguay Round, • the extent to which non‐tariff barriers will continue to constrain access by imported processed foods; • the extent to which these measures will bias opportunities towards partially processed foodstuffs, • the products and sub‐sectors of the Indian food processing industry that have been targeted as priorities for foreign investment and/or in which India has significant comparative advantage, • changes in distribution and retail structures, broad trends in dietary/consumption patterns; and • the extent of existing and foreshadowed foreign investment in retailing, distribution and food processing.
1 The basis of the study was an extensive review of literature and databases in Australia, India and in third countries; Fieldwork was conducted in India in January/February 1997. This included data collection, interviews with government agency officials at national and state levels, multinational and domestic companies and peak industry organisations and visits to a range of retail outlets and distribution/wholesale operations. Interviews were sought and conducted with a broad cross section of executives from companies and agencies with policy responsibility for the food sector: those which service the sector (eg machinery, packaging industries) as well as those engaged in the food processing sector ‐ with production, financial and/or sales responsibilities ‐ the food service sector and in distribution and retailing.
STRUCTURE OF THE REPORT Chapter 3 outlines the dimensions of the Indian agricultural sector. In Chapter 4, the processing sector is profiled while in Chapter 5, the emerging Indian consumer class is described. Chapter 6 details trends in distribution and retailing and Chapter 7 outlines government policy directions. Chapter 8 analyses recent trends in Australian and Indian food trade and, finally, Chapter 9 assesses the implications for Australia.
2 3. INDIAN AGRICULTURE
3.1 OVERVIEW Agriculture contributes nearly 30 per cent to India’s gross domestic product (GDP), a share approximately 10 times greater than the Australian rural sector’s contribution to GDP. Government planning figures heavily in Indian agriculture and has been implemented via successive five year plans. Following independence in 1947, a wide range of fiscal, monetary and trade policies were formulated with the aim of achieving the government’s primary objectives for agriculture. These were: • Accelerating growth in agricultural and food grains output in order to achieve food security for the nation. • Provision of improved rural infrastructure, modern inputs and a framework of incentives for farmers to enable them to increase output through the adoption of modern technology. The major components of agricultural policy since 1947 have included:
• Implementing land reforms during the mid‐1950s with the objective of eliminating intermediaries and ensuring greater equality in land distribution.
• Investing public funds in rural infrastructure improvements, specifically irrigation and power.
• Providing cheap institutional credit and subsidies to farmers to encourage private investment in irrigation and other infrastructure as well as encourage the adoption of new technology.
• Investing in the development of a research system managed by the Indian Council of Agricultural Research and State Agricultural Universities.
• Simultaneously, investing in an extension network for disseminating new technologies, especially on high yielding varieties (HYV), to cultivators.
• Setting administered prices with the objective of keeping food grain prices low in the interest of food security.
• Establishing a comprehensive state management system for procurement, storage and public distribution of food grains aimed at providing food to consumers at reasonable prices.
• Implementing tightly controlled trade and exchange rate policies. Except for a few traditional commercial crops, the agricultural sector was insulated from world agricultural markets through almost total control of exports and imports. Foreign trade in most agricultural goods was subject to quota restrictions or other restrictions such as minimum price requirements. 3 Figure 3.1 outlines the key features and achievements of Indian agriculture since 1947.
Figure 3.1: Major Eras In Agriculture In Post Independence India:
1947 - mid 1960s Mid 1960s - Late 1970s Late 1970s - 1990 1990 onwards
“Grow more Food” The Green Revolution The Green Revolution Program - First Decade - Second Decade
Key • Implement land reforms • Introduce High Yielding • Increase in consumption of • Focus on dry land farming Issues Abolish intermediaries and Varieties of seeds for wheat fertilisers techniques make tillers legitimate land • Increase public investment • Spread of green revolution to • Improving inter-crop and owners in infrastructural support for backward states inter regional imbalances • Impose ceilings on ownership agriculture • Redressal of major inter-crop and distribute surplus land to imbalances land less Key • Tillers accounting for 40% of • Increase in gross irrigated • Improvement in the growth • Improvement in rural Achievements cultivated area made land area from about 35 million to rate of food grains output. credit facilities owners about 45 million hectares Annual growth rate for rice • Continuing spread of • Significant growth in food during this period. was 3.19 % while that for green revolution to grain production due to an • Spread of HYV seeds results food grains was 2.68 % backward areas increase in both cropped area in rapid increase in yield per • Significant growth in other and total irrigated area (22.6 hectare. Increasing yields crops like oilseeds and million hectares in 1950-51 to account for 80 % of increase pulses. Annual growth rate about 35 million hectares in in food grains output. for pulses was 2.32 %while the mid 1960s. • Rapid increase in marketed for oilseeds it was 3.86 %. surpluses of food grains and • Spread of green revolution in stocks held by the to poorer states - many government. states in Eastern India • Annual growth rate of 2.16 % experience record growth for rice, 2.31 % for food for the first time. grains, 0.27 % for pulses and 1.39 % for oilseeds. • Falling public investment in Major • Land reforms largely • Below average • Falling public investment in infrastructure and impediments unsuccessful, except in productivity infrastructure like canals productivity improvement a handful of states • Below average yields • Increasing share of public • Increasing share of public • Below average for all crops other than investment funds diverted investment funds diverted to productivity and yields rice and wheat to provide subsidies for all crops • Insufficient resources provide subsidies allocated to resolve issues • Growing concern over surrounding productivity impact of environmental improvement degradation on future crop production • Ambiguity in legislation governing contract farming. Source: INSTATE Research
India has achieved broad self‐sufficiency in food grains and the Indian government holds substantial buffer stocks of rice and other grains to offer protection against shortages resulting from poor harvests. Subsidies and incentives have continued to support the agricultural industry in India as the country moves towards achieving self‐sufficiency in other areas of agricultural production. In keeping with this aim, there has been a distinct trend toward higher land usage by non‐food crops relative to food crops.
4 Figure 3.2: Trends In Indian Land Usage, (Million Hectares, Percentage)
100 % = 147 155.6 152.6
Sugarcane 1.8% 2.4% 2.5% 12.0% Oilseeds 15.5% 16.6%
Food 86.2% 82.1% 80.9% grains
1981 1991 1995*
Source: Tata Services Note: 1995 figures are estimates only.
Food grains, however continue to dominate production and account for 80 per cent of agricultural production with rice being the single largest crop.
3.2 INDIAN AGRICULTURE IN A GLOBAL CONTEXT Today, India has emerged as a major agricultural producer with significant shares of global production of some agricultural commodities.
Figure 3.3: India’s Position In Global Agricultural Production*: Million Tonnes 1996 (1993-94 global ranking)
Milk (2)
Fish Catch* (7)
Fruit (2) Vegetables (2) Oilcrops (na) Puls es (na) Res t of World India Cotton (3)
Tea (1) Sugarcane (2) Potatoes (6) Ric e (2) Wheat (3)
0 200 400 600 800 1,000 1,200
Source: FAO 1997, Tata Services Note: *The figure in brackets is global production ranking **Fish catch figure is 1995
5 The scale and achievements of the agricultural sector in India can be put in better perspective through a comparative analysis with agricultural sectors in Australia, China and the USA.
Figure 3.4: Comparison Of Agricultural Sectors: India, Australia, China and the USA: Selected Indicators (Million Tonnes, Million Hectares) Agricultural Crop Net irrigated Total land Total arable Production area area land
China 930.5 50.1 932.6 92.0
India 627.7 49.9 297.3 166.1
USA 409.3 21.4 915.9 185.7
Australia 73.1 2.3 768.2 48.1
Million Million Million Million Tonnes Hectares Hectares Hectares Source: FAO statistics, various years
While India’s total agricultural output lags that of China, it is a first rank producer with evident potential to achieve significant expansion in output.
3.3 DAIRY The dairy sector is one in which India, in trade terms at least, is something of a sleeping giant. India has one of the largest cattle populations in the world. Together with Pakistan, it has the strongest dairy foods tradition of any Asian country. By developing country standards, per capita output of milk has always been relatively high. That said, milk consumption is still largely biased towards to urban areas ‐ or about 26 per cent of the total population. Total output trebled between 1970 and 1995, far outstripping population growth. By 1995, per capita availability of milk had reached 78 kg per annum, more than ten times the comparable figure for China but still lags behind countries such as Australia and the US.
6 Figure 3.5: Per Capita Milk Consumption: Selected Countries (1995) (kg/year)
Australia 104.2
Japan 40.2
USA 95.2
China 6
India 78
0 20406080100120
Source: Dairy India 1997, Note: Indian figure includes consumption of cow and buffalo milk.
India has already become the second largest milk producer in the world, behind the US but well ahead of New Zealand and Australia.
Figure 3.6: Total Milk Production: Selected Countries (1995) (Million MT)
USA 70.5
India 66
China 9.5
New Zealand 9.3
Australia 8.5
0 20406080
Sources: FAO 1997.
Output is expected to climb to between 74 and 78 million tonnes by 19982 by which time India will have become the largest milk producer in the world.
2USDA/FAS and Dairy India 1997 estimates respectively 7
Punjab: India’s Granary
Punjab was the cradle of India’s Green Revolution which, in a few short years in the 1960s, transformed Indian agriculture practices in the north west of the country.
Key elements of the Green Revolution were:
• the introduction of high yielding varieties of wheat and other grains;
• major investment in irrigation;
• the spread of mechanisation.
The results were big increases in yields and total output, with Punjab leading the way. Total wheat production in 1968 reached 17 million tonnes, 5 million tonnes higher than the previous high in 1964. Grain available for government procurement increased even more dramatically, with Punjab leading the way.
Figure 3.7: The Green Revolution at Work: Wheat Procurement (tonnes)
1966-67
1967-68
1968-69
0 5 10 15 20 25 National Punjab
Source: Business World, 11-24 December 1996.
India’s need, in the worst years of the mid-1960s for up to 10 million tonnes of imported grain for famine relief was dramatically reduced. The country has eventually emerged as a significant exporter of some grains in recent years.
There have been less desirable side effects and problems exist with water use and heavy reliance on fertiliser. However the achievements of the Green Revolution are undoubted.
Much scope remains for improvement of agricultural practices, especially outside regions with widespread irrigation infrastructure. But perhaps the biggest challenge for Indian agriculture will be adapting to a policy environment in which government regulation of domestic and cross border trade and investment is gradually being reduced and meeting foreign competition in both the domestic and international markets.
Source: INSTATE Pty Ltd
8 3.4 PROBLEMS FACING AGRICULTURE Economic reform since 1991 has principally targeted India’s industrial sector and foreign trade and investment regime. Agriculture, with its ‘special status’ has seen relatively less change. That said, there have been changes with direct and indirect impacts on the farm sector. On the positive side, higher procurement prices and the devaluation of the rupee has increased export competitiveness. But agriculture still faces challenges. Despite being a major producer of agricultural commodities with the resources to become a dominant global player, India’s current performance in global trade of agricultural produce is dismal. The current share of global exports in rice, sugar, tea, coffee, tobacco, cotton and jute is less than 1 per cent. India’s share of global exports in fruits, vegetables, fish and meat is even lower. There is also growing concern over the slowing growth in the agricultural sector in general. Agricultural output has grown at an annual rate of just 3.3 per cent between 1990 and 1995, despite a succession of good monsoons during this period. (Industry has grown at 7.5 per cent during the same period.)3 The sector is plagued by inefficiencies, falling investment and low returns. Real investment in agriculture has declined as a significant proportion of public funding is spent on subsidies. Private investment in the sector has been hurt by unfavourable “terms of trade” as inputs into agriculture have grown increasingly expensive while output prices are still largely administered. Restrictive policies on land ownership and exports have only served to magnify the problem. The major bottlenecks confronting the sector today include poor agricultural yields, lack of post harvest infrastructure, poor utilisation of land, low value addition and poor quality of packaging and presentation.
LOW YIELDS The most damaging problem confronting the agricultural sector in India is poor yield per hectare. Estimates indicate that it is 25 to 40 per cent below world’s best practice.4 The magnitude of the problem is reinforced by data which reveals that although India has 75 per cent more arable land than China, it produces 30 per cent less output.5 Of course, yields are not a complete indicator of agricultural efficiency. If they were, Australia would rank among the most inefficient producers of grain, for example. However, the low average yields India achieves are not commensurate with its natural endowments.
3 The EIU, April 13, 1995 4 Food and Agriculture Integrated Development Action Report 5 Asian Business Review, August 1997 9 Figure 3.8: Comparison of Yields, 1996 (Tonnes per hectare)
Rice, Yield (Tonnes/Ha) Cotton, Yield (Tonnes/Ha)
Australia 6.1 1.6
US 4.9 0.8
China 4.3 0.9
India 1.9 0.3
Source: FAO, 1997
LAND OWNERSHIP CONTROLS In an effort to distribute wealth and protect smaller farmers, Indian policy makers have progressively lowered the ceiling on the amount of land that can be owned by any one individual or entity. The size of an average operational farm has been reduced from 2.69 hectares (1960 ‐61) to 1.57 hectares (1990‐91).6 The fragmentation of land holdings has meant farmers are not able to practice modern methods of farm management, resulting in low yields and poor quality of produce. Companies capable of utilising technology to leverage economies of scale are prevented by the Land Ceiling Act from doing so. The legislation has also resulted in the existence of vast tracts of uncultivated land. In the past three or four years this problem has begun to attract serious attention. Box 3.2 outlines the strategy adopted by one new corporate entrant to the sector ‐ Maxworth Orchards. Maxworth skirts the ownership restrictions by obtaining large parcels of land and arranging for individual investors to purchase small plots while retaining long term management rights to the whole of each parcel.
6 Investment Opportunities in Agribusiness in India; Agribusiness ‘96 - Conference Proceedings 10 Box 3.2: Maxworth Orchards: Working Around the System
Since its establishment in 1993, Maxworth Orchards has sought to work its way around one of the biggest obstacles to large scale horticultural production in India: strict official limits on the size of individual land holdings. Maxworth was the brainchild of Mr R Subramanian, a native of Tamil Nadu. Subramanian’s background was in tourism: his company, Sterling Holiday Resorts pioneered time share property development in India and claims to have sold 75,000 timeshare units (all in India) making it the largest timeshare manager in the world. Maxworth consolidates large tracts of cropland while not breaching government limits on land holdings by applying, in a fashion, the timeshare principle to its land. Individuals buy small plots ‐ typically one quarter to two acres and pay Maxworth a development fee, a management fee and a percentage of sales as a marketing fee. The balance of the income from sales accrues to the owner. Subramanian claims a very large potential market: he maintains that India has 5 million people able to pay 1‐200,000 rupees (approx. A$ 3,500 – 7,000 )for an acre of land. By early 1997, Maxworth controlled 17,000 acres: 3,000 acres is already under harvest, 7‐8,000 acres was cultivated while a further 6‐7,000 acres was under development. This land is spread across the country including in UP, MP, AP, Maharashtra, Orissa, and Tamil Nadu). Within three years, Maxworth’s crop output is projected to exceed 50,000 tonnes. Typical farm size is 200 acres but the biggest are 5‐600 acres. Subramanian believes that, for the foreseeable future, Maxworth will be the only operation in India able to supply consistent product to the processing sector on a reliable basis. He points to the experience of processors who find that product procurement is the biggest problem that they face. “ If they go to the market to buy fruit, there is no segregated product available and nor is there any reliability ‐ growers will not commit to supply a given processor, they just chase the highest returns”, he says. Maxworth has over 300 qualified technical staff and has also drawn on Israeli agricultural technology. It is employing higher density cultivation methods for its plantations and intercropping is also used in the early years of the plantation’s life. This makes production costs lower than for traditional methods even allowing for higher overheads. But at the moment, vegetable prices are high in the cities (about 20 Rs/kg) and middle class consumption is low. Fruit and vegetable processing has potential but existing plants are under‐ utilised ‐ basically because of supply problems. The company sees itself as principally an agricultural/horticultural grower. However it is making a foray into processing with a US$ 6 million juice plant near Bangalore. It will use Taiwan and Italian equipment and should be able to generate about $10‐11 million in exports per annum, when operational. The plant is not yet operational due to cash flow problems in the group. Maxworth also has 13 retail outlets but Subramanian sees these as being more of a short to medium‐term promotional necessity than a long‐term core business. Maxworth has had cash flow problems during 1996‐7. Sales of new land tracts are down and its share price has slid from a peak of 80 rupees in 1994 to just 12 rupees in February 1997 and 2 rupees in December 1997. These problems aside, Subramanian remains optimistic about India’s agricultural potential, pointing to the country’s 240 million acres of fallow arable land. He believes that India can achieve the lowest costs of agricultural production in the world - based on its cheap land and labour and a good climate. - if it applies scientific methods and can overcome its infrastructure and land tenure problems. Sources: INSTATE Interview, January 1997; Far Eastern Economic Review, 20 February 1997
11
More recently some state governments are reportedly beginning to offer large parcels of currently uncultivated land on long term leases ‐ which permits large scale cultivation without all of the logistical challenges that Maxworth has faced. The alternative to models such as that developed by Maxworth Orchards is contract farming. Several agribusiness producers and processors have attempted to work around the land ceiling act through large‐scale contract farming. However, such arrangements are risky ‐ there is no national legislation to govern contract farming and thus no means whereby contractual agreements can be enforced.
POST HARVEST WEAKNESSES Poor harvesting techniques and inadequate post harvest infrastructure result in damage to and wastage of much of the raw produce. The sector suffers from serious inadequacies in rural road / rail networks to transport farm produce to markets, lack of reefer transport or cold storage facilities and erratic supply of electric power. In the case of fruits and vegetables, for example, the wastage caused by lack of cold storage facilities is estimated at A $ 8.5 billion, equal to 40 per cent of the value of the total production.7 According to one source, “each year the country wastes more fruit and vegetables than are consumed in the whole of the UK.”
MULTIPLICITY OF MIDDLEMEN Compounding the problem of poor post harvest infrastructure is the presence of several layers of middlemen between the farmer and the factory. A recent study on the Indian food sector reveals that there are no fewer than 6 levels of intermediaries between the farmer and consumer, compared with just two in the US.8 The large number of intermediaries has an adverse effect on both the final price and the quality of the product. The final selling price escalates as each middleman factors in a profit margin. The outcome, as stated in the same study, is a tripling of average prices of vegetables between the farm ‐ gate and the consumer. The extra handling, moreover, leads to damaged produce while the extra time to reach retailers means more wastage.9
7 Business World, July 7, 1997 8 Food and Agriculture Integrated Development Action Report 9 Asian Business Review, August 1997
12 LACK OF DOWNSTREAM PROCESSING FACILITIES: The presence of a wide variety of soils and agro‐climatic conditions in India has given the country a global ranking in the production of both fruits and vegetables. India was ranked second in the global production of fruit and vegetables in 1994, with production volumes exceeding 35 million tonnes for fruit and 90 million tonnes for vegetables.10 However, while developed countries process approximately 70 per cent of their horticultural produce, before consumption, India processes only about 1.2 per cent of its total horticultural output.
3.5 INDIA’S COMPETITIVE ADVANTAGES These problems aside, global interest in the food and agricultural sector in India has grown with the realisation that there are four relatively untapped natural advantages that give the Indian agri‐business sector an edge. These are: favourable climatic conditions, the availability of irrigated land and low cost labour and significant opportunities for value‐adding in the pre and post harvest phases (Table 3.1).
Table 3.1: Strengths in Indian Agriculture
Favourable climatic India is naturally suited to diversified agri‐ production. There are 19 conditions: agro‐climatic zones in India, ensuring cultivation year‐round, and providing conditions for supplying a diverse range of crops from temperate apples and artichokes to tropical berries and custard apples. Availability of irrigated With 50 million hectares of irrigated land providing 182.7 million land: hectares for crop cultivation India has the largest acreage of cropped land in the world. Estimates11, suggest that this represents just 60 per cent of the total potential land available for irrigation. More effective utilisation of harnessed irrigation water would lead to further benefits as about 50 per cent of the water is currently under‐utilised or wasted. 12 Availability of low cost The country has an abundance of manpower in all categories ‐ skilled, skilled manpower: unskilled, technical, scientific and managerial – more than any other nation. Significant opportunities for There are immense gaps between the production potential with value addition in the pre and proven technologies and the actual harvest of most crops in the post harvest phases: country. This provides several opportunities to improve both pre harvest output like yields and post harvest processing through the use of better inputs and the adoption of appropriate technologies over the next few years.
10 FAO, Tata Services
11 183 million hectares refers to the total cropped area which is area sown / irrigated more than once in a year.
12 Food pro 1995 - book of presentations - Processing for viable commercial horticulture.
13
Indian agriculture has great strengths and, by virtue of its ‘special status’, has been relatively less affected by the economic reforms of the 1990s. That said, the problems it currently faces are, to a large extent, a product of past immunity to change. Further reform in the agricultural sector should see India’s significant comparative advantages come to the fore. They would also underpin the expansion of, and greater efficiency in, the Indian food processing sector.
14 4. Food Processing
4.1 SIZE In stark contrast to India’s global status as a primary agri‐commodities producer, its food processing industry is diminutive. Value added foods account for only 32 per cent of the total food market in India (Fig 4.1).
Figure 4.1: The Indian Food Market, 1996 (A $ Billion, Percentage)
100 % = A $ 88 Billion
Value Added Products 32 % Fresh Food 68 %
Source: Food & Agriculture Integrated Development Action Report, Express Investment Week Note: Exchange rates assumed; 1996: 1 A $ = 28.4 INR
15 4.2. INDUSTRY STRUCTURES The Indian food processing sector has a number of key characteristics: • it is relatively labour intensive: the sector employs about 18 ‐ 20 per cent of the manufacturing labour force but employs less than 7 per cent of total manufacturing capital stock.13 • the extent of value‐adding is low: value‐adding in the food processing sector accounted for just 6.8 per cent of total manufacturing value added in 1993‐414; • there is an inordinately large number of small ‐ scale and unorganised processors (Figure 4.2); and • a relatively high proportion of industry participants are state‐owned or co‐ operatives.
Box 4.1: Describing Indian Industry
When examining the food processing industry in India (or virtually any industry sector) several key characteristics stand out - each described in standard and widely used terminology:
• much activity occurs at a grass roots level and is seldom captured by official economic statistics: this is generally described as the unorganised sector;
• since Independence in 1947, some industries have been reserved for small business: firms in these industries comprise what is called the small-scale sector;
• the balance of industry activity is undertaken by relatively larger enterprises, usually described as the organised sector.
Source: INSTATE Pty Ltd
13 Indian Food Processing - A Sunrise Industry 14 Tata Services
16 Figure 4.2: Structure of the Food Processing Industry in India, 1996
100 % = A $ 28,170 million
Unorganised sector 42 % Small scale industries 33 %
Organised sector 42 %
Source: Food and Agriculture Integrated Development Action Report Note: Exchange rate assumed: 1996, 1 A $ = 28.4 INR
The high concentration of small scale and unorganised processors in the food processing sector is the outcome of several decades of industrial policy. Since independence, the government has actively encouraged the setting up of small‐scale industries, particularly in those sectors that were perceived to be labour intensive, including traditional food processing (e.g. manufacture of pickles and chutneys). The original intentions of the policy were clear. Smaller enterprises were thought to increase employment, help distribute income more equitably and to disperse industry more evenly. They were therefore given several incentives including lower excise duties and several items were reserved exclusively for manufacture by the small‐scale sector. The current structure of the food processing sector is, however, likely to change considerably over the next few years as there is increasing recognition by the Government of the benefits that could flow from the de‐reservation of many products, especially those that naturally lend themselves to economies of scale. A further driver of change is growing concern that many of the smaller processors have neither the skills nor capital nor technology to compete in an increasingly liberalised market as it opens up to more imports and foreign investment. Policy trends that will affect the food processing industry are outlined in Chapter 7.
17 4.3 LOCATION The food processing sector in India is strongly regionalised, largely because of the poor post harvest infrastructure in the country. In 1993/94, the latest year for which dis‐aggregated data is available, the southern states of Andhra Pradesh and Tamil Nadu and the northern state of Uttar Pradesh accounted for 45 per cent of the food processing factories in India. All three states are leading producers of various agricultural and horticultural products. • Andhra Pradesh is a major producer of rice and other crops like groundnut, sugarcane, oilseeds, chillies and turmeric. It also produces leading varieties of fruit like mangoes and grapes. Andhra Pradesh is also the leading state in poultry and eggs. • Tamil Nadu is also a major producer of plantation crops like sugarcane, oilseeds and coconuts. It holds the highest productivity records among Indian states for these crops. With nearly 10 per cent of India’s coastline, aquaculture is well developed and it is a major exporter of marine products. • Uttar Pradesh the country’s most populous state is a major producer of plantation crops like sugarcane and a wide range of fruits. In terms of capital invested in food processing, Maharashtra accounted for 21 per cent of cumulative national investment in the sector up to 1993 / 94. Other states with more than 10 per cent of invested capital were Uttar Pradesh and Tamil Nadu. Andhra Pradesh while leading in the number of food processing units, has only a 7 per cent share of invested capital, indicating that its lead in the number of factories was largely caused by the presence of many relatively small units. 15
15 The EIU, September 10, 1997
18
Box 4.2: Case Study: Tamil Nadu
While the national Government has overall priorities for the food processing sector, a number of state governments also have aggressive development plans. Tamil Nadu, located in the South East of India is an example.
In 1995, the Tamil Nadu Agro-Industrial Corporation was nominated as the key (‘nodal’) agency responsible for promotion of food processing in the State.
One form this support can take is direct investment in new projects via either:
• associate status - whereby TNAIC (and the central govt) take an equity stake of up to 11 per cent in projects; or
• joint status - whereby TNAIC (and the central govt) take up to 25-26 per cent equity in projects.
Projects typically involve a total investment of between A$4-15 million. On this basis, TNAIC currently has a number of projects underway or in the pipeline:
• four in floriculture;
• two mushroom projects; and
• two fruit processing projects.
There are other projects coming up involving processing of coconuts, mangoes, tomatoes, and pineapples. This type of project can be identified by TNAIC or by entrepreneurs.
TNAIC estimates that there are 40-50 foreign investments in food processing in Tamil Nadu. The Dutch are well represented in floriculture and there are US investments in mushrooms. Priorities for the future (for new investment in processing) are mangoes, tomatoes, mushrooms and floriculture.
TNAIC is working with other government agencies to establish an integrated cold chain to support the horticulture industry. Auction and cold storage facilities are being built at the airport - these facilities have a strong export orientation. The State Government is also planning investment in a cold chain for the supply of vegetables.
Other activities undertaken by TNAIC include:
• industry training programs;
• a scheme to improve backward linkages for the horticultural processing industry in the state;
• generic advertising of processed foods; and
• research and development in the fruit and vegetable processing sector.
TNAIC sees the following products as having the greatest export potential:
• fruits such as mango (fresh, pulp and in pickles), fresh grapes, papaya; and
• vegetables including mushrooms (fresh, dehydrated and canned), canned gherkins, tomato (paste and puree) and canned gherkins.
Source: INSTATE Interview
19 4.4 RECENT GROWTH Despite its relatively small installed base, the food processing sector in India has seen significant growth in the last decade, driven largely by changes in consumption patterns caused by socio ‐ economic and demographic changes. The output value of the food manufacturing industry grew, in real terms, at an average rate of 6.2 percent per annum between 1982 and 199416. The average growth rate in value added output during the same period was 6.4 per cent (figure 4.7).
Figure 4.3: Food Manufacturing Growth: 1982-1994 (Crore Rupees)
25,000 20,505 20,000
15,000 9,923 10,000
5,000 2,342 1,116 - 1981-82 1993-94
Food Manufacturing: total output Food Manufacuring: value added
Source: Statistical Outline of India, Tata Services Note: Values in 1980-81 prices, I crore rupees = 10 million rupees
According to a more recent source, the food processing industry grew at an annual rate of 20 per cent between 1993 and 1996.17 Recent data on government approvals for projects in the food processing sector indicate that the central government had approved 983 investment proposals worth A $ 6.23 billion for the food processing sector, since its liberalisation in 1991.18 This includes all proposals for joint ventures, foreign collaborations, industrial licenses and 100 per cent export oriented units.
16 This data takes into account only the output of the registered food manufacturing sector. 17 Express investment week, June 2, 1997 18 The Economic Times, October 7, 1997
20 Figure 4.4: Investment in the Food Processing Sector, July 1991 - June 1997 (Number of proposals)
Proposals implemented by local 774 players 983 44 % Proposals implemented 56 % by MNCs 209
Total Total number of Total number number of approvals of approvals approvals pending implemented implementation
Source: The Economic Times, October 7, 1997 Note: Average exchange rate assumed: 1 A $ = 27.5 INR
Of these proposals, only 209 proposals worth A $ 1.38 billion had been implemented by June 1997. Multinationals and foreign companies accounted for 56 per cent (118 proposals) of the implemented investments, worth A $ 0.71 billion. 19
Figure 4.5: Investment in the Food Processing Sector, July 1991- June 1997 (A $ Billion)
$6.23 $4.85
$1.38 $ 0.71
$ 0.67
Total value of Total value of Total value of Total value Total value investment investment investment of foreign of local proposals proposals proposals investment investment approved pending implemented implementation
Source: The Economic Times, October 7, 1997 Note: Average exchange rate assumed: 1 A $ = 27.5 INR
19 The Economic Times, October 7, 1997
21 The key drivers facilitating the growth of the food processing sector can be summarised as follows: • A growing ‘consumer class’: there are currently estimated to be about 10 million upper middle income and high income households that earn at least A $ 2,695 per annum. With an average of 5.7 members per house this implies a consumer base of about 57 million people.20 (For a broader discussion of consumer segments in India, please see Chapter 5.) • Changing lifestyles: characterised by growing urban populations, an increasing number of nuclear families and dual income families. • Changing attitudes and tastes: there is a growing modernisation and, to a lesser extent, westernisation, of tastes, particularly with the younger generation, who are increasingly influenced by cable / satellite TV. • Low penetration ratios: for most processed food products the penetration rates are much lower than in many other developing markets, let alone western markets; for example, just 5 per cent for cheese in 1994.21 • Plentiful raw materials: as outlined in Chapter 3 above.
4.5 FOREIGN INVESTMENT IN FOOD PROCESSING Foreign investment in two industry sectors ‐ energy and food ‐ has attracted the greatest public attention, both domestically and internationally. Foreign investment in both these sectors has been very contentious. However, unlike the controversy on investment in the energy sector, exemplified by the Enron case, there has been no government opposition in the case of foreign investment in food. Indeed, successive governments have vigorously promoted foreign investment in food processing. Concern has been expressed more by the general public and the domestic corpoprate sector that domestic food companies – and Indian values ‐ could be harmed by ‘rapacious’ multinationals.
20 Tata Services 21 A & M, November 1994
22 Figure 4.6: Foreign Investment in the Food Sector (Percentage)
Metallurgical Food industries processing 5% Electrical 6% Other 15% equipment 6% Energy Transportation 6% 24%
Chemicals 7%
Services 8% Telecommunications 23%
Source: DFAT Country Economic Brief, August 1997 Notes: Approvals data from August 1991 to March 1997
For all the controversy it has aroused, foreign investment in food processing has been quite limited ‐ accounting for just 5 per cent of total investment approvals in the period from August 1991 to March 1997. Foreign investment in the food sector has however grown significantly in recent years in dollar terms. (Figure 4.7).
Figure 4.7: Foreign Direct Investment in the Food Sector Percentage Share of Total FDI Approvals
1996-97 US$ 238m
1995-96 US$ 85m
1994-95 US$ 61m
1993-94 US$ 44m
1992-93 US$ 28m
0% 2% 4% 6% 8% 10% 12%
Source: RBI Annual Report
Details of major foreign investors in food in India are contained in Appendix B.
23 Box 4.3: Same bed, different dreams?
Like China and most of the South East Asian economies, India’s first steps to open the food sector (and many others) to foreign investment provided for joint ventures rather than wholly owned operations. There were several elements to the rationale:
On the one hand, India should welcome the introduction of new technology, products and management expertise, but should also provide for local firms to obtain a window on them via joint venture structures;
India should legislate to ensure that local partners can have a stake in leading edge ventures and ensure that the country shares in the rewards - rather than have all economic benefits (dividends) flow offshore.
Government attitudes to foreign investment are evolving - and, generally, becoming more welcoming - and India finds itself increasingly in competition for foreign investment. The result has been a loosening of restrictions on local equity.
The response by several major foreign investors has been to buy out their local partners. This reflects an evolving perspective on the issue of joint ventures vs 100 per cent owned operations: initially, there was recognition - or acceptance - by foreign investors that a local partner could offer savvy about the Indian market that would not be quickly acquired by a newcomer; over time, a desire on the part of foreign investors to win back control of their operations has begun to surface; and in many cases, the decision was spurred by a realisation that each partner had very different expectations and, most critically, that they were often in conflict.
On the Indian side, there is some apprehension at this trend. Some Indian companies fear that joint ventures could serve as Trojan Horses providing foreign investors with a first window on the market courtesy of the Indian partner who can be discarded when no longer as useful. The Government too retains reservations about 100 per cent foreign ownership - which can only be approved on a case by case basis rather than receiving the automatic approval available to joint ventures in which foreign partners own up to 51 per cent of the equity.
For new investors, the choice of partner - or indeed, whether to have a partner - remains a critical threshold issue.
Source: INSTATE Pty Ltd
4.6 MAJOR INDUSTRY SECTORS In terms of output value, the big food processing industries in India are sugar refining, edible oils and vanaspathi, and dairy. In value adding terms the situation is a little different: • sugar accounts for almost 28 per cent of total value added ‐ even more than its share of output value; • oils and vanaspathi account for just 6.5 per cent of value added; • dairy’s share of total valued added is just 5.5 per cent ‐ about half of its share of output value;
24 • milled grain products account for over 8 per cent of value added more than three times their share of total output (figure 4.8).
Figure 4.8: Composition of the Food and Beverages Sector
0% 5% 10% 15% 20% 25% 30%
Dairy products
Proc'd fruits and veg
Grain mill products
Bakery products
Refined sugar
Vanaspati
Edible oils
Tea
Animal feeds
Other food products
Spirits
M alt liquors & water
Tobacco etc
Share of value of output Share of value added
Source: Ministry of Food Processing Industries, 1995 (no year given for data)
The structure of the India food processing industry contrasts sharply with the food processing sectors in most western markets where meat processing, high value‐ added dairy processing (yogurt, ice cream, butter, cheese, etc.), milk and cream processing and horticultural product processing take centre stage. Figure 4.9 provides a comparison of the relative weightings of different sectors in India and Australia.
25 Figure 4.9: Comparison of food processing sectors in India and Australia (A $ billion)
Food Processing Sector in India, 1996 Food Processing Sector in Australia, 1996
Total market = Total market = A $ 28.2 billion A $ 41.9 billion
Meat processing $5.9 Oil and vanaspati $6 Dairy product mfg (nes)* $3.8 Liquid Milk $4.8 Bakery products $3.1
Sugar $3 Fruit and vegetable processing $3
Bakery $1.4 Milk and cream processing $2.7
Cereals Sugar mfg $1.2 $2.5
Beer and malt mfg $2.5 Indian sweets $0.95 Soft drink, cordial and syrup mfg $2 Tea & Coffee $0.85 Cereal food and baking mix mfg $1.9 Confectionery $0.7 Poultry processing $1.8 Spices $0.14 Wine mfg $1.8 Other $9.2 Other $10.9
Source: Express Investment Week, ABS *Note: Dairy product mfg (nes) includes all dairy processing except milk and cream. Exchange rate used: 1 A $ = 28.4 INR The different composition of the Indian processing industry is a product of two main factors ‐ lack of downstream processing infrastructure for fresh/semi processed produce and lack of demand for some processed food categories. Consumer demand is in turn driven by: • a preference for fresh fruit and vegetables; • a preference for ‘Indian’ flavour/taste which has historically meant that many processed Western‐style foods were seen as bland and unappealing; for example, western style cheese; • the presence of traditional/religious taboos eg against a range of meat products.
26
Box4.4: Why Buy a Can?
“The only really major branded processed fruit company is Kissan. They dominate the retail market, such as it is. We are a second tier player. We reach about 1500 of the 10,000 or so retail outlets in Mumbai that take canned fruit.
Our main market is institutional – hospitals, flight kitchens, hotels, restaurants. Our main competition comes from the small scale sector, which is primitive but very cost competitive. But retail is unprofitable: demand is low and consumer spending is low. There is plenty of fresh fruit available all year. Consumers ask: ’Why buy a can?’
I don’t see a bright future for retail sales. The government should give subsidies.”
Source: Executive, State Owned Corporation, INSTATE Interviews
However, as infrastructure improves, incomes rise and the demand for convenience grows, the current sectoral composition is likely to change. • Products that a typical Indian consumer enjoys, for example, confectionery, biscuits and value added dairy products, should grow considerably. • Other categories of foods that do not feature prominently in the current break down, for example, processed dairy products like yogurt, should also grow into sizeable segments as convenience becomes more important to the consumer. • Increasing consumption of poultry should also lead to significant growth for the currently minuscule processed meat / poultry segment of the market. Five specific Indian food sectors in which Australia is a competitive exporter to the Asian region are briefly profiled below. They are: • horticulture; • dairy; • meat • cereals and grain; and • animal and vegetable oils.
4.7 HORTICULTURE As noted in Chapter 3, India is a very large producer of fruit and vegetables. However it currently processes just a tiny proportion ‐ about 1.2 per cent of total production, well under one million tonnes.22 That said, the installed capacity of the industry is expanding and grew at an annual rate of 11.6 per cent in between 1980 and 1995 (Figure 4.10).
22 Food Processing Industries in India, 1995-96
27 Figure 4.10: Fruit and Vegetable Processing: Growth of Installed Capacity (Million Tonnes)
1.40 CAGR = 11.6 %
0.89
0.40 0.27 1980 1985 1990 1995
Source: Food Processing Industries in India, 1995-96
The output value of the horticultural processing industry was estimated at approximately US $ 550‐600 million in 1996‐7.23 Major processed products include packaged beverages, fruit pulp (especially mango pulp) pickles, preserves and chutneys and frozen fruits and vegetables (Figure 4.11).
Figure 4.11: Major Processed Fruit and Vegetable Products (Percentage)
Frozen fruits & Tomato veg products Others 4% RTS beverages 9% 8% 27% Dehydrated fruit & veg 2% Canned & Pickels, bottles fruit & preserves & veg 4% chutneys 11% Fruit juice 3% Fruit juice Jams/squashes concentrate /syrups Fruit pulps 1% 8% 23%
Source: Food Processing Industries in India, 1995-96
Currently about 50 per cent of fruit and vegetable processing is carried out in the unorganised sector. Lately, however, several multinational and large local firms including Pepsi, Hindustan Lever, Brooke Bond Lipton, (recently merged with
23 INSTATE calculation based on industry data and reported growth rates.
28 Lever), Godrej Foods, Maxwell Orchards and others have made investments in plants for fruit concentrates, tomato pastes and preserved fruits and vegetables. Output has been growing at an annual rate of 30 per cent and this strong growth is predicted to continue over the next few years. 24 The Government has ambitious plans for the development of horticultural processing ‐ in order to reduce currently high wastage of fresh production. Export markets are its principal priority but the domestic market is also growing. The Government’s target is to build the sector to the point where 30 million tonnes of fruit and vegetable is processed annually. The products expected to grow fastest (over 100 per cent annually) include prepared or preserved cucumber / gherkins, green pickles, tamarind concentrate chutney, potato preparations and tomato juice. Preserved onions and dried mushrooms are among some of the products expected to grow at an annual average rate of over 50 per cent. The biggest challenges facing the industry in realising its development plans are ensuring reliable supply of quality product and cost imposts caused by infrastructure problems. Foreign investment in this sector is permitted ‐ companies are entitled to set up plants in which they own a maximum of 51 per cent equity.
4.8 DAIRY Estimates of the total size of the industry are not available as over 85 per cent of the industry is in the unorganised sector. The 1996 turnover of the organised segment of the industry is estimated at A $ 215 million. The dairy sector as a whole is estimated to be growing at annual rate of 9 per cent while facilities for value added processing are growing at an annual rate of 20 per cent. 25 Just under half of total milk production is sold in the form of liquid milk (Fig 4.12) and this proportion has been relatively steady during the past few decades even as aggregate milk production has continued to rise rapidly.
Figure 4.12 Milk Utilisation in India (1995) (Million tonnes, Percentage)
100 % = 66 million tonnes
24 India Business Information Service 25 India Business Information Service
29 Other Khoa 7% 7% Butter 7% Liquid milk Curd 7% 45%
Ghee 27%
Source: Dairy India 1997
Until 1991, India’s dairy industry was largely reserved for the co‐operative sector. Since that year, when restrictions on private sector investment (including foreign joint ventures) were eased there has been a surge in investment in new processing capacity. • In October 1997 processing capacity was estimated at 54 million litres per day26 (lpd); • However more plants are coming on stream ‐ projects involving new capacity of 100 million litres per day were approved between 1991 and 1996.27 Problems facing the dairy processing sector include: • significant government regulation: for example, new investment in processing requires specific government approval; • a generally fragmented industry structure: the majority of processing plants have a capacity of 50‐250,000 lpd, although some larger scale plants are gradually coming on line; • supply chain uncertainties (quality assurance, transport costs etc); • with a small number of notable exceptions (such as Amul), weak domestic brands. These problems aside, the processing sector looks set for strong growth in coming years as demand grows for: • Packaged consumer products: for example, a recent study predicted that the packaged milk segment of the industry would be valued at A $ 13.3 billion by the year 2005;28
26 USDA/FAS and Dairy India 1997 27 Dairy India 1997
30 • Higher value‐added products: such as ice cream, milk shakes and cheese, all these products have low penetration ratios and per capita consumption levels; with incomes rising, demand for these products is expected to escalate. • Ingredients for the food processing industry: ranging from high volume, albeit specialised, products such as whey through to lower volume niche products such as cheese powders. • Branded versions of traditional sweets (‘mithai’): the current market for milk based sweets is estimated at US $ 857 million. In recognition of the potential in this segment, Nestle has just commenced a new line of branded mithai products. • Product for growing food service markets: especially initially the hotel and fast‐ food sectors.
Box 4.5: Dairy: An Insider’s Perspective
There were only two major players in powdered product until 1990 (Milk Food Limited of Delhi and Foremost Dairies) but there are now about 150 powdering plants and more on the way. This new capacity is why imports of SMP have fallen so sharply in recent years.
The first UHT capacity was installed in the early 1980s and new capacity is being installed. There are new projects in Andhra Pradesh (Hyderabad) and Maharashtra and one of the UHT projects with French involvement will use disposable plastic bottles (made on site on the processing line). However there are still some problems with the quality of most domestically produced UHT milk.
The best prospects for export from India include SMP (much more so than WMP), whey powder, casein and lactose.
There are many Australian companies looking for opportunities to export to India. In my view, cheese holds the best prospects. Demand for cheese is growing fast: both for the fast food industry (mozzarella) and for eating at home (cheddar or processed). In the short term, there are opportunities for (standard cheddar or processed) cheese. In the longer term, there will be opportunities to supply specialised cheeses.
Source: Agent for major domestic co-operative, INSTATE Interview
4.9 MEAT India produces about 3 million metric tonnes of meat annually. Per capita consumption of meat is low by developing country standards at just 3.4 Kg / year, well under 10 per cent of the consumption level in China.
Table 4.1: Output of meat products million tonnes (kg per capita) India China 1993 2.9 (3.4 kg) 38.4 (32 kg) 1995 3.1 (3.4 kg) 52.8 (42 kg) Sources: China: Statistical Yearbook, 1997; India: Euromonitor – Consumer Asia 1997
28 Food and Agriculture Integrated Development Action Report Average exchange rate assumed: 1 A $ = 0.75 US $
31 Less than 4,000 tonnes is processed and packaged in value‐added form. The rest is consumed as freshly cooked meat. Increasing urbanisation and growing incomes are, however, increasing the domestic demand for meat products. The Government of Indiaʹs 8th (1992‐1997) Five Year Plan allocated an outlay of US $347 million for the Animal Husbandry division of the Ministry of Agriculture and US $100 million for the food processing and storage sectors. This was aimed at providing more better‐quality meat by increasing the number of developmental projects and by reorganising the breeding techniques for sheep/goats and pigs. It is estimated that at their current size, India’s livestock herds are large enough to produce 940,000 million tonnes per annum of goat and sheep meat if sufficient modern infrastructure were in place.29 The market for processed meat and poultry is expected to grow to A $ 3.2 billion in under a decade.30
POULTRY Until a decade or so ago, the poultry sector was largely confined to the unorganised sector. Since then, a significant industry with medium and larger scale operators has emerged that contributes an estimated US $ 420 million per annum to the GNP and employs a capital of around US $ 322 million, (1993). Industry estimates for 1995 put annual production figures at 30,000 million eggs and 450 million broilers. 31 70 per cent ‐ 80 per cent of poultry production is consumed domestically with the balance going to export, principally to the Middle East. Domestic consumption is growing steadily and there are several branded products in the market. The food service sector ‐ led by, but not limited to, high profile chains such as KFC is creating rapidly growing demand for poultry products. Growth has been underpinned by the use of modern poultry processing equipment, which has been permitted under Open General License (OGL) for some time. The increasing popularity of fast food has led to a rapid increase in new poultry projects. In fact, during 1996‐7 the industry has been hit by oversupply and falling prices as a result of an earlier surge in investment. These developments are increasing the availability of poultry meat faster than any other type of meat and poultry’s rapid growth looks set to continue. The market for fresh poultry in India is expected to grow from its 1996 level of A $ 2.6 billion to A $ 10.7 billion by the year 2005, growing at an annual average rate of 18 per cent per year. 32
29 USDA/FAS 30 USDA/FAS, Average exchange rate assumed: 1 A $ = 28 INR 31 USDA/FAS 32 Food and Agriculture Integrated Development Action Report Exchange rates assumed: 1997: 1 A $ = 28.4 INR; 2005: 1 A $ = 28 INR
32 Box 4.6: Domestic Sourcing, Domestic Markets
“There will always be ups and downs in a fast developing market. I can see strong international interest in the Indian poultry market by big international players.
There is some ad hoc importing of feed for the industry - maize, soymeal and so on. Long term, the big integrated operations will want to source feed locally.
We currently have some export markets for egg products but India won’t be a serious exporter of poultry meat until volumes have grown considerably and we can reap better economies of scale.”
Source: Editor, Poultry Times of India, INSTATE Interview
RED MEAT As the slaughter of cows is banned in most states, cattle meat is consumed by a very small section of the Indian population. Domestic demand for sheep and goat meat, however, continues to grow. Mutton and lamb production is estimated to have reached 167,000 tonnes in 1995 and that of goat meat 456,000 tonnes in the same year.33 Pork products are becoming increasingly popular in India. Ham, salami, sausages and bacon are sold as packaged products in India, but branding is limited and no figures are available on total output.
4.10 CEREALS AND GRAIN34 India produced 120 million tonnes of rice, 64 million tonnes of wheat and 45 million tonnes of pulses & coarse grains in 1995. Output was forecast to increase to 121.5, 68.7 and 44.9 million tonnes respectively in 1997. 35 The processing of these commodities however remains largely in the unorganised or small‐scale sector although some investment is beginning to flow into larger‐scale projects. Rice milling is reserved for the small‐scale sector and is characterised by a plethora of small capacity mills, which typically operate at a maximum capacity of 1‐2 tonnes per hour. An increasing volume of rice bran is being diverted from use as feed to milling for oil but the dispersed nature of the industry is a major obstacle. 87 per cent of value‐adding is obtained by primary processing ‐ the production of milled rice and its by‐products ‐ while only 13 per cent is obtained by further processing to
33 Indian Agriculture 1996 34 Unless otherwise noted, this section draws on material from Food Processing Industries in India, 1995-96. 35 FAO
33 produce bran oil, meal, flakes, puffed rice, instant rice, noodles, extruded snack products or the like. Primary processing of wheat ‐ flour milling ‐ is not subject to licensing. The bulk of capacity ‐ more than 70 per cent ‐ is accounted for by the unorganised sector (Figure 4.13).
Figure 4.13: Flour Milling: Big and Small
30,000 26,000 50 40 25,000 40
20,000 30
15,000 20 15 10,000 10 5,000 800 0 0 Estimated Output (million tonnes per Number of mills year)
Unorganised sector Organised sector Unorganised sector Organised sector
Source: Food Processing Industries in India
Pulses are processed entirely in the unorganised sector. There are, for example, more than 10,000 dal mills processing pulses across the country. Most secondary processing of pulses as well as processing of coarse grains also takes place in the unorganised sector. Within the grain processing sector, wheat flour ‐ known in India as atta ‐ was recently identified as having perhaps the greatest value‐adding potential. Packaged atta has a current penetration rate of less than 1 per cent, meaning that it is used by perhaps 10 million consumers. According to estimates, by the year 2005, the packaged product could be consumed by as many as 140 million consumers. If this were to eventuate, the packaged atta industry would emerge as an estimated A $ 5.4 billion industry by 2005.36
BAKERY PRODUCTS The bakery sector in India is relatively large and growing fast. Total production of bakery products was projected to reach 3.4 million tonnes per annum by the end of 1997, twice the level in 1989.37
36 Food and Agriculture Integrated Development Action Report Exchange rate assumed: 1 A $ = 28 INR 37 Food processing Industries in India, 1995-96
34 The unorganised and small scale sectors play a big role. Although no recent national data is available, biscuit production in the unorganised sector was as high as 80 per cent of the total output during the 1980s.38 In addition, new investments in large plants were restricted until mid 1997. As a result, the major producers of biscuits all had big networks of contract producers to provide market reach. While the mass market is the biggest segment of the biscuit industry, things are changing:
“Mass market biscuits are still packed in wax wraps but packaging is changing rapidly. We are moving from wax wraps to laminates for most types of biscuits, especially the mid to upper priced products.”
India’s per capita consumption of western style bread is low at only 1.2 kg per year, compared to 9 – 10 kg in Malaysia, Singapore and Hong Kong, 19 kg in Singapore, 48 kg in Taiwan and as much as 90 kg in some European markets. 39 Automation is increasing and a market for branded premium breads is emerging. Brands such as Gardenia and WhyteKollar, priced at 11 Rs (41 cents) and 14 Rs (52 cents) respectively (compared to Rs 6.50 (24 cents) for ordinary breads) are emerging in the most sophisticated markets such as Mumbai. Reportedly, none of the major players has yet broken even although premium breads are estimated to account for about 10% of the total bread market which, in October 1997 was estimated to have a total value of almost A $ 500 million.40 Mumbai is also the home to Croissants Etc a chain of 15 retail outlets selling cakes/croissants that targets the most affluent 25% of the market. The largest chain in this sector (bread and cakes) is Mongini’s, established about 30 years ago. Chains aside there are many hundreds of individual cake/bread shops throughout the city. The emergence of a premium market for baked products should provide opportunities for bakery ingredients suppliers such as Burns Philp (Mauri) and Pilsbury. There have been some imports of ingredients in recent years but industry players see that as a temporary measure and believe that, very specialised products and niches aside, the only way to secure big markets for ingredients in India is via in‐country production operations.
38 Food Processing Industries in India, 1995-96 39 Euromonitor – Consumer Asia, 1997 40 The Economic Times Internet Edition, 24-30 September 1997. Exchange rate assumed: 1997: 1 A $ = 27 INR.
35 4.11 ANIMAL AND VEGETABLE OILS Indian oilseed production has grown very rapidly throughout the 1990s reaching 27 million tonnes in 1996‐7. Much of the growth in production has been due to large increases in output of rapeseed, sunflower and soybeans. (Fig 4.14)
Figure 4.14: Growing Oilseed Production (million tonnes)
25
20 2.5 1.3
15 0.9 4.5
10 0.4 6.1 2.6 1.5 5 5.9 6.6
0 1986 - 87 1995-96
Peanut Rape/mustard Soyabean Sunflow er Other
Source: Solvent Extractors Association
This growth in total oilseeds production, designed to reduce reliance on imports, occurred with strong encouragement from the Government from the late 1980s. However output growth has flattened out somewhat as import liberalisation has seen cheaper imports increase quickly to meet rising consumption. Total imports in 1996‐7 were about 1.6 million tonnes, compared to just 100,000 tonnes in 1992‐3, and are conservatively forecast to grow to 2‐2.5 million tonnes over the next five years or so.41 The composition of imports varies quite widely from year to year, principally in response to changes in price and availability of substitutable oils from major supplier countries. While Malaysia is the biggest supplier of palm oil, other suppliers such as Argentina (principally sunflower oil) have seen big increases in export volumes in recent years.
41 USDA/FAS
36 Box 4.7: Vanaspathi
Vanaspathi is a hydrogenated vegetable oil that traditionally, was very widely used in Indian cuisine. Throughout the 1980s vanaspathi producers received preferential allocations of imported oilseeds but this arrangement was scrapped at the height of the self-sufficiency drive in 1988-89.
Consumption of vanaspathi is stable but its share of all edible oil consumption is sliding rapidly - consumption of other liquid oils, perceived to be significantly healthier, is growing quickly (Figure 4.15).
Figure 4.15: Per Capita Availability of Edible Oils and Vanaspathi (per year)
8.0 7.0 1.0 6.0 5.0 kg 4.0 1.0 3.0 6.5 2.0 3.7 1.0 - 1979-80 1995-96
Liquid oil Vanaspathi
Source: Solvent Extractors Association
India’s exports of oilseed‐based products ‐ especially soy and other meals ‐ have growth strongly in recent years and are now running at more than 4 million tonnes per year.
4.12 PACKAGING Recent years have brought significant improvements to food packaging in India, especially at the higher value‐added end of the market, led mainly by the entry of multinational firms with high quality demands.
37
Box 4.8: Growth Trends
One major industry player estimated that the packaging market for food products in general is growing at about 15 per cent per annum. The fastest growth is being recorded in cereals and chocolate packaging. The major market segments are as follows:
Type Annual Consumption (million units)
Lined cartons 770
Non-lined cartons 380
Hand packed containers 60
Other - chocolates, tea bags etc 50
The cigarette market, long a mainstay of the industry, is growing more slowly, at just 4 per cent per annum but the liquor market is recording much faster growth - from 10 - 100 per cent per annum, depending on product type.
Source: INSTATE industry interview, January 1997
Until the early 1980’s, packaging was viewed by domestic processed food manufacturers primarily as a means of providing inexpensive and reliable support for containment and communication. It was rarely viewed as an additional attribute that would enhance the final value of the product to the consumer, (eg. by retaining freshness). Most standard products still suffer from poor packaging42. There are several reasons for this: • At the root of the problem is the formidable cost of packaging for processed food in India. While the cost of packaging in most developed countries accounts for up to 20 per cent of the cost of the food item, in India it accounts for up to 55 per cent. This in turn is largely caused by the high excise duties levied on the raw material used to create packaging products. 43 • The presence of a large number of small scale processors also acts as a deterrent to significant improvements in the packaging of food products. These processors typically sell to customers in their region and their primary selling point is often their low price. In fact much of the price differential between products in the organised and the unorganised sectors comes from government taxation and packaging costs. These small scale processors therefore have neither the money nor the need to invest in modern packaging technology as aspects like better packaging for long term shelf life etc. are not critical issues.
42The Economic Times, 31 May 1995 43A & M, 30 November 1994
38 • For the majority of the population, access to fresh foods is easy and a generic habit. This in combination with a widely held view that poorly packaged processed foods are not as ‘fresh’ or healthy as fresh foods leads to low volume sales for many processed products. This completes a vicious cycle as poor sales in turn lead to low investment by processed food manufacturers in ‘trimmings’ like enhanced food packaging technology. Growing competition from an increasing number of multinationals will lead to further improvements in the packaging of many premium products. Larger domestic processors can be expected to follow this lead. In the words of one industry player:
“Local food processors are becoming quite aggressive about investing in upgraded packaging. Traditionally Indian companies have looked for low cost packaging options, but now we have local firms coming to us to examine higher quality options that would cost substantially more. Some still baulk at the cost and don’t go through but others do.”44
These changes at the top end of the market aside, for the large majority of bulk consumption products, however, dramatic improvements in packaging are unlikely unless lower government levies or increased production volumes of packaging material reduce ultimate packaging costs.
4.13 PROFITABILITY ... AND PROBLEMS Internationally, the food processing is highly profitable.45 The small size of the installed base of the Indian food processing industry and the strength of the growth drivers mean that it too should be a profitable sector. This is reinforced by the surge of recent investment. However efficient and profitable operation of the sector has been hampered by a number of serious problems including: • significant idle capacity: one estimate holds that only 40 per cent of current installed capacity is being utilised. • high input costs: due to low yields and an uncertain supply chain; • variable input quality: and • fragmented markets: caused principally by transport and infrastructure bottlenecks that hamper development of pan‐regional or national markets.
44 INSTATE interview, January 1997 45 See for example, Agribusiness and Processed Food Development in South East Asia, INSTATE Pty Ltd, RIRDC 1993, p30.
39
Box 4.9: Still Sceptical
“We were recently offered an investment in a food processing plant in Karnataka. But the project has problems – inappropriate technology, lack of cold storage facilities and poor distribution and marketing.
Few of India’s top 100 firms have looked seriously at investments in food processing as yet. It is unorganised, margins are low and there is an active farmer lobby. Some may dip a toe in the water but not much more.”
Source: GM, (New Projects), Indian Conglomerate, INSTATE Interviews
The healthiest margins in the Indian food sector go to the distributors and middlemen who, being traders, are reluctant to invest in production. In advanced economies, producers command 50 per cent of the retail price, whereas in India their component is half that, at 20 to 30 per cent. This has lead to a vicious cycle of low profits, low investment, low efficiency, low added value and low profits. A recent study estimates that US $ 40 billion needs to be invested across India’s agricultural sector, addressing these problems if the country is to reap the benefits of its natural resources.46
4.14 PROSPECTS What then are the attractions for investors? For both the Government and investors, the essence of the 1991 economic reforms was in the ‘new industrial policy’ that advocated: • The deregulation of most domestic industries ‐ opening them to both local and foreign private investment, • The removal of licensing requirements to set up new capacity in these sectors, • An increase in the equity ceiling (from 40 to 51 per cent) for foreign investment. Growing recognition of the potential for exporting value added agricultural / horticultural products has resulted in focusing government policy on private investment in downstream processing. Foreign investors are not permitted to invest in farm and plantation production but agricultural processing has been declared a priority area for foreign investment. In essence this means that FDI in this sector is eligible for automatic approval of up to 51 per cent. There are however certain exceptions to this rule ‐ some sectors within agri / food processing have been reserved exclusively for the domestic SSI, (small‐scale industry), including milk food, malted foods and flour.
46 Food and Agriculture Integrated Development Action Report
40 In addition to facilitating private investment, the government has focused its own plans and budget for the agricultural sector on performance improvements based on better inputs and fewer regulations. With this in mind the Union Budget for 1997‐98 has substantially increased budgetary allocations for irrigation and rural credit. The government has also started dismantling some controls on agriculture.47 In order to facilitate investment and growth within the agri‐business sector, the Indian government set up the Ministry of Food Processing in 1988. The Ministry’s focus areas as outlined in the Government’s eight plan outlay (1992 ‐ 1997) emphasise improving the quality and output from grain processing, fruit and vegetable (horticulture) processing, meat and poultry processing and fisheries.48 Opportunities also exist for both domestic and foreign companies to enter the dairy sector. The future growth of the value added foods sector in India will be influenced by two major trends: • growth in incomes; and • falling import barriers. Based on an evaluation of the impact of rising incomes on future consumption patterns, a recent study49 predicts that the Indian market for value‐added foods will treble from A $ 28.5 billion in 1996 to 80.3 billion A $ by the year 2005, “providing one of the largest opportunities in India today”.50 Their estimates are based on their analysis of consumption trends during different stages of economic development in over twenty countries. ‐ trends that have shown a distinct evolutionary pattern and that are closely correlated to the growth in per capita GDP of the country, as shown in Figure 4.14.
47 AIC Online, March 1997 48 Food Industry Business Report, June 12, 1995 49 Food and Agriculture Integrated Development Action Report 50 Food and Agriculture Integrated Development Action Report, Exchange rates assumed, 1996: 1 A $ = 28.4 Indian Rs; 2005, 1 A $ = 28 INR
41 Figure 4.14 Changing consumption patterns
Food consumption patters Percent
Luxury Foods Breakfast cereals Luxury 17 21 Jams Sauces 15 million additional 34 37 Poultry people are expected US $ 7,500 per capita 17 to make the jump Basic from basic foods to luxury foods by the year 2005 in India Basic Foods Meat Fish 68 Dairy Products 54 Biscuits 52 US $ 1,000 per capita 200 million additional Subsistence 66 people will make the jump from subsistence foods to Subsistence Foods basic foods by the year Grains 2005 in India Fruit and Vegetables 11 11 12 Unprocessed cereals
1000 5000 10000 25000
Per capita income US $ (ppp)
Source: Food and Agriculture Integrated Development Action Report
These changes are likely to underpin industry rationalisation and support the emergence of big local players who can compete with foreign multinationals. By one estimate, at least 10 Indian food companies with turnover over A $ 1 billion will have emerged by 2005 where there are none today.51 While rising incomes will probably drive growth dramatically in the basic foods category, premium products can also be expected to do relatively well, particularly for well known and nationally appreciated processed food products like chocolates and ice cream. Growth in this segment will be based not just on discretionary incomes but also on the increasing affordability of premium foods because of falling barriers to food imports. New Delhi’s April 1997 decision to free imports of some premium products including chocolates, cocoa products, ice cream, chewing gum and corn flakes will accelerate progress in this direction. Cheaper imports will help expand the size of the market, (despite tariffs and duties) and further spur the development of the domestic sector.
51 Food and Agriculture Integrated Development Action Report
42
5. THE INDIAN CONSUMER AND THE MARKET FOR PROCESSED FOOD
5.1 THE CHANGING CONSUMER Changing consumption patterns in India are creating new markets for processed food products and by implication for the intermediate products used to make them ‐ whether domestically produced or imported. The Indian consumer today is quite different from his counterpart of a decade ago Today’s consumer: • is more willing to spend; • has access to a wider range and choice of quality products; and • is more aware of branded products. Private consumption expenditure in India has grown at an annual average rate of 10.9 per cent between 1981 and 1995.52 The quantity and quality of products available to the Indian consumer has also improved significantly in this period. For example: • Between 1991 and 1995, packaged and branded food items grew from 1,200 items to over 4,500 items and this trend is set to continue.53 • Products that even a decade ago were typically brought in from overseas by affluent Indian travellers are now easily available in India. Indian consumers can now purchase domestically produced, quality products like cheese, wine, donuts, packet soups, frozen meats and vegetables, instant noodles, packaged grains and pulses and some ready to eat frozen meals. Since 1991, a range of multinationals in the food processing and fast food restaurant sector have set up operations in India and many more are evaluating the market. These foreign firms have contributed to the steady increase in the variety and quantity of consumer foods available to the Indian consumer.
52 Tata Services 53 The Hindu Business Line, Oct 21, 1995
43
Box 5.1: Cultural and Religious Factors
India’s economic growth and its gradual opening of the door to imported products and foreign investment for the domestic market is fuelling growth in overall consumption spending as well as its composition: what people are buying.
However these changes need to be kept in perspective and set against the backdrop of cultural and religious factors.
Developments in meat consumption patterns are an obvious example where religious factors are playing a big role.
Hindus account for approximately 80 per cent of India’s population, and around 25 - 30 per cent are strict vegetarians. 54 Hinduism forbids consumption of beef - indeed, beef slaughter is prohibited in all but a few states - while India’s Muslim population does not eat pork.
The two segments that are growing fastest are chicken and goat meat - both of which are free from religious prohibition albeit still not eaten by strict vegetarians. Nevertheless, overall consumption of meat remains limited. Per capita consumption is estimated to be just 3.4 kg / year.55 Source: INSTATE Pty Ltd
The growing reach of the media, especially television, has also influenced consumer buying behaviour. • Consumers across the country have become more aware of product choice and brands, with TV advertising on Doordarshan, the state owned channel, estimated to reach 82 per cent of the population.56 • The growing reach of cable TV has also brought global trends to younger Indians, influencing many to experiment with non ‐ traditional foods and adopt more open attitudes to sampling a wider range of foods.
Box 5.2: Moving Up Market
“We have a new joint venture with a foreign partner. Our product will hit the market later this year. It will be fresh orange juice with no preservatives. Initially we are focusing on the domestic market, but eventually we will export.”
“Before embarking on the project, we did a thorough benchmarking study of costs and quality. Even when imported product comes in, we will have nothing to fear. This product will leave the current Indian market leader way behind.”
“We are leading the market and our customers into new territory.”
Source: Executive, State Owned Corporation, INSTATE Interview
54USDA/ FAS 55 Euromonitor - Asian Consumer, 1997 56 The EIU
44 The differences in the consumption patterns of younger and older Indians was highlighted in a study on the attitudes of Indian middle class consumers (defined as urban consumers with an average monthly income of at least A $ 83 ) towards processed food and beverages. The study, conducted by AMR:Quantum Harris, Harris Research‐India and Infoplan‐Japan in 1995 ‐ 96, revealed that consumers in the 18 ‐ 24 year age group consumed considerably more processed foods than those in the 45 ‐ 54 year age group.
Figure 5.1: Consumption Patterns: Percentage of Regular Product Users
18 - 24 years 45 - 54 years
Savoury 37% 12% biscuits
Carbonated 25% 9% soft drinks
Chocolate 23% 4%
Sweets 27% 7% & toffees
Potato 28% 13% chips
Instant 30% 11% coffee
Source: India SCAN - 1995 - 1996, Foods and Beverages and the Indian Middle Class Consumer
Other anecdotal evidence in support of changing consumption patterns reveals for example that: • There is a marked increase in the consumption of packed tea. While loose tea consumption grew at an annual average rate of 3.5 per cent from 225 million kg in 1980 to 377 million kg in 1995, the consumption of packed tea grew at an annual average rate of 6 per cent, from 91 million kg to 218 million kg in the same period. 57 • Nearly 200 million people with disposable incomes eat out at least once a week.58 • The food service market is currently estimated to be worth US $ 133 million in just the four biggest cities of Delhi, Mumbai, Calcutta and Chennai.59 • Per capita consumption of poultry is increasing. Consumption grew at an annual average rate of 7.3 per cent between 1990 and 1995.60
57 The Hindu Business Line, September 19, 1996 58 The Hindu Business Line, July 29, 1996 59 The Hindu Business Line, August 21, 1997
45 Box 5.3: The Indian Alcohol Market
The alcohol trade in India is vexed and faces a mix of religious opposition, tight restrictions and, sometimes, bans across the Indian states. However, it is not insubstantial. The vast majority of branded product is Indian produced, western style spirits, principally whisky.
Figure 5.2: Breakdown of Alcoholic Drinks Market 1993-94
Brandy Whisky 64% 17%
Rum 14%
Gin 4%
Vodka 1%
In addition, about 200, 000 cases worth of whisky is imported in bulk and bottled in India. A further 400 – 900,000 cases are reported to be smuggled in.
Counterfeiting is rampant. One interviewee recalled that tests were once done on 12 branded whiskies – each was fake.
Wine consumption is small but slowly increasing. There are a handful of local wineries – with French and other foreign expertise. By volume, most imports are of sparkling wine, but amounts are not large. In 1995 – 96, total imports of wine were valued at approximately A $ 2.3 million. To date, the vast majority of imported wine has been for foreign hotels but some broader interest is stirring.
Source: Food Processing Industry in India, INSTATE Interviews, Ministry of Commerce
5.2 INDIA’S ‘CONSUMER CLASS’ Growing disposable incomes and exposure to media are creating a new ‘consumer class’ in India whose buying behaviour differs significantly from that of their counterparts of a decade ago, But companies targeting the Indian consumer need to have a clear understanding of: • the size of the consumer class market • the effective purchasing power of a member of India’s consumer class and the thresholds that differentiate the diverse group of consumers who are often lumped together as representing the middle class in India Figure 5.3 below provides a segmentation of the Indian consumer based on average annual earnings. In order to better illustrate the effective purchasing power of
60 Euromonitor, Asian Consumer 1997
46 Indian consumers, the figure also provides a perspective on the likely ownership of consumer durables by members of each consumer segment. The ownership patterns are representative of a typical urban family in each segment. This is because incomes and the resultant purchasing power differ greatly in India depending on origin and location. There is no income tax on agricultural income and many traders and professionals are able to avoid much of their nominal tax burden. Moreover, housing, transportation and social conformity costs vary between locations. A given income in Delhi leaves much less for spending on consumption than it would if it were earned in a smaller town or village. By implication therefore, we can assume that families in non‐urban locations probably have higher effective spending power than urban families with the same nominal incomes. Based on income figures and some broad ownership patterns, it is reasonable to postulate that for most foreign manufacturers of consumer goods, the 57 million people who represent the 10 million households earning more than A $ 2,695 per annum constitute the initial target population of consumers.
Figure 5.3: Segmentation of consumers by purchasing power:
THE INDIAN CONSUMER AVERAGE OWNERSHIP OF ANNUAL CONSUMER INCOME, DURABLES 1994 Fastest growing group of consumers Conspicuous consumers - own a wide range of basic gadgets like food processors, washing The rich Over A $ machines and colour TVs, music systems and 3.9 million households 3,740 (22 million people) refrigerators Most likely own a car
Emerging middle class 6.1 million households A $ 2,695 - Probably own some basic gadgets like colour TVs , The consuming (35 million people) 3,740 refrigerators and music systems but still acquiring class others Likely to own a scooter or car
Aspiring middle class Own a t least a B&W TV and some other simple 15.9 million households The climbers A $ 1,740 - gadgets like 2 in 1 music systems (91 million people) 2,695 Possibly own a scooter
Probably own a B & W TV, 2 in 1 40.6 million households A $ 870 - The aspirants radio, bicycle (231 million people) 1,740 Rarely buy other consumer gadgets
90.5 million households Less than A May own a B & W TV, bicycle The poor (516 million people) $ 870
Target consumer class
Source: NCAER, Ernest & Young, Various News Clippings, Interviews, Instate analysis Note: Exchange rate assumed: 1994: 1 A $ = 23 INR, (rounded to the nearest number)
This analysis does not take into account the impact on consumption trends of income earned in India’s “black economy”. Estimates of “black money” vary widely and the very nature of the problem makes it impossible to provide any reasonably credible
47 figures. Various sources inflate the above estimate of 57 million consumers by between 25 and 120 per cent.61
Box 5.4: Estimation of the Size of India’s Consumer Class: Methodology
Most estimates of India’s consumer class are based on the income surveys conducted by the National Council for Applied Economic Research, (NCAER). As the graphic above shows, the NCAER income distribution survey segments households into five categories based on their average annual income. The 1994 survey estimates that there are 10 million households in the upper middle class and high income groups, earning at least A $ 2,695 per annum.
Based on the assumption that there are an average of 5.7 people per household, this provides a consumer base of 57 million people. Foreign companies evaluating the Indian market should consider this group as reflecting the size of the ‘consumer class’ market in India.
Many estimates of the “consumer class” in India however use lower annual average income limits that include all households earning at least A $ 1,740 per annum. In doing so, the number of households considered to be in the “consumer class” grows to 26 million households or 148 million consumers. It has become commonplace to talk about this extended group of people as the ‘large and growing middle class’ in India. However, foreign and domestic marketers must realise that the term is misleading. This widely defined middle class in India is not comparable to the middle class in developed countries. Many in the income group between A $ 1,740 and A $ 2,695 have just started to buy and own staple consumer products and consumer durables. Income earners in this category are sometimes not even high school graduates. As the graphic above shows, for most western consumer goods companies, the more conservative estimate of 57 million consumers is probably more realistic, given typical ownership and consumption patterns.
Source: INSTATE Pty Ltd
61 USDA/FAS
48 5.3 THE GROWTH OF THE CONSUMER CLASS Another factor that excites consumer goods manufacturers looking at the Indian market is the growth rates for the different income groups. Comparative surveys done by the NCAER show that high income households had grown by a dramatic 160 per cent in the space of just five years; while upper middle class households had grown by 144 per cent and middle income households by 59 per cent. 62
Figure 5.4: Trends in Growth in Size of Income Groups: (Percentage change 1987-88 to 1993-94)
L, up to $ 870 (12%) LM, $ 870.1 - $ 1,740 (7%)
M, $ 1,740.1 - $ 2,695 (59%)
UM, $ 2,695.1 - 3,740 (144%)
H, Above $ 3,740 (160%)
0 20406080100
1987-88 1993-94 million people
Source: Consumer Market - EIU Business Operations Report, April 9, 1997 Note: Exchange rate assumed: 1994: 1 A $ = 23 Indian Rs (rounded to the nearest number) Key: : L = low income group, income up to $870; LM = lower middle income group, income between $870 and $1,740; M = middle income group, income between $1,740 and $2,695; UM = upper middle, income between $2,695 and $3,740; H = high income group, income above $3,740.
Perhaps as a reflection of these trends, there is a rapidly growing market for many luxury goods. Cellular phone ownership (costing A $ 633 ‐ A $ 1,266) escalated from zero to 50,000 in Delhi and Mumbai in 6 months. A new coffee table “interiors” magazine, with a print run of 15,000 ran out immediately, another (India Today Plus) has been launched with a 100,000 run (based on the top end of the 400,000 India Today market, (a kind of Indian Time magazine). 63
5.4 REGIONAL CONSUMPTION PATTERNS
“India is not a market, its in fact a series of markets and you can do business in just one part of it” 64
India is a land of diversity ‐ diversity in languages, religion, race, food habits, tastes and cuisine. Success for marketers of food products will therefore depend as much
62 The EIU, April 9, 1997 63 The EIU, May 3, 1996 Exchange rate assumed: 1997, 1 A $ = 27 INR 64 Mr. Colin Hook, Austrade Senior Trade Commissioner for South Asia, as quoted in Business Asia, 11 August 1997
49 on their understanding of regional differences as it will on an understanding of broader national or urban consumption trends. Most food marketers divide the country into four broad regions. The states within each region show some broad similarities in food consumption habits and attitudes. The Western Region Gujurat and Maharashtra, the two biggest states in Western India are leaders in industrial development. These states also have well developed infrastructure and the most affluent consumer base in India. With smaller cities like Pune attracting an increasing amount of investment, the affluence of the region as a whole is likely to grow dramatically. The Northern Region The Northern region is characterised by the presence of both the best developed and some very backward states. While a large part of the central northern belt covered by Madhya Pradesh, Uttar Pradesh and Rajasthan are underdeveloped, the major magnet for consumer goods companies is the rich belt around Delhi, Haryana and Punjab. This region is home to a very affluent consumer base likely to show rapid growth. The Southern Region The Southern states of Karnataka and Tamil Nadu have become increasingly popular both as a location for foreign investment and as growing consumer markets. The consumer base in the South is less affluent than that in the West and North but pockets in Chennai and Bangalore are likely to grow very rapidly. The Eastern Region With the exception of West Bengal, which has recently embarked on a process of economic reform, many states in Eastern India lag behind the rest of the country. Ethnic tension and insurgency also affect the North Eastern states. Many states in the North East are off limits to foreigners. The region as a whole has the least affluent consumer base in the country.
Table 5.1: Overview of Regions in India:
Region Representative Per capita Regional Megacity Income** Population West Mumbai Rs 13,112 122 East Calcutta Rs 6877 218 North Delhi Rs 17,068 309 South Chennai / Rs 8941/ 197 Bangalore Rs 8082 Source: Tata Services, DFAT Country Economic Guide, Various news clippings Notes: * INSTATE estimates based on 1991 population data; ** of state in which major cities located
50
5.5 KEY REGIONAL VARIABLES
“India is a taste market...... And the taste that an Indian really likes is the one closest to what is made at home.” Manufacturers will have to look at India as 25 different markets, like Europe... Success will then depend on designing products for local markets.” 65
Main meals in India still tend to be ethnic in origin and strongly regional in flavour. The North Indian staple is wheat, although rice is also eaten. In the South, the staple is rice. Both Indian and foreign companies are increasingly realising and responding to regional differences and preferences in tastes. For example, when Pepsi introduced its food products in 1990, it found that although snacking was well established in India, it varied widely in taste preference over regions. • murukku (a rice based snack) appeared to be the preferred snack in the South; • samosa (made from flour and vegetables) was a North Indian favourite; • dhokla (a wheat based snack) was the choice in the West. 66 Other examples include • Taaza Tea from Brooke Bond Lipton which comes in five regionally ‐ customised variations67; and • Dhara, a popular, branded edible oil, which comes in regional flavours: the company sells a groundnut variant in the west and mustard in the east. 68
Table 5.2: Overview of Some Regional Variables in Diet
Region Regional variations in diet West • Largely wheat based diet • High proportion of vegetarians • Dairy based sweets very popular • Groundnut oil popular cooking medium North • Largely wheat based diet • Significant consumption of poultry and meats
65 Harish Bijoor, Marketing Manager, Tata Teas, and Gallup QSA representative respectively, as quoted in Processed Foods, A & M, 30 November 1994 66 A & M, 30 November 1994 67 A & M, 30 November 1994 68 The EIU, December 1993
51 • Dairy based sweets very popular • Consumption of wide range of temperate fruit and vegetables (eg. apples, peas) • Mustard oil East • Largely rice based diet • Higher than average consumption of noodles and oriental‐style foods • Significant consumption of seafood • Dairy based sweets very popular • Mustard oil popular cooking medium South • Largely rice based diet • Significant consumption of seafood • Significant consumption of coconut and coconut based products • Preference for spicy and /or sour flavours? • Coconut oil popular cooking medium • Tropical fruit like bananas and tropical vegetables like yams are staple foods. Source: Instate Pty Ltd
The penetration figures for various foods from a national food survey conducted by IMRB (Indian Market Research Bureau) in 1994 serve to re‐emphasise the existence of regional differences. 69
Figure 5.5: Consumer Penetration of Food Products: Regional Variations (percentage)
Cheese Milk Drinks Noodles Packed Meat
North 5 22 23 8
East 3 31 51 2
West 6 21 12 2
South 4 39 12 2
Source: A & M, November 30, 1994
69 A & M, November 30, 1994
52 5.6 STRONGER OR WEAKER?
“Core food habits are not universal. Staple foods differ from culture to culture. More importantly, traditional societies have incorporated food into their socio‐economic framework...... Changes if any, are likely to occur in the peripheral and quasi‐meal areas relatively easily.” 70
There are three broad trends that need to be evaluated in order to understand the continuing impact of regionalism on food habits in India. • The first deals with the broad changes in consumption of various categories of foods across the country that is a result of growing incomes. • The second deals with the more limited changes in the consumption of fully processed products that are a consequence not just of income but also of regional differences in diet. • The third trend deals with the impact of urbanisation on the consumption of fully processed product, across the major metros of the country. There is growing evidence that rising incomes lead to broad changes in the consumption of different classes of foods, with proteins increasingly substituting cereals in average diets even in strongly cereal‐based cultures like Japan, Korea and China. India too has followed this trend with expenditure on cereals declining from 33 per cent to 25 per cent in urban India. More importantly, in rural India, cereal consumption declined from 50 per cent to 37 per cent while protein consumption increased from 16 per cent to 21 per cent, over a period of six years.71 These changes look set to spur the creation of a group of fresh / semi processed foods that is consumed nationally throughout the year. Some evidence of this is reflected for example in the growth of the egg and milk industries in India. Eggs are now available all through the year and consumed by all classes of society. The continuing presence of significant differences in regional diets would however imply that many of these fresh / semi processed foods will continue to be cooked and consumed in ways that are typical of a region. Therefore while rising incomes may change broad food consumption patterns across the country, regionalism will continue to influence the final form in which the food is prepared and consumed and to that extent will continue to limit the options for fully processed products on a national basis. This is especially so given the fact that 70 per cent of India’s consumer base still live in over 600,000 villages in rural India. These consumers may share many attributes with their urban counterparts with respect to the consumption
70 Vikram Kaushik, V.P., Marketing & Exports, Britannia Industries as quoted in Processed Foods, A & M, 30 November 1994 71 Food and Agriculture Integrated Development Action Report
53 of many consumer goods, but they can be expected to remain fairly conservative with respect to food habits, tastes and preferences, particularly for their main meals. The third trend to be seen in India is some convergence in urban eating patterns as the big metros become increasingly affluent, multicultural and global. This trend will be the one that influences the growth of nationally acceptable fully processed products. There is anecdotal evidence that increasing urbanisation and the urban consumer are influencing the consumption of certain categories of foods on a national but urban basis. Consumers in the urban multicultural metro markets of Mumbai, Delhi, Calcutta, Chennai and Bangalore are, for example, more aware of the growing number of packaged ‘ready‐to‐cook’ regional foods ‐ like packaged powders for dosas, (rice pancakes), vadas, (rice dumplings) and gulab jamuns, (traditional sweet). More importantly, the fact that they are packaged for ease of preparation has led to an increase in the consumer’s willingness to try foods from different regions, thus initiating a move towards some convergence in eating habits with the spread and acceptance of products from other regions within India. There is also a segment of highly educated and affluent consumers in urban markets who are strongly driven by ‘health conscious’ tags that can be used to promote foods from other regions or even from other cultures. The significant growth in the consumption of sunflower oil (promoted as a healthy alternative to other cooking mediums) in urban markets over the last decade is perhaps just one example of this trend. Markets for “nationally acceptable” semi / fully processed foods will therefore probably grow, helped along by the multicultural, high income elite in urban markets as well as by institutional sales (hotels, restaurants), but it will reach a natural barrier, without a discontinuous change in national attitudes. At this stage the first two trends discussed above can be expected to be the more dominant ones. The Indian consumer can therefore be expected to consume more protein rich food giving rise to new country ‐ wide markets for the supply of commodities / fresh produce. Fully processed products will however continue to be influenced by regional preferences in tastes. Given the significant size of the more conservative rural market, regionalism is likely to remain a significant force influencing eating habits at least over the next decade, especially for main meals like lunch and dinner.
54
Box 5.6: Traditional Health Food
Some western notions of ‘healthy eating’ can be seen making their presence felt in Indian food markets. For example, white oats have long been regarded as a “western style health food” in India. Soya products in the form of dried / dehydrated soya cubes and soya milk are also popular. The growing popularity of cereals like Kellogg’s or the cheaper and more popular Indian version made by Mohan Meakins is another example.
But these developments are minuscule when compared to the market for traditional Vedic health foods. Like China, India has had a long tradition of health foods and supplements that are based on traditional herbal recipes that fall within the ayurvedic system of maintaining health and well being.
Ayurveda treats the patient as a whole rather than address a specific symptom. The fundamental premise underlying the ayurvedic system is that all health problems are the result of a dysfunctional digestive system. Ayurvedic medicine and health supplements therefore focus on prevention and maintaining a healthy digestive system. The most well known of these supplements is ‘chavanprash’, a blend of 42 herbal ingredients.
Ayurveda has received a significant amount of international attention and exposure as an alternative approach to prevent ill health and regain health. It is a well accepted alternative in India as well. Indian companies have been fairly active in the market for traditional health supplements. Dabur, a 114 year old Delhi based company is the most well regarded name in the traditional health supplements market. Anecdotal evidence indicates that the company is sprucing up its act and the format of its products in order to retain its customers especially those in the urban markets who have access to a growing range of alternatives to Dabur’s products.
Traditional supplements should continue to account for a dominant share of the health food supplements market over the next decade.
Source: INSTATE Pty Ltd
5.7 FROM CITY TO COUNTRY
THE BIG FIVE Many of the changes taking place in Indian fully processed food consumption are driven by lifestyle changes, increasing globalisation and attitudinal shifts particularly in the big five urban metros of Mumbai, Delhi, Calcutta, Chennai and Bangalore. While rural consumers constitute a significant segment for many fast moving consumer goods, they should not be expected to be major drivers of change especially for processed foods that are still considered “western”, as there are few if any changes in lifestyle or attitudes. The exceptions would be: • sales of packaged / branded semi processed or fully processed traditional food products like wheat flour and Indian snacks that were previously sold loose; and • packaged non traditional products that have mass appeal like biscuits or confectionery
55 Affluent consumers, rural or urban, would be willing to pay a higher price for quality and reliability for such products. While the big opportunities in the near term are expected to be in packaged semi processed traditional foods, there will exist other pockets of opportunity as urban eating habits change, and the demand for convenience foods increases.
“Today only 3 per cent of urban homes have domestic help. The percentage of working women is increasing. So women will spend less time in the kitchen…. “ “To target this market we have launched Real Fruit juices, Homemade cooking pastes and has joint ventures for cheese, baked foods and snacks. 72
SMALLER CITIES AND TOWNS Over the last two decades, India has been experiencing a growing metropolisation, with smaller towns like Pune, Nagpur and Baroda emerging as mini metros and commercial centres in their own right. Typically, consumers in the smaller metros rapidly adopt trends that start out in the big five metros. Often these consumers are faced with similar lifestyle issues and have higher disposable incomes as their cost of living is lower. This makes them prime targets for manufacturers of fast moving consumer goods. The chewing gum market in India is a case in point. The Indian edible gum market grew at an annual average rate of 50 per cent between 1993 and 1996. One study estimates that the edible gum market (chewing gum and bubble gum) expanded four fold during this period, from A $ 13 million in 1993 to A $ 52.8 million in 1996. There are now at least 2 multinationals competing with four domestic players for market share. The players are unanimous in their view that for the gum market to grow significantly in the future they will have to reach out to smaller towns. Perfetti, the first foreign entrant into this sector now has a distribution network that covers not just the six metros of Delhi, Mumbai, Calcutta, Chennai, Bangalore and Hyderabad, but also 300 towns with populations of over 100,000 people.73 According to a company executive, growth in demand from the smaller towns has doubled ‐ from 12 per cent to 25 per cent in just the past one year. 74 Confiteria, the other major foreign player has 400 ‐ 500 distributors on its rolls covering more than 2000 cities and towns.75
72 Kartik Raina, head of Foods Division, Dabur Foods cited in The Gravy Train, Business World July 7, 1997 73 The Hindu Business Line, August 7, 1997 74 Business World, February 16-28, 1997 75 The Hindu Business Line, August 7, 1997
56 RURAL AREAS Rural India accounts for about two‐thirds of the country’s annual private consumption expenditure, worth A $ 88 billion in 1996.76 Marketers of fast moving consumer goods in India are increasingly recognising the worth of rural markets. The NCAER survey indicates that there are 4.3 million households (accounting for 24.5 million consumers ) in rural India, earning over A $ 2,695 per annum. Several years of good monsoons, improved agricultural and irrigation practices, debt relief for farmers and better procurement prices have all combined to create a rural middle class willing to spend its money. Its spends not just on traditional ‘rural’ products like portable radios, black and white television sets, bicycles, watches, sewing machines and washing cakes but also on more urban lifestyle oriented categories of products like shampoos, skin creams, health drinks and soft drinks. While the potential of rural markets may appear enormous, servicing them comes at a significant cost. For one, data on rural markets are scarce, outdated and not too comprehensive. Many companies seeking to understand the rural segment are therefore forced to set up special cells dedicated to carrying out surveys and market studies in rural areas. Probably more important are the higher transportation costs ‐ estimated by one foreign multinational to be 7 per cent higher than for sales in urban centres.77
5.8 IMPLICATIONS FOR FOOD MARKETERS
TARGET MARKET There are an estimated 32.5 million people living in urban households with annual incomes of A $ 2,695 or more. These consumers are spread across the six major metros of Delhi, Mumbai, Calcutta, Chennai, Bangalore and Hyderabad and over 3,600 smaller cities and towns. This group of consumers would typically represent the initial target group for companies selling processed food products. In most instances, they would also represent the initial target market for an Indian company that purchased imported intermediate products for further processing into non‐ traditional foods.
KEY DETERMINANTS OF SUCCESS Taste / flavour and price will be key determinants of success for a foreign food company across all markets, rural and urban, in India.
76 Business World, February 16-28, 1997 Exchange rate assumed: 1996, 1 A $ = 28.4 Indian Rs. 77Business World, February 16-28, 1997
57 Fifty years of post independence isolation, have resulted in an Indian palate that is accustomed to traditional foods. For the foreseeable future, the most successful processed food products look set to be those that are tailored to include Indian spices and traditional ingredients. In addition to traditional tastes, there are other social factors, such as vegetarianism, which affect consumption, even in urban India. We have a western format: a chain store selling croissants, cakes and other baked products. However Indian tastes are strong. Our most popular fillings for croissants are ‘Indianised’: they include tandoori chicken, manchurian chicken and chilli chicken.78
Perhaps the biggest stumbling block that many food multinationals will encounter in India is the high degree of price sensitivity, especially for fully processed food products. While western‐style products are gradually flowing onto food store shelves, there are growing signs that some foreign companies have over‐estimated the premiums that are available for foreign branded product, especially when there are competitively priced local products of reasonable quality.79
78 General Manager, major bakery producer; INSTATE interview 79 Business World July 7, 1997
58
Box 5.7: If the Price is Right
Maggi noodles is a classic case of the impact of price sensitivity on product sales in India. As the graphic below shows, sales of Maggi noodles increased dramatically when price was slashed from 32 cents to 25 cents per pack, in 1993.80
Fig 5.5 Impact of price on the consumption of noodles (sales in metric tonnes)
20000
Price reduction 16000 from 32 cents to 25 cents 12000
8000
4000
0 1995 1987 1989 1991 1993
Source: Food and Agriculture Integrated Development Action Report
80 Exchange rate assumed; 1993 1 A $=21 INR (rounded to the nearest number)
59 6. Distribution and Retailing
6.1 DISTRIBUTION: AN OVERVIEW India is a vast country, spread over 3.3 million square kilometres, stretching 3,200 kilometres from north to south and 2,800 kilometres from east to west. Significant distances separate the six most populous cities of India. Outside the major metropolitan areas, India is an intricate network of smaller towns and villages. The government’s 1991 population census, (the latest available) suggests that there are over 3,700 designated towns and more than 600,000 villages ‐ many serviced by only the most rudimentary infrastructure. Distribution therefore represents one of the most complex issues for new entrants in India’s food market.
Figure 6.1: Population Breakdown by Location: 1991 (Percentage, Million)
100 % = 846 million
Towns 12.5 %
Cities 13.2 %
Villages 74.3 %
Note: Cities defined as urban locations with a population base of 400,000 or more, in 1991 Towns defined as locations with populations of between 5,000 and 400,000 in 1991 Villages defined as locations with populations of less than 5,000, in 1991
Source: Tata Services, Instate analysis
Distribution networks differ significantly depending on the nature of the product and the type of retail outlet. This chapter outlines the distribution channels for retail and food service segments, for: • fresh and bulk products; • branded / fully processed products; and • imported food products.
60 6.2 DISTRIBUTION OF UNBRANDED BULK COMMODITIES
CURRENT ISSUES Distribution networks for unbranded bulk foods are typically multi‐layered and very inefficient. Distribution of pulses and grains for example takes place through at least five intermediaries, which results in an increase in margins of 35 ‐ 50 per cent between farm and retail prices. Similarly the distribution of fresh fruit, vegetables and livestock involves six intermediaries leading to a three‐fold increase in price between the farm and retail outlet. 81 Distribution of dairy products has improved over the last decade with the creation of dairy co‐operatives that manage the total system of processing and marketing milk and milk products on their own. However, as discussed in chapter 3, the co‐ operatives account for only 15 per cent of liquid milk sales.82 In the unorganised dairy sector there are still at least four intermediaries between the milk producer and the processor, implying that there is significant scope for improving the procurement practices of downstream milk processors. 83
Figure 6.2: Distribution Channels for Bulk Food Commodities:
DISTRIBUTION CHANNEL FOR BULK FOOD COMMODITIES ( EG. RICE, EDIBLE OIL)
Mark up of 35 % - 50 % between farm and consumer
Farm Commission Trader Processing Wholesaler Retailer Consumer Agent unit
DISTRIBUTION CHANNEL FOR FRESH FRUIT AND VEGETABLES
Three fold rise in price between farm and consumer Farm Village Commission TraderCommission Wholesaler Retailer Consumer consolidator Agent Agent
Source: USDA, Asia Intelligence Wire, July 9, 1997
81 The Financial Times, Asia Intelligence Wire, July 9 , 1997 82 India Business Information Service 83 TheFinancial Times, Asia Intelligence Wire, July 9 , 1997
61 IMPORTED COMMODITIES Traditionally, India’s imports of bulk food products were limited to a few commodities and almost always ‘canalised’ through designated import agencies which then distributed the product to downstream processors or through traditional domestic marketing channels to consumers. Imports of wheat, for example, have been canalised through the Food Corporation of India while oilseeds have been traditionally been handled by the State Trading Corporation and Hindustan Vegetable Oils Corporation Limited. By 1997, the only food products officially subject to canalisation were coconut and palm oil, palm stearin, oilseeds and cereals. Once imported, the domestic distribution channels for imported bulk commodities are essentially the same as for domestic commodities as outlined above.
FUTURE TRENDS The first signs of change in the current distribution structure are coming from food processors that are seeking to rationalise up stream procurement to improve product quality and reduce costs. This trend can be expected to grow in the years to come. A recent study on the food sector in India emphasises the importance of eliminating current inefficiencies. It estimates that over the next ten years A $ 51.9 billion would need to be invested across the food chain ‐ from ‘paddock to plate’ ‐ in order to capitalise on the potential of the country’s underlying agricultural wealth. Approximately A $ 14 billion of this will be required for investments in improved raw material procurement and post‐production distribution systems. 84 Over the next few years, it is likely that the canalisation and licencing85 system for imported commodities will continue to be wound back. This will create the opportunity for more importers to participate in the trade.
6.3 DISTRIBUTION OF BRANDED PROCESSED FOOD There are two primary forms of distribution for fully processed food in India today. • Exclusive distribution networks used by many larger Indian companies and some large multinationals like Pepsi. • Contract distribution performed by distribution houses and used by many smaller companies and recent foreign entrants.
84 Food and Agriculture Integrated Development Action Report Average exchange rate assumed: 1 A $ = 27 INR 85 see Appendix A
62 OWN DISTRIBUTION NETWORKS: Large food companies that have developed their own distribution networks typically use both distributors and wholesalers to service the retail network. Both distributors and wholesalers work on low margins and are often family‐run operations. The graphic below provides an overview of this distribution system.
Figure 6.3: Distribution Network Developed by Large Indian Consumer Goods Manufacturers:
FLOW OF PRODUCT SIZE OF OPERATION EXAMPLES
150 - 300 field sales • Hindustan Lever employs Manufacturer staff to monitor 300 field salesmen to (A $ 4) distributors, nationwide monitor 4,500 stockists nationwide, who supply Distributor 500 - 600 Distributors, products to retailers, nationwide nationwide. (A $ 4.12 (A $ 4.18) - 4.16) • Proctor and Gamble 1,000 - 1,500 employs 120 field staff to Wholesaler Wholesalers, nationwide supervise 250 stockists who sell to 361,000 (A $ 4.28 Large retailer retailers. - 4.32) 1.2 Million retailers, nationwide, (2/3rd Small retailer urban, 1/3rd rural) (A $ 4.45) Consumer
Figures in brackets represent distribution margins
Source: EIU
Distributor’s salesmen cover about 60 per cent of retail outlets for most major companies manufacturing consumer goods. The rest is covered indirectly through a network of wholesalers.86 Unlike distributors, wholesalers do not sell directly to customers. Their function is limited to stocking a range of products, often from competing manufacturers, for small and rural retailers. The price paid by a retailer to a wholesaler is largely dependent on the demand ‐ supply situation for each brand and the negotiating power of the retailer. Typically, small retailers pay more. For most companies, however, developing their own distribution networks is both a time consuming and an expensive proposition. It is estimated to have cost Pepsi’s operations in India close to A $ 4 million. Several recent joint ventures or acquisitions by foreign companies reveal that the primary factor governing choice of local partner / acquisition was the local company’s distribution network. Examples include Coca‐Cola and Parle (soft drinks), and Walls and Kwality (ice cream).
86 The EIU, December 1993
63 CONTRACT DISTRIBUTION Many smaller companies do not have the capital to invest in either developing their own distribution networks or in acquiring one. These companies tend to “piggy ‐ back” on a local contract distributor until they are strong enough to go it alone. There are two types of contract distributors: • Specialist contract distribution houses which use their distribution networks to distribute both their own products and the products of several other companies. (eg Voltas and TTK) • ‘Opportunistic’ distributors: firms that are not specialist distributors but enter into ad hoc deals to distribute other companies’ goods on a one‐off basis for a short period of time.
Figure 6.4: Typical Contract Distribution Network:
FLOW OF PRODUCT EXAMPLE - VOLTAS’ CONTRACT DISTRIBUTION SYSTEM
Manufacturer • Voltas’ distribution system is (A $ 4) managed by four zonal offices, nine branches and 20 offices across the C & F Agent of country. Distribution House • The network has one carrying and (A $ 4.48) forwarding agent in each Indian Stockist state. (A $ 4.68 - 4.88) • C & F agents supply products to 2000 stockists situated nationwide. Large / small retailer • The stockists in turn on-sell to (A $ 5.28) 100,000 retail outlets that cover both rural and urban markets. Consumer
Figures in brackets represent distribution margins
Source: EIU
Companies usually seek third party distribution agreements in order to: • Gain instant and inexpensive access to a nation‐wide consumer base with relative ease. They thereby avoid the lead‐time of 2 ‐ 3 years that would be needed to set up their own distribution network. • Overcome inability to attract an adequate number of distributors who will get their goods to consumers across the country, (because of own size constraints.) • Overcome gaps in local knowledge and experience base, or funds, to set up a nation‐wide distribution network. Marketing costs are high and are likely to rise as the need grows to create brand awareness. Earlier shortages created a demand that was sufficiently strong to sell products regardless of their quality or
64 consumer perception. That is no longer true of a market that is being opened to competing consumer brands.
DISTRIBUTION OF FOREIGN BRANDS Over the last four or five years, foreign companies have increasingly chosen either contract distribution arrangements or joint ventures with Indian companies ‐ forging alliances with companies that already have sturdy distribution infrastructure in place.
Figure 6.5: Contract Distribution: A Low Investment Approach for Foreign Companies
COMPANY/ CONTRACT COMPETITIVE PRODUCT DISTRIBUTOR ADVANTAGE
Instant access to a network of of 1,200 Wrigley’s Parry’s dealers and 103 sales personnel covering chewing gum sweets over 250,000 outlets nation wide.
Mount Everest GEEP Instant access to a network of of 1,550 Mineral Water Industrial distributors and 310 sales personnel Syndicate covering over 300,000 outlets nation wide. Meiji Seika’s Parry’s Instant access to a network of of 1,200 Hello Panda sweets dealers and 103 sales personnel covering (chocolate over 250,000 outlets nation wide. cream filled biscuits)
Source: The NTDB, Business India, The Hindu Business Line
Although contract distribution is an attractive alternative for many companies, there are some pitfalls in using contract distributors to distribute products. Choice of retail channel – The chances of success in using a contract distributor are maximised if the products handled by the distribution house are fully ‘compatible’ ie they go to the same retailers. Synergies are much smaller with ‘non‐compatible’ products. Conflict of interest ‐ The distribution company’s salesmen invariably pay more attention to their own products. This means other companies’ goods get short shrift. Consequently, as companies’ operations attain a certain size, there is a natural tendency for them to consider setting up their own distribution networks. Incomplete feedback loops ‐ Distribution houses can provide nation‐wide reach but not consumer feedback. For example, Voltas ensured easy availability and unprecedented products promotion for Ju‐C, manufactured by a joint venture
65 between the Kotharis and General Foods. However, the Indian consumer did not accept the product and its small‐scale sachet packaging but feedback on this problem to the manufacturers was poor.
IMPORTED CONSUMER PRODUCTS Historically, importation of consumer food products had been banned. A few exceptions existed including for example, dried fruit and nuts like almonds and raisins. Much of this was however imported in bags / cartons for wholesale sale rather than in consumer ready retail packs.87 Exemptions from this ban were available to diplomatic commissariats and the foreign exchange‐earning hotel sector. Diplomatic commissaries have always been allowed duty free imports of food products for their own consumption: this community’s needs continue to be serviced by a small number of licensed food importers / distributors who operate 10 ‐ 12 bonded warehouses.88 For an outline of channels to the hotel sector see Food Service below.
6.4 MANUFACTURING AND PACKING As the number of foreign investments in food manufacturing increases, and as local firms respond to this competition, demand for specialised ingredients will increase. At present, imports of intermediate food products are either banned or tightly restricted by licensing and high duty rates. However as import restrictions are eased, opportunities will emerge for foreign and domestic suppliers. In the case of imported product, a number of supply channels can be expected to emerge: • direct supply is likely to be an attractive option, especially to foreign food manufacturers with operations in India and with whom suppliers may have existing relationships ‐ servicing other markets; • direct supply of ingredients to big domestic players is also likely; • however as the market matures, and if demand for imported ingredients for the plethora of mid‐sized food processors grows, then domestic distributors and wholesalers are likely to be important channels to end‐users. Domestic subsidiaries of multinationals and other large local manufacturers can also be expected to step up direct imports of ingredients or bulk product for repackaging and resale.
87 USDA/FAS, July 1996 88 The Financial Times, Asia Intelligence Wire, July 9, 1997
66 6.5 FOOD SERVICE The hotel industry has emerged as an important niche market for imported fresh and value added products. Special import licenses enable the industry to import food products for their own consumption against foreign exchange earnings. Import of a wide range of fresh and value ‐ added products is permitted. Exceptions include beef products, mineral water, carbonated soft drinks, beer and gin.89 With duties on food products imported by hotels falling from over 200 per cent in 1991 to less than 50 per cent today, hotels are increasing their sourcing of these products. The luxury hotel industry as a whole is also growing at a steady rate. Between 1992 and 1994, the total number of luxury / five star and heritage / palace hotels increased from 101 to 113, registering an annual average growth rate of 5.8 per cent. Rooms at luxury / five star and palace hotels grew at an annual average rate of 6.1 per cent, increasing from 16,086 rooms in 1992 to 18,122 rooms in 1994. Foreign hotel chains have shown increasing interest in the Indian market as they are now allowed to own up to 51 per cent foreign equity in their Indian operations. Foreign chains currently operating in India with local partners including the ITT Sheraton, Hyatt International, Kempinski Hotels, South Pacific Hotels, Hilton, Four Seasons, Accor SA, Radissons and Quality Inn.90 In 1996, imports of fresh and value added food products into the hotel segment were estimated to be worth A $ 13.3 million and growing at an annual rate of 20 per cent ‐ 25 per cent per year.91 One major hotel chain has started to import fresh fruits and vegetables every week. Another major group estimated that the share of imported food products in its total food basket climbed from 25 ‐ 30 per cent before 1993 to 55 ‐ 60 per cent in 1995.92 When imports by the hotel sector were first permitted, hotel buyers purchased all their imported foods from export consolidators located in overseas markets. These consolidators ship an assorted range of products that meet the hoteliers’ requirements directly to them, often on a monthly basis. This arrangement allowed hoteliers to buy small quantities of assorted items and reduced storage and space requirements. Most consolidators serving the Indian market operate from Singapore, the Netherlands, Germany, England, Dubai, Australia or New Zealand.93 Since 1996 bonded warehouse distributors who typically supply the diplomatic community have also been allowed to supply to the hotel industry.94 The entry of
89 The Financial Times, Asia Intelligence Wire, July 9 , 1997 90 The Hindu Survey of Indian Industry 1996, C & I Guide, 1996 91 USDA/FAS 92 AGEXPORTER , January 1996 93 AGEXPORTER, January 1996 94 The Financial Times, Asia Intelligence Wire, July 9 , 1997
67 locally based players will permit a degree of specialisation ‐ consistent with the growing scale of imports. While it is clear that Indian Government policy is to encourage local sourcing of product ‐ and the hotels generally see this as a desirable long‐term objective, there are gaps in the market. Examples include portion control foods and food service packs and specialised products for which hotels are willing to pay a premium for quality such as pre‐mixes and specialised bakery fats.95
Box 6.1: Food Service: A Developing Market
The range and quality of specialist food service products that are available to purchasers outside the ‘foreign’ hotel sector in India is very limited.
For this reason one major flight kitchen in Mumbai, still does most of its ‘primary processing’ in-house - for example, deboning of fish, shelling of prawns and peeling of potatoes.
The same kitchens also produce large quantities of baked goods for their catering operation and for sale in dedicated retail outliets. They find that local flours and yeasts are not of consistent, high quality. Some foreign suppliers that have or are building operations in India can provide better quality product but the duties are too high for that to be sustainable.
Direct import is not possible because the flight kitchen doesn’t have an import licence - it is not a forex earner.
Pending an easing of duty rates, the removal of licencing and or the arrival of domestic (or foreign invested) producers of the range of products needed, they make do with the available local supplies.
Source: INSTATE interviews
In most developing Asian countries, the fast food sector has been a major driver of growth in imports of food products. In India, the ‘modern’ fast food sector is still relatively small (Table 6.1). Moreover, imports of inputs by the fast food sector have basically been banned. However liberalisation of import restrictions, when they occur, are likely to see the fast food sector emerge as a direct importer of some ingredients and raw materials.
95 Instate interview, January 30, 1997
68 Table 6.1: A Selection of Major Foreign Players in the Indian Fast Food Sector Name Concept Comment Wimpy’s burgers etc. 25 (plus 3 new outlets in 1997) KFC chicken 2 (in Delhi & Bangalore) Pizza Hut pizzas 2 (in Delhi & Bangalore) Domino’s Pizza home delivery 5 (in Delhi) pizzas McDonalds hamburgers 7 (4 in Delhi & 3 in Mumbai) TGI Friday Italian, 1 (in Delhi) Mexican and Oriental food Hard Rock Cafe First outlet expected by year end Source: EIU Business Reports, The Hindu Business Line, The Wall Street Journal
6.6 IMPORT LIBERALISATION Liberalisation of food imports is on the way. The state of play with the liberalisation process ‐ and India’s negotiations within the WTO framework ‐ is outlined in Chapter 7 below. In the short to medium term, the consequences of liberalisation are likely to include: • the steady whittling away of canalisation and licencing restrictions: thus opening opportunities for more domestic players to become involved in import of bulk, intermediate and, ultimately consumer food products; • more direct importing, especially by foreign and domestic manufacturers, the food service sector ‐ initially those players that earn foreign exchange, but eventually also including the domestic food service sector and by the emerging modern retail sector (see below); • notwithstanding the above, new opportunities for existing players like bonded warehouse licensees who are currently servicing the ‘foreign’ hotel sector and will have a head‐start in terms of established infrastructure and market knowledge; • some speeding up of the rationalisation of the multi‐level distribution system profiled above.
69 6.7 RETAILING: AN OVERVIEW “My mother’s generation bought a year’s supply of wheat and stored it in the house; my wife buys a week’s worth of grain and has it ground at the local mill; my daughter is quite happy to buy packaged bread.”96
“There are three Indias: one that is internationalised, one that is moving towards it and one that is traditional. Finding which market best suits a product is the ticket for retailing success”.97
Traditional, formats, structures and systems, especially, the ubiquitous small mom‐ and‐pop stores, still dominate retailing in India. However, the emergence of a wider range of branded products is occurring hand in hand with the development or importation of new urban retail formats. Change has already been substantial but looks set to accelerate over the next decade.
WHAT HAS CHANGED? The most visible change on the retail front has come from the proliferation of brands over the last decade. For example, between 1985 and 1993, the number of packaged tea brands grew from 31 to 134 while detergent brands on the market increased from 26 to 50 and shampoo brands went up from 23 to 47.98 Today’s Indian consumer and retailer are both more sophisticated and knowledgeable about products and brands than their counterparts of a decade ago. One significant outcome of the proliferation in brands has been a gradual shift in power from manufacturers to consumers and retailers. Retailers increasingly sell their limited window space to the highest bidders of branded products and stock branded products that they know will move quickly. Today’s average Indian consumer is also wealthier. (For a detailed discussion of consumer incomes, see Chapter 5) Increasing brand awareness along with increasing affluence, changing lifestyles and growing media penetration are causing gradual changes to consumption patterns across the country. The most visible signs of change are evident in urban India. New outlets ‐ whether manufacturer owned (like Croissants Etc in Mumbai) or retail chain stores (like Food World in Chennai and Nanz in Delhi) ‐ are being developed in major urban centres to market food and other consumer goods to the growing middle class.
96INSTATE Interview, January 1997 97 Ajit Suryanarayanan, Director, Godfrey Philips India’s tea division, as quoted in EIU Business Operations Reports, April 9, 1997 98 The EIU, March 1, 1996
70 Estimates suggest that there are currently about 400 mini supermarkets like Food World across the country, typically located in the “larger” cities.99 Initial entrepreneurial efforts with supermarket chains failed to make profits as supermarkets were set up in wealthy neighbourhoods and targeted high‐income consumers while charging higher prices. There was little effort made to rationalise existing procurement systems or reduce operating costs. Moderate sales and high operating costs (10 ‐ 15 per cent of turnover), of which a significant component was probably real estate costs often eroded profitability. There is however, some evidence of increasing sustainability in the retail chain store business in India, as recent entrants have learned from the mistakes of earlier entrepreneurs. These new players have often sought international expertise to help develop mini supermarkets to sell products that provide value for money. Food World is a case in point. The company operates 10 supermarkets in Chennai and Bangalore and says it is achieving average margins of 18 per cent within 15 months of being in operation ‐ a target it had not hoped to achieve till the fourth year of operations (Box 6.2).100 The other emerging trend in urban retailing comes from the food service sector, where multinationals like McDonald’s and KFC are pioneers in India as elsewhere. McDonald’s is said to have spent four years before starting up in October 1996, working with various domestic suppliers who could create and deliver product to its specifications. The ingredients for a Maharaja Mac (the local version of the Big Mac) are 100 per cent Indian‐made. More than 98 per cent of McDonalds Indiaʹs other products are also sourced locally.101 These local suppliers can be expected to help promote rationalisation efforts in product distribution as they learn how to offer cost competitive products directly to supermarket chains as well as food service outlets.
WHAT HAS NOT CHANGED? While significant changes have occurred in product availability and some new formats are emerging in urban retailing, the essential structure of the retail sector in India remains unchanged. Small mom‐and‐pop stores (grocers and kirana stores) still dominate the retailing landscape. In 1992, the latest year for which data on the segmentation of retail outlets is available, small grocers accounted for 44.5 per cent of all retail outlets. (Figure 6.6) There are as yet no truly national department store chains in India. The only exception is the supermarket chain run by the government. All cities however, have well‐known market districts.
99 USDA/FAS, July 1996 100 The Financial Times, September 12, 1997 101 The EIU, April 9, 1997
71 Figure 6.6: Segmentation of Retail Outlets, 1992
100 % = 3.5 million outlets
Other 22.7 % Grocers & kirana stores 44.5 % Bakeries 4 %
Chemists 6 %
Cigarette Shops 7.8 % Department Stores 15 %
Source: The EIU
Like most distributors in India, retailers too typically operate a small, family run business. Figure 6.7 highlights the small scale, low cost, small margin, nature of the business conducted by these retail outlets. The small retailer’s basic value proposition is one of locational convenience and personalised service
Figure 6.7: Key Features of Small Retail Operation in India
Purchase / Site / Location Merchandising Logistics Store Operations Financials
350 - 700 sq. Owner is Long working Margins 10 % KEY 600 - 1000 ft. decision maker hours FEATURES SKUs (stock keeping units) Operating costs Residential Based on Often no formal very low areas - within Packs often instinctive feel billing Property 0.5 % walking tailored to for customer Salary 1.5 % distance from consumer need and current Builds loyalty Other 3.0 % consumer stock holding by added PBIT 5 % Quality of services like Minimal merchandise Shop delivery credit and home investment in (esp. by branded delivery decor unbranded) manufacturers below average Personalised Minimal Linkages with counter service “non-trading” Follows low wholesalers space price strategy. especially for Low paid / unbranded dry family personnel Low cost grocery property (Owned / Old Lease)
Source: Prospects for Organised Retailing in India - A Need for Partnership, Spencer & Co.
72 Rural retailing is another component of the retailing sector that has been largely unaffected by changes. While rural consumers who account for 74 per cent of India’s population represent an attractive market for consumer goods companies, most retail outlets are small, typically between 30 ‐ 90 square metres in size, and continue to operate along time tested patterns.102 Market estimates indicate that there are approximately 2.2 million rural retail outlets.103 Other surveys show that groceries constitute the largest share of rural retail outlets, followed by general stores, cigarette shops and chemists. In recent years the number of pharmacies has shown rapid growth, as they emerge as major outlets for cosmetics, toiletries and other fast moving consumer goods for which rural demand is escalating. 104 Selling in rural areas however remains difficult as inadequate infrastructure hampers consumer reach. Of the 600,000 villages in India, more than 60,000 do not have a single retail outlet of any kind, and twice this number have one or two outlets. Sparse populations and inaccessible roads further amplify the problems of accessing many segments of the rural market.105
GROWTH TRENDS IN RETAILING There are an estimated 1.3 million urban and 2.2 million rural retail outlets in India.106 Outlets are growing at an estimated annual rate of 5 per cent in urban areas and 8 per cent in rural areas.107 At these growth rates the total number of retail outlets is expected to exceed 5 million by the year 2000.108
102 The Far Eastern Economic Review, June 13, 1996 103 The Far Eastern Economic Review, June 13, 1996 104 The EIU, March 1, 1996 105 Business World, February 16 - 28, 1997 106 The Far Eastern Economic Review, June 13, 1996; Euromonitor – Asian Consumer 107 USDA/FAS, July 15, 1996 108 USDA/FAS, July 15, 1996
73 Figure 6.8: Growth Estimates for the Retail Sector, 1995 - 2000: (Million outlets)
5.0
1.8 3.6 Urban outlets 1.4
3.2 Rural 2.2 outlets
1995 2000
Source: FAS Online, The Far Eastern Economic Review
In other trends noted by various surveys, outlets are increasing, not just in number, but also in size, as the number of consumer products increases. Retailers are also becoming more consumer conscious and are sprucing up their shops, providing home delivery, shopping bags and telephone ordering.
6.8 FUTURE DIRECTIONS IN RETAILING It is unlikely that there will be dramatic changes either in distribution or in retail over the next decade. The most visible signs of change will be observed in the urban retail sector where the new retail formats that have emerged should experience further growth in response to changing consumer aspirations and needs. A study of urban consumer attitudes towards prevailing mom and pop retail formats concluded that the small urban retailer’s basic value proposition of locational convenience and personalised service was unlikely to sustain them in the years to come. The study found that there was a new need among urban consumers for the option to ‘self select’ based on their evaluation of a large range and assortment of quality products.109 This trend can be expected to increase as more urban consumers seek the same enhanced services. The RPG Group that commissioned the study is following up on
109 Prospects for organised retailing in India - A need for partnership, Spencer & Co.
74 its research findings through significant investments in new formats in the retail sector (Box 6.2). Fundamental changes in retailing that will affect the sector on a national basis will however only occur if inadequacies in the supply chain infrastructure, discussed in some detail in chapter 3, as well as in government legislation pertaining to the sector are addressed. Large retail chains will eventually have to be able to run high volume, low margins operations in India as they do elsewhere in order to grow their operations and reap profits. This cannot be achieved unless they can integrate backwards and rationalise their procurement systems through bulk buying from producers, processors, and manufacturers of fully processed products. Lack of distribution infrastructure and complicated legislation are likely to impede efforts by retailers in the near future. Distribution of food products remains complex: a deteriorating road network, lack of adequate refrigeration, a 9 tonne limit on truck size, excise taxes and octroi (city) taxes are just some of the factors that need to be urgently addressed for significant improvements to occur in retailing. Government legislation pertaining to the sector is ambiguous. This ambiguity extends to the issue of foreign direct investment in the sector, which is still handled on a case by case basis. At this stage, existing foreign interest in the retail sector is largely in the apparel and toy segments. There, foreign companies have either found master franchisees in India (for example, Osh Kosh), or tied up with local Indian partners to market their products (for example Walt Disney who have a 51:49 joint venture with the K.K. Modi Group).110 The absence of foreign retailers in the food sector is principally due to inability to gain government approval. In order to work their way around restrictions, foreign investors exploring opportunities in the food retail sector have opted for technical or advisory tie ‐ ups with local companies. Examples include Nanz (Germany) and Dairy Farm (UK/Hong Kong). As legislation is clarified and the prospects for food retailing improve, it is likely that more foreign retailers will emerge as players in the sector.
110 The EIU, January 21, 1997
75
Box 6.2: RPG’s Supermarket Sweep
RPG is one of India’s biggest family-owned conglomerates, with diverse interests ranging from power generation and tyres to financial services and telecommunications. The group’s 1996 annual turnover was worth A $ 2 billion.
The move into food retailing started with the purchase in 1989 of Spencer’s, a quality but loss making retailer based in Chennai. RPG bought Spencer’s primarily for its properties and had intended to wind down the retail operations. A modernisation experiment with one Spencer outlet in Bangalore however indicated that there was latent potential for dramatically increasing the chain’s turnover.
In September 1995, the company signed a technical advisory deal with the A $ 13.3 billion global retailing giant, Dairy Farm International. The long-term objective: to build a chain of 2,500 retail outlets in various formats. The immediate objective: to establish 200 supermarkets over the next five years.
In format, these supermarkets were to be different from prevailing formats in India. The concept of a supermarket in India is quite different from that in the west. An Indian supermarket is visualised as an outlet that sells everything from packaged food products to consumer durables; internationally, supermarkets restrict themselves to packaged foods, cosmetics, personal and household care products and crockery and cutlery. An average supermarket in the west occupies 25,000 sq ft of space and has between 25,000 - 30,000 stock keeping units (SKUs) on the shelves and well over 1,00,000 items in the purchase register. The corresponding figures for the RPG supermarkets are 6,000 to 8,000 sq ft; 5,000 to 6,000 SKUs and 20,000 items.
RPG plans to set up different kinds of supermarkets to cater to different segments. A supermarket catering to the mass market, for instance, needs to have fewer items than the one catering to the up- market segment. The size of the supermarket, the range of products available and the configuration will vary depending on the target segment.
To avoid high real estate costs, Spencer’s is not setting up any supermarkets in Delhi and Mumbai. Its initial target markets are Chennai, Bangalore and Calcutta. The company is looking at an average investment of A $ 370,000 to A $ 445,000 for a 6,000 to 8,000 sq ft. Supermarket. The overall investment in the venture is likely to be between A $ 92.6 million and A $ 111 million. This figure is based on the assumption that 25 per cent of the outlets will be on premises owned by the company, and 75 per cent on premises rented by the company.
In the two years since its tie - up with Dairy Farm, RPG has set-up ten Food World supermarket stores. Innovative marketing is bringing in consumers while bulk buying and the introduction of in- house brands is helping the group crack the supply chain and thus improve the margins on its SKUs. The retailing group is already turning over A $ 22.2 million a year. The group says it is hitting average margins of 18 per cent within 15 months of commencing operations. This is well ahead of target - it had not expected to reach these margins till the fourth year of operations.
RPG believes that supermarkets will complement existing retail outlets, not replace them.
Source: India’s Supermarket Sweep - The Financial Times, September 12, 1997 Supermarkets: Has their time come? - The Hindu Business Line, October 21, 1995 Average exchange rates used: 1 A $ = 27 INR, 1 A $ = 0.75 US $
76 7. Government Policy Trends
7.1 OVERVIEW The economic reform process that started in 1991 encouraged foreign investment and technology transfer, lowered import barriers on capital goods and facilitated agri‐product exports. It also heightened consumer, investor, and official awareness of the importance of developing India’s food processing sector. Food processing has since been declared a high priority sector and accorded a number of incentives with a view to enhancing investment and output. The Ministry of Food Processing, set up in 1988, is the primary body overseeing the development and implementation of policies and plans for the sector. The Ministry was carved out of several existing ministries including those for health, agriculture, industry, civil supplies and finance, all of which had responsibilities for different aspects of food production and processing in India. The Ministry is responsible for most though not all policies and plans for the sector. Some policy decisions continue to be made by other ministries with sectoral responsibility. Moreover, some food products still remain outside the ministry’s jurisdiction. One such product is vanaspathi, the traditional and widely used cooking oil made from hydrogenated vegetable fat. The Ministry’s priorities for the Indian food processing industry include: • development of infrastructure; • technological upgrading; • development of better linkages between primary producers and processors; • enforcement of quality standards; • expanding domestic as well as export markets for food processing industries. Over the last 6 years, considerable progress has been made in liberalising the domestic food processing sector. For example: • In January 1997, food processing was brought under the list of industries eligible for automatic approval of FDI up to 51 per cent. • Between 1991 and 1997, several items were de‐reserved (facilitating the way for many larger companies to build production capacity in the sector). • Efforts have also been made by the various ministries involved in the process to reduce tariffs, permit more imports of food products and rewrite outdated legislation.
77
Box 7.1 The Government’s Plans for the Food Processing Sector
A central government task force on food processing industries has projected investment in the sector during India’s ninth five-year plan (1997 - 2002) at A $ 10.7 billion. This is expected to generate employment for over two million people. The government hopes that A $ 9.2 billion of this investment will come from the private sector with the rest being met by funds from various central and state government bodies. 111
As noted in Chapter 4, between 1991 and 1997, the sector received proposals worth just A $ 6.2 billion. Only 22 per cent of these nominal commitments had been utilised by June 1997 - meaning that the total value of concrete projects undertaken was just A $ 1.38 billion having been completed.112 Of this, just over half was accounted for by foreign investors, the balance by local investors
At this rate, the task of attracting investment worth A $ 10.7 billion by 2002 and A $ 51 billion by 2005 appears quite formidable. However these figures also make clearer the scale of the Government’s ambitions for the processed food sector.113
Source: Instate Pty Ltd
Further details of major policy changes that have taken place since food sector liberalisation began in 1991, and their implications for foreign direct investment in the sector as well as for exporters studying the Indian market, are outlined below.
7.2 FOREIGN INVESTMENT: RECENT POLICY CHANGES Policy decisions taken in recent years that will create opportunities for foreign direct investment in the food sector include: • Facilitating automatic approval of investment; • Abolishing licenses; • Increasing the number of product segments open to large ‐ scale food processors; • Revamping restrictive limits on investment ceilings for the small scale sector; • Reducing import restriction and duties; • Permitting the use of foreign brand names; • Unravelling complex legislation governing the food processing sector; and • Providing additional incentives for exporters.
111 The Financial Express, May 14, 1997 Exchange rate assumed: 1 A $ = 0.75 US $ 112 The Economic Times, October 7, 1997 113 The Hindu Business Line, May 31, 1997
78 AUTOMATIC APPROVAL OF INVESTMENT Foreign investment projects now receive automatic approval for up to 51 per cent of foreign equity for most products within the organised / large scale segment and up to 24 per cent foreign equity in the small scale segment* of the food processing sector. The exceptions are: • milk food, malted food and flour; and • products for which dividend balancing with net foreign exchange earnings is also necessary for automatic clearance.
ABOLITION OF LICENSES Foreign investors have been freed from the need for licenses to set up production in most sectors of the food processing industry. The exceptions are: • brewing and distillation of alcoholic beverage; and • items reserved for exclusive manufacture by the small‐scale industry.*
INCREASING THE NUMBER OF PRODUCT SEGMENTS OPEN TO LARGE SCALE FOOD PROCESSORS Foreign and domestic investors can now participate in large scale investments in more product segments with the de‐reservation, in April 1997, of several product segments formerly reserved for the small scale sector including ice cream, vinegar, rice ‐ milling, legume / pulse ‐ milling, biscuits, poultry feed and synthetic syrups.
REMOVING RESTRICTIVE LIMITS ON INVESTMENT CEILINGS FOR THE SMALL SCALE SECTOR Recent government legislation has raised the investment ceiling for the small scale sector from A $ 220,000 to A $ 1.1 million.114 This should encourage existing and new processors to both increase capacity and use better technology.
REDUCTION IN IMPORT RESTRICTIONS AND CUSTOMS DUTIES Controls on imports of capital goods including second hand ones have been eased. Customs duties have also been reduced to 25 per cent for agro‐processing equipment and spare parts.
* As of April 1997, the items reserved for the small scale sector include pickles and chutneys, bread, confectionery (excluding chocolate & chewing gum) rapeseed (canola), sesame and groundnut oils (except solvent extracted), processed spices, sweetened cashew nut, tapioca sago and tapioca flour 114 The Economic Times, February 8, 1997, The EIU, May 12, 1997 Exchange rate assumed: 1997: 1 A $ = 27 INR.
79 LIFTING THE BAN ON FOREIGN BRANDS Foreign companies are now allowed to use their own and often well established brand names to sell their products in the local market, and develop a presence, and brand loyalty.
UNRAVELLING COMPLEX LEGISLATION GOVERNING THE FOOD PROCESSING SECTOR The April 1997 budget abolished some of the restrictive regulations and control orders that have had an adverse impact on investment in the agri‐business sector. For example: • The Rice Milling Industries (Regulation) Act, 1958 and the Ginning and Pressing Factories Act, 1925 are being repealed. The proposal to repeal the Ginning and Pressing Factories Act, 1925 should help the cotton industry as cotton processing factories will now be free to manage pricing without interference from State governments. • Licensing, price control and requisitioning under the Cold Storage Order, 1964 will also be removed. Establishment of cold‐storage facilities and cold chains vital to the distribution of perishables like fresh fruit, vegetables, flowers and marine food should get a boost with the proposed removal of several restrictive provisions under the Cold Storage Order, 1964.115 Anecdotal evidence also indicates that persistent lobbying by industry groups has resulted in some relaxation and changes to the Food Products Order 1955 and the Packaged Commodities Rules. Other control orders, for example, the PFA, (Prevention of Food Adulteration Act) are believed to be under review.
ADDITIONAL INCENTIVES FOR EXPORT PROMOTION 116 Food processing has been identified as a focus of for export development support. Several additional incentives are therefore made available to companies that set up Export Oriented Units (EOUs) in the Free Trade Zones (FTZ) and Export Processing Zones (EPZ). These include: • Export‐linked duty‐free imports. Imports in other cases for export production are allowed at concessional rates. • Export profits are made tax free for five years. • Export oriented units can retain 50 per cent of foreign exchange receipts in foreign currency accounts.
115 The Hindu Business Line, March 7, 1997 116 The EIU, April 9, 1997
80 • Export oriented units and companies engaged in agriculture and allied activities in the export‐processing zones can now sell up to 50 per cent of production in the domestic tariff area on payment of normal duty. The value addition stipulation has been removed.
7.3 FOREIGN INVESTMENT: ISSUES
TAXATION While Indian corporate taxes continue to be reduced they are still fairly high when compared to those in other South East Asian economies. India also imposes different levels of taxation for foreign and domestic investors. The 1997 / 98 budget reduced corporate taxes from 40 to 35 per cent for domestic companies and from 55 to 48 per cent for foreign companies.117 Capital equipment used for food production and processed output in the food sector are also subject to significant excise and sales taxes in India. Figure 7.5 compares taxation levels for both capital equipment and processed output in the food processing sector for various Asian countries including India. It reveals that: • Foods in India are subjected to exceptionally high levels of excise and sales taxes. Excise taxes vary from 8 to 40 per cent. In addition food products are also subject to sales tax of 5 to 12 per cent and further taxes on packaging. By comparison, taxes on food products sold in other Asian countries are limited to a maximum of 5 to 12 per cent in sales tax. • Indian taxation levels on capital equipment used for the manufacturing process are significantly out of line with that in the other countries.
COMPLEXITY OF LEGISLATION Despite government initiatives there still remain many complexities in the legislation governing the food processing sector in India. Currently there are more than 20 laws relating to food products.
117 The EIU, July 15, 1997
81 Fig 7.5 Comparative taxation on food in Asia: (Percentage)
VALUE ADDED OUTPUT CAPITAL EQUIPMENT
EXCISE TAX SALES TAX IMPORT DUTIES EXCISE TAX
8 - 20- India 5- 10 - India 40 12 40 50
0 Indonesia 12 0 Indonesia 15
0 Philippines 10 0 P hilippines 20
0 Thailand 7 0 Thailand 5
0 Malaysia 0 0 M alaysia 0
Source: Food and Agriculture Integrated Development Action Report
7.4. FOREIGN INVESTMENT: LIKELY POLICY TRENDS
REWRITING LEGISLATION FOR THE FOOD PROCESSING SECTOR The process of unravelling legislation governing the food sector that commenced in a significant way with the 1997 budget should continue to gain momentum over the next few years.
IMPROVING INFRASTRUCTURE Improvements in infrastructure and backward linkages (from food processing to food production) are likely to receive a great deal of attention. The Pepsi experiment has shown that agri‐business companies can help improve farm output. Pepsi, which set up a tomato ketchup factory in Punjab five years ago, had to impart modern growing technologies to small farmers who were its contract suppliers of raw tomatoes. As a result, the tomato yield in Punjab increased six to ten times.118 Outcomes like these could spur the development of more cohesive national policies / laws on contract farming and leasing of large tracts of land, considered critical for sustaining growth in the industry.
118 The Australian Financial Review, May 23, 1997
82 Alternatively, the government may explore options to working around the Land Ceiling Act. An increasing number of food processors keen to expand and modernise agricultural practices are pressing the authorities to reclassify fruit, horticulture, potatoes and other vegetables as ʹplantation cropsʹ, thereby bypassing the ceiling.119
REDUCING TAXES ON FOOD PRODUCTS AND OTHER TAXATION POLICY CHANGES As discussed earlier, India imposes very high levels of taxation on many food products. For example, in March this year the government imposed an 8 per cent excise duty on branded fruit and vegetable products such as jams, jellies, juices, sauces, soups including potato chips and cakes. According to food industry sources this could lead to a 20 per cent rise in final prices paid by the consumer as sales taxes and other charges are added.120 With persistent lobbying by the industry to reduce excise and sales taxes on many manufactured food products, there may be some concessions from the government on this front in the foreseeable future. There may also be some movement towards easing taxes on packaging. It is also reasonable to expect some tax incentives for the development of post harvest infrastructure especially the development of cold storage chains. Import and excise duties on capital equipment for cold storage chains (currently 53 per cent) and other infrastructure should therefore also come down.
ADDITIONAL INCENTIVES FOR EXPORTERS Given successive governments’ policy focus on developing exports of processed food products, additional incentives to foreign investment projects with export potential might be expected in coming years.
CHANGES TO SECTOR-SPECIFIC LEGISLATION 121 As part of the broad trend towards improving productivity, yields and suitability of raw material for processing, there have been calls for changes in the current seed policy to induct suitable strains of fruit and vegetable planting material. As part of its recommendations for the food processing sector during the Ninth Plan period (1997 ‐ 2002), a working group has suggested the removal of the quantitative ceiling on the export of milk products and a de‐reservation of ice‐cream from the
119 The Financial Times, November 17, 1995. See also Box 3.2 in Chapter 3. 120 The Hindu Business Line, March 12, 1997, The EIU, April 9, 1997 121 The Financial Times - Asia Intelligence Wire, October 13, 1997
83 small scale sector. The de‐reservation of ice‐cream was formally announced in April 1997. It is expected that other legislation liberalising the milk sector will also be passed in the foreseeable future. The group has also suggested the implementation of a scheme to subsidise the installation of driers and dust control systems in order to improve the efficiency and productivity of the pulse milling industry, during the Ninth Plan. To promote the development of the meat and poultry processing industry, the working group has suggested that the Central Government commit funds worth about 25 per cent of the total investment. This is expected to be sufficient to attract investment from the private sector and financial institutions for projects to increase capacity in the meat‐processing sector.
7.5. IMPORT REGIME: RECENT POLICY CHANGES
EASING OF IMPORT RESTRICTIONS The Indian government announced a new five year export ‐ import policy on April 1, 1997 that fully or partially liberalises the imports of 150 fresh and value added agricultural products. Fully liberalised products are those on the Open General License, (OGL). This means that they can be freely imported by any agent within the country on payment of the appropriate tariffs or duties. About 60 new items have been placed on the OGL list including: • Processed cereal products like cornflakes, crisp bread, sweet biscuits • Fresh seafood • Sugar confectionery • Chocolate • Ice cream • Fruit juices Imports that have been partially liberalised are those that require a Special Import License, (SIL). These products can only be imported by holders of the SIL on payment of tariffs and duties. Typically SIL holders would include companies involved in exports and others like hotel chains and bonded warehouse operators. There are about 90 partially liberalised items including: • Baby milk formula • Processed cheeses not containing animal rennet or fat • Jams and jellies • Honey • Diet Coke A detailed summary of the items that can be imported and the applicable duties by harmonised code is provided in Appendix A.
84 The imports of some items continue to be restricted or prohibited. Prohibited, restricted or canalised imports include alcoholic beverage concentrates, wines, saffron, clove, cinnamon, cassia, oil seeds and cereals. Similar prohibitions also apply to exports from India. Prohibited, restricted or canalised exports include beef, animal fats and oils, fish oil, coconut milk, processed pulses, (except those imported for re‐export) paddy, vegetable oils and butter122.
7.6 IMPORT REGIME: LIKELY POLICY TRENDS
REDUCTION IN TARIFFS AND IMPORT QUOTAS The Indian government’s 1997 ‐ 98 Budget reflected a continuing commitment by the Government to the process of economic liberalisation and tariff reform that got underway in 1991. Peak tariffs were reduced from 50 per cent (+ 2 per cent revenue duty) to 40 per cent (+ 2 per cent revenue duty). This will affect many value added industrial and consumer products including food. Tariffs on capital goods were cut from 25 per cent to 20 per cent, with rates to be reduced further to ASEAN ‐ APEC levels by the year 2000. 123 There is a growing expectation that an increasing number of food products (fresh and processed) will find their way out of restricted or banned import lists to the Open General License, (OGL) list, as WTO negotiations continue to put pressure on India to increase imports. For example, there are already calls from within the edible oil industry in India for putting oil seeds and edible oil on the OGL list. For its part, the Indian Government put forward a three‐phase plan for the removal of quantitative restrictions over ten years (from 1997 to 2006) to the WTO in May 1997. The plan came in for significant criticism from India’s trading partners including Australia who advocated the speedier removal of trade barriers especially for a number of agri‐ products, most of which fall into phase three. Under the Indian Government’s original plan, removal of restrictions on these products would not have begun until April 2003. Details of India’s original phase out plan are contained in Appendix A, Section A‐1. Some acceleration of this timetable has already been achieved as a result of negotiations between India and its major bilateral partners including Australia. Appendix A, Section A‐2, provides details of the current state of play but in essence: • the third and final phase is now due to conclude by 31 March 2003, three years earlier than originally proposed by India;
122 USDA/FAS 123 The EIU, July 15, 1997,
85 • the timing of liberalisation of some products of interest to Australia has now been accelerated; Products of interest to Australian exporters on which quantitative restrictions will now be removed during phase 1 (April 1997 ‐ March 2000) include for example, fruit juices, smoked salmon, whey, yogurt, non‐chocolate confectionery, and honey. Products of interest to Australian exporters on which quantitative restrictions will now be removed during phase 2 (April 2000 ‐ March 2003) include fresh cuts of certain meats, frozen fish, whole milk powder and various flours. Products of interest to Australian exporters on which quantitative restrictions will now be removed during in phase 3 (April 2003 ‐ March 2006) include grains, various cereal‐based products, other meat products, fresh and processed fruit, beers and wine. As noted above, tables setting out the timetable for removal of quantitative restrictions on imports of food products by the Indian Government – as it stood in late 1997 – are set out in Appendix A (Tables A.2.1, A.2.2 and A.2.3 respectively).
7.7 THE MARCH 1998 ELECTION Economic policy‐making was put on hold during the five month run up to the March 1998 election. The election of a BJP‐led coalition may slow the pace of reform ‐ its ideal of swadeshi or self‐reliance and electoral slogan computer chips not potato chips underline its reservations about foreign investment in the consumer sector and across‐the‐board trade liberalisation. True to the slogan, foreign investment in the consumer food sector has been one target for BJP criticism in recent years. Its oft‐stated preference has been for foreign investment to be encouraged in ‘priority areas’ such as infrastructure. In the first instance, the composition of the BJP‐led cabinet will be important in gauging the stance it is likely to adopt on investment and trade liberalisation now that it is in Government. In any event, international capital markets will closely monitor early policy developments under the new Government and could react strongly to any signs of a retreat from the process of economic and trade policy liberalisation. In the medium‐term, it is questionable how effective a selective policy on foreign investment would be ‐ whether ‘non‐essential’ sectors could be quarantined from further foreign investment liberalisation without affecting flows into stated ‘priority’ sectors such as infrastructure. Continuing negotiations under the auspices of the WTO can be expected to add to the pressure on the Government to maintain and, indeed, accelerate its current timetable for trade liberalisation.
86 8. Trade Trends
8.1 AUSTRALIA’S EXPORTS TO INDIA Australia’s exports of food and beverages to India have increased by 75 per cent in value between 1990‐91 and 1996‐97 (Figure 8.1).
Figure 8.1: Australian Food and Beverage Exports to India (A $ million)
FY90-91 65
FY93-94 62
FY96-97 114
0 20406080100120
Source: ABS124
In the context of Australia’s global exports of food and beverages, India is a relatively small market (Figure 8.2).
Figure 8.2: Australian Food and Beverage Exports to India: Share of Exports to All Countries, Selected Years
1 0.8 0.6 % 0.4 0.2 0 1990-91 1993-94 1996-97
Source: ABS
In 1996‐97, Australia’s exports of food and beverages to India represented only 0.7 per cent by value of Australia’s total exports of these items. In recent years, this share has remained reasonably steady.
124 For the purposes of analysing food and beverage trade data from the following HS chapters has been used: 2, 3, 4, 7, 8, 9, 10, 11, 12, 13, 15, 16, 17, 18, 19, 20, 21, 22. The following items at the 4 digit level were excluded from the analysis as they are non-food items: 0301, 1209, 1211, 1213, 1214, 1505, 1518, 1519, 1520, 1521, 1522.
87 The ‘unknown factor’ in assessing these trade figures is the exclusion of some product data on confidentiality grounds. Box 8.1 provides details of items not listed separately in Australian export statistics.
Box 8.1: What is not counted?
ITEMS EXCLUDED FROM ABS TRADE DATA FOR INDIA (OR ALL MARKETS INCLUDING INDIA) ON THE BASIS OF CONFIDENTIALITY AND THE YEARS WHICH THE EXCLUSION WAS EFFECTED ARE:
• ROCK LOBSTER (30/5/95);
• FRESH OF DRIED ALMONDS, SHELLED (30/6/95);
• FRESH MANGOES, GUAVAS, MANGOSTEENS, APPLES, PEARS (EXCLUDING BUERRE BOSC AND PACKHAM), QUINCES, NASHI PEARS, PEACHES, NECTARINES (30/6/95);
• WHEAT AND MESLIN (IN BULK OR BAGS) (30/6/95);
• BARLEY FOR MALTING IN BULK (1/7/93);
• BARLEY FOR FEED IN BULK (1/7/94);
• OATS IN BULK (1/7/93);
• HUSKED BROWN SHORT OR MEDIUM GRAIN RICE (1/7/91);
• PARBOILED BROWN RICE (1/1/88);
• PARBOILED WHOLE LONG GRAIN, SEMI-MILLED OR WHOLLY-MILLED (1/1/88);
• RICE, WHOLE LONG GRAIN, VITAMIN ENRICHED, SEMI-MILLED OR WHOLLY-MILLED (1/1/88);
• RICE, WHOLE SHORT AND MEDIUM GRAIN, VITAMIN ENRICHED, SEMI-MILLED OR WHOLLY-MILLED (1/7/91);
• RICE, WHOLE SHORT AND MEDIUM GRAIN, EXCLUDING VITAMIN ENRICHED, SEMI-MILLED OR WHOLLY- MILLED (1/1/88);
• RAW CANE SUGAR IN SOLID FORM, IN BULK (30/6/95);
• ACTIVE YEASTS (31/3/91);
• NATURAL YEASTS, INACTIVE (31/5/88).
Source: ABS.
Of the ‘confidential’ items listed in Box 8.1, the products that are most significant in Australia’s export trade with India are: • wheat: India, like a number of Australia’s markets is a sporadic but occasionally large buyer (for example, contracts for 1 million tonnes were signed in early 1997 and are due for delivery throughout 1997‐8); • yeast: Burns Philip has a wholly owned venture in India producing yeast products and has also exported some product from Australia for a number of years.
88 8.2 THE COMPOSITION OF AUSTRALIA’S TRADE WITH INDIA In line with previous years (1990‐91 and 1993‐94), Australia’s exports of trade of food and beverages to India in 1996‐97 were dominated by dried pulses, which comprise the biggest item within the overall category of ‘vegetables’ (Figure 8.3).
Figure 8.3: Top 10 Items of Australia’s Food and Beverage Exports to India125: 1996-97 (A $ million)
Vegetables 107.0 Fruits & nuts 4.7 Dairy produce 0.9
Fats & oils 0.3
Beverages 0.3
Sugar 0.3
Proc'd fruit & veg 0.2 Misc prep's 0.2
Milled products 0.1
Meat 0.1
- 20.0 40.0 60.0 80.0 100.0 120.0
Source: ABS
Of those items for which data is available126, the fastest growing food and beverage items exported to the Indian market over in the six years from 1990‐91 to 1996‐97 were vegetables and fruit and nuts (Figure 8.4).
125 For brevity, shortened HS code descriptors are used in this and succeeding figures. Full descriptions are used here and elsewhere are: Vegetables (Edible vegetables and certain roots and tubers); Fruits and nuts (Edible fruits and nuts; peel of citrus or melons); Dairy produce (Dairy produce; birds’ eggs, natural honey, edible products or animal origin not elsewhere specified); Fats and oils (Animal or vegetable fats and oils and their cleavate products); Beverages (Beverages, spirits and vinegar); Sugar (Sugars and sugar confectionary); Processed fruit and veg (Preparations of vegetables, fruits, nuts or other parts of plants); Misc prep’s (Miscellaneaous edible preparations); Milled products (Products of the milling industry; malt; starches; inulin; wheat gluten); Meat (Meat and edible offal). Cereal prep’s (Preparations of cereals, flour, starch or milk; pastry cooks’ products); Fish (Fish and crustaceans, molluscs and other aquatic invertebrates). 126 ie excluding items with confidentiality restrictions as listed earlier in this chapter.
89 Figure 8.4: Growth Rates of Australia’s Food and Beverage Exports to India (CAGR 1990-91 to 1996-7)
600% 508% 500%
400% 308% 300%
200% 178% 160% 153% 145% 129% 127% 87% 92% 98% 100%
0%
s s l s eat es nut oi eps ugar M abl pr S prep' and al and veg produce s e y products Beverages ir ruit and er fruit Veget led F Fat C neous Da il la M roc'd iscel P M
Source: ABS
There have been very modest exports in recent years of a number of other products, including fish and crustaceans (A $ 46,000), cocoa and cocoa based food preparations (A $ 11,000) and vegetable saps and extracts (A $ 4,000), Australia’s exports of oilseeds to India, while always relatively small in absolute terms, has declined significantly over the same period ‐ from A $ 825,000 in 1990‐91 to just A $ 52,000 in 1996‐97. Like wheat, Indian demand for oilseeds is very much a function of domestic production conditions.
90 8.3 AUSTRALIA’S TRADE WITH INDIA COMPARED WITH EXPORTS TO REST OF WORLD Table 8.1 outlines Australia’s major food and beverage exports at a global level.
Table 8.1: Australia's Top 20 Food and Beverage Exports to World at 4 digit level: FY96-97
Australian HS Classification at 4 digit level A $ million
1001 Wheat and meslin 4,301 1701 Cane or beet sugar and chemically pure sucrose, in solid form 1,546 0202 Meat of bovine animals, frozen 1,175 0201 Meat of bovine animals, fresh or chilled 937 0402 Milk and cream, concentrated or containing added sugar or other sweetening 840 matter 1003 Barley 815 0306 Crustaceans, whether in shell or not, live, fresh, chilled, frozen, dried, salted or in 679 brine; crustaceans, in shell, cooked by steaming or by boiling whether or not chilled, frozen, dried, salted or in brine; flours, meals and pellets of crust
2204 Wine of fresh grapes, including fortified wines; grape must containing added 604 spirit or fermented 0204 Meat of sheep or goats, fresh, chilled or frozen 558
0406 Cheese and curd 476 1006 Rice 313 0713 Dried leguminous vegetables, shelled, whether or not skinned or split 277 0405 Butter and other fats and oils derived from milk; dairy spreads (b) 220 1107 Malt, whether or not roasted 174 1502 Fats of bovine animals, sheep or goats, other than lard stearin, lard oil, 173 oleostearin, oleo oil, and tallow oil, not otherwise prepared 0206 Edible offal of bovine animals, swine, sheep, goats, horses, asses, mules or 154 hinnies, fresh, chilled or frozen 0805 Citrus fruit, fresh or dried 138 1806 Chocolate and other food preparations containing cocoa (b) 137 1205 Rape or colza seeds, whether or not broken 124 0307 Molluscs, whether in shell or not, live, fresh, chilled, frozen, dried, salted or in 120 brine; aquatic invertebrates other than crustaceans and molluscs, live, fresh, chilled, frozen, dried, salted or in brine; flours, meals and pellets of aq. inv
0806 Grapes, fresh or dried 119
1605 Crustaceans, molluscs and other aquatic invertebrates, prepared or preserved 105
Source: ABS
Figure 8.5 contrasts Australian exports to India with the profile of Australia’s total exports of food and beverage products to all markets. Once again, the predominance of vegetables (mainly dried pulses) in Australia’s exports to India is evident.
91 Figure 8.5: Australia’s Top Ten Food and Beverage Exports: India vs the World
94% 34% 35%
30% 25%
20% 18%
15% 11% 10%
Exports 10% 6% 4% 4% 3% 5% 3% 2% 2% 0% 0.08%0.82% 0.23% 0.04% 0.28% 0.11% 0.28% 0%
ls r ish es ea Meat F bl Suga ages Cer er it & nuts % of Australia's Food and Beverage ru Fats & oils Bev Vegeta F led products Dairy produce Mil to World to India
Source: ABS
92 Table 8.2 provides some comment on likely reasons for the big variations reflected in Figure 8.5
Table 8.2: Australia’s Exports to India relative to Australia’s Exports to the World (4-digit level, FY96-97)
Products of which Australia’s exports to India Possible reasons for mismatch could be considered ‘underweight’ Cereals Indian import restrictions. Edible meat and offal Most of Australia’s world exports in this category are beef, which is not widely consumed in India because of religious beliefs. India is also a small but growing producer of sheep/goat meat. Dairy produce India has a large dairy sector and imports have traditionally been tightly controlled. Sugar India has a large sugar cane industry and imports have traditionally been tightly controlled. Fish and crustaceans, molluscs etc Large Indian domestic production and tight import restrictions. Beverages, spirits and vinegar Australia is a big wine exporter but the Indian market is just beginning to develop. Initially, imports have been permitted for just the hotel sector. India is a big spirits importer and imports a small quantity of sparkling wine. Products of the milling industry, malt starches Import restrictions. etc Animal or vegetable fats and oils Australia’s exports in this category are predominantly animal fats, whereas India’s imports of this category are, in the main, vegetable oils. Source: ABS
93 8.4 INDIAN IMPORTS India’s food and beverage imports are dominated by three categories: edible oils, nuts and dried pulses.
Figure 8.6: India’s Major Food and Beverage Imports from All Sources: 1995-96 (A $ million)
Vegetable oils 952
Fruit s & nut s 439
Vegetables 286
Sugar 94
M isc prep's 71
Cereal prep's 28
Cof f ee, t ea & spices 27
Dairy produce 26
Beverages 16
Oilseeds 16
- 200 400 600 800 1,000
Source: Monthly Statistics of the Foreign Trade of India, 1995-96. Note: Rupees converted using average exchange rate for FY95-96, INR/A $: 24.86.
The major source of India’s food and beverage imports is Malaysia, by a large margin. Other big suppliers are neighbouring Myanmar, Brazil, USA, Indonesia, Argentina and Tanzania.
94 Figure 8.7: India’s Food and Beverage Imports by Source Country (estimated*) (A $ million)
Others 449
Australia 19
Tazania 108
Argentina 112
Indonesia 116
Brazil 128
USA 145
Myanmar 154
Malaysia 626
0 100 200 300 400 500 600 700 Source: Monthly Statistics of the Foreign Trade of India, 1995-96. *Notes: Estimate based on 93 per cent of India’s food and beverage imports. Rupees converted using average exchange rate for FY95-96, INR/A $: 24.86.
India’s top 5 food and beverage import source countries and their major exports to India (by value) are set out in Table 8.3.
Table 8.3: India’s Top 5 Food and Beverage Source Countries and their Main Export Items: Indian FY95-96
Country Major Item (percentage by value of total items exported to India)
Malaysia: Vegetable oils (99 per cent) of which 97 per cent is palm oil, smaller volumes of soybean oil and rapeseed oil. Myanmar: Dried pulses (99 per cent) USA: Almonds (38 per cent), bulgur wheat prepared by swelling or roasting (15 per cent), soyabean oil (10 per cent). Brazil: Refined sugar (other than refined cane sugar) (66 per cent) and oils, most of which is soyabean oil (28 per cent). Indonesia: Palm oil, most of which is refined (78 per cent), and cashews (21 per cent). Source: Monthly Statistics of the Foreign Trade of India, 1995-96.
Australia’s share of India’s total food and beverage imports in 1995‐96 was only 1 per cent (Figure 8.8).
95 Figure 8.8: India’s Top 10 Food and Beverage Imports Estimated Shares: 1995-96
Mayanmar 8% USA Malaysia 8% 34% Brazil 7%
Indonesia 6%
Argentina 6% Tanzania 6% Others Australia 24% 1%
Source: Monthly Statistics of the Foreign Trade of India, 1995-96.
Australia’s share of the Indian import market for major food and beverage items is generally very small (Figure 8.9).
Figure 8.9: Australia’s share of India’s Major Import Products: 1995-96
7 6 5 4 % 3 2 1 0 Sugar Oilseeds Beverages Vegetables Fruits & nuts Cereal prep's Dairy produce
Dried peas, chickpeas Source: Monthly Statistics of the Foreign Trade of India, 1995-96.
Of Australia’s relatively ‘big ticket’ exports to India, the biggest market share is enjoyed by exports of dried pulses. In 1995‐6, Australia accounted for approximately 6 per cent by value of India’s total dried pulse imports. Some products for which Australia exports smaller quantities have a substantially bigger market share (Figure 8.10).
96 Figure 8.10: Australia’s Exports to India with the Highest Indian Import Share (at 4 digit level): 1995-96
Almonds 0.04% Milk powder 0.1% Beer 0.4% Other sugar 0.5% Misc prep 1.1% Sugar 1.6% Sugar confectionary 2.9% Wine 4.8% Dried pulses 6.4% Cheese 17.1% Honey 26.0%
0% 5% 10% 15% 20% 25% 30%
Source: Monthly Statistics of Foreign Trade of India, 1995-96.
8.5 INDIA’S MAJOR EXPORTS India’s major food and beverage exports include grain (wheat and rice), marine products, oil cakes, coffee, tea, cashews and fruit and vegetables (Figure 8.11). In the case of grain exports, levels vary greatly from year to year in line with domestic seasonal (production) conditions and variations in stockpile levels. The fastest growing exports in recent years have included rice and other grains, fruit and vegetables, coffee and oil cakes.
97 Figure 8.11: India’s Major Agri-products Exports (A $ million)
Oil cakes
Spices
Tea & mate
Coffee & coffee substitutes
Fruits & vegetables
Cashew s
Wheat
Ric e
Marine products
Meat & meat preparations
0 200 400 600 800 1,000 1,200 1,400 1,600 1,800
A$ million 1994-5 1995-6
Source: : Monthly Statistics of Foreign Trade of India, 1995-96. Note: Rupees converted using average exchange rates: FY95-96, INR/A $: 24.86, and FY94-95, INR/A $: 23.31.
98 9. Conclusions and Implications for Australia
9.1 THE INDIAN PROCESSED FOOD MARKET: 1997
STATE OF PLAY The Indian market for processed food is growing, but off a very low base. It is characterised by: • a generally small domestic processing industry; • a very small modern ingredients industry; • a generally underdeveloped packaging industry but high packaging costs; • an inefficient distribution system; • the dominance of traditional retailing systems; • a small modern food service industry outside foreign‐run hotels and fast food pioneers; • encouragement, at least until 1998, by the Government of foreign investment in the food sector in India within a moderately attractive framework; • slower progress than expected for many foreign firms which were investment pioneers; • big Government plans for export development; • generally poor export competitiveness and performance. At present, the principal obstacles to further penetration of the Indian food market by foreign firms are: • high tariff and non tariff barriers; • the small size of the market for processed foods.
TRADE POLICY DEVELOPMENTS Despite earlier concerns, economic and trade reform continued under the United Front Governments formed in 1996 and 1997. Liberalisation of policies affecting the processed food sector was given considerable priority. The April 1997 Budget demonstrated the United Front Government’s willingness to push forward with the deregulation of a range of industry sub‐sectors, including food, providing greater access to domestic Indian firms. Further measures to ease
99 restrictions on foreign investment including in the food sector were announced at the same time. Among the 150 items for which import restrictions were eased (by lowering tariffs and or easing licensing or canalisation requirements) are: • a range of seafood products including lobster, crabs and scallops; • butter oil and certain processed cheeses; • certain nuts and dried fruits; • certain milled grain products including some flours, meals, gluten; • other cereal preparations such as breakfast cereals, breads, biscuits and dough; • most major vegetable oils; and • a wide range of fruit and vegetable preparations (pulps, juices etc);
PHASING OUT OF QUANTITATIVE (QUOTA) RESTRICTIONS Subsequently, in access negotiations conducted under WTO auspices, India made an offer of progressive market liberalisation between 1997 and 2006. In late 1997, the results of further negotiations on the WTO liberalisation schedule between the Indian Government and other bilateral trading partners, including Australia, were announced. They telescoped the former timetable, reducing the time required to phase out quantitative restrictions by three years to provide for further and faster access concessions by India for some food products of importance to Australia. Products of interest to Australian exporters on which quantitative restrictions will now be removed during Phase 1 (April 1997 ‐ March 2000) include for example, fruit juices, smoked salmon, whey, yogurt, non‐chocolate confectionery, and honey. In Phase 2, quantitative restrictions will be removed on a fresh cuts of certain meats, frozen fish, whole milk powder and various flours. Items of interest to be liberalised in Phase 3 include grains, various cereal‐based products, other meat products, fresh and processed fruit, beers and wine.127
THE MARCH 1998 ELECTION The election of a BJP‐led coalition may slow the pace of reform ‐ its ideal of swadeshi or self‐reliance and electoral slogan computer chips not potato chips underline its reservations about foreign investment in the consumer sector and across‐the‐board trade liberalisation.
127 Tables setting out the timetable for removal of quantitative restrictions on imports of food products by the Indian Government – as it stood in late 1997 – are set out in Appendix A (Tables A.2.1, A.2.2 and A.2.3 respectively).
100 International capital markets will closely monitor early policy developments under the new Government and could react strongly to any signs of a retreat from the process of economic and trade policy liberalisation. In the medium‐term, it is questionable how effective a selective policy on foreign investment would be ‐ whether ‘non‐essential’ sectors could be quarantined from further foreign investment liberalisation without affecting flows into stated ‘priority’ sectors such as infrastructure. Continuing negotiations under the auspices of the WTO can be expected to add to the pressure on the Government to maintain and, indeed, accelerate its current timetable for trade liberalisation.
9.2 THE INDIAN FOOD MARKET IN PROSPECT
OVERALL TRENDS Changes in prospect for the Indian food market over the next 5‐10 years (see also Table 9.1) include: • steady growth in demand for basic / lightly processed product as well as branded consumer products and their raw materials and intermediate inputs; • improving market access for exporters from countries such as Australia; • slow change in traditional distribution methods, limited development of more modern distribution infrastructure, mainly in larger cities; • considerable growth in the ‘foreign’ food service sector and the emergence of the first opportunities to supply product to non‐’foreign’ hotels, restaurants and fast food outlets; • growing competition from Indian producers and patchy competition from foreign ventures producing in the market; • growing foreign investment by major international food companies determined to establish a domestic presence in a major emerging market; • steady growth in Indian processed food exports, from a low base; areas of particular growth potential include: ◊ processed horticultural products and, to a lesser extent, fresh horticultural products; ◊ certain dairy products; ◊ sheep (goat) meat and, to a lesser extent, chicken meat; ◊ traditional export items such as spices, pickles and preserves.
101 CHALLENGES FACING THE DOMESTIC FOOD PROCESSING INDUSTRY For the foreseeable future, the domestic processing industry can be expected to: • continue to struggle to modernise and compete with imports; • continue to face supply chain problems such as: ◊ unreliable supply of quality raw materials; ◊ expensive transport costs; ◊ poor physical infrastructure; ◊ support industries that are not internationally competitive, for example packaging; ◊ Limited domestic supply of specialised intermediate ingredients.
SHORT TO MEDIUM TERM PROSPECTS FOR AUSTRALIA Products in which Australia is internationally competitive and which do not face especially strong competition from India should do moderately well in the short to medium term. These are likely to include: • higher value added dairy products such as specialised milk powders, processed cheese, cheese powders etc; • malting barley and, possibly, malt; • high value fresh seafood; • specialised baking flours, mixes, fats and oils; • other edible oils and fats; • some dried fruit and nuts; • wine.
DISTRIBUTION The further liberalisation of import channels and licensing arrangements, together with the entry of new and more demanding suppliers to the retailing and food service sector, are likely to help accelerate changes in distribution arrangements for foreign products: • bulk unbranded product: as canalisation is phased out, the number of import channels will grow ‐ new entrants will include major domestic traders and bigger end users; • the food service sector: existing licensed importers operating bond warehouses will expand and be joined by new importers; both will face new competition from larger food service companies wishing to import direct;
102 • intermediate food products for manufacturing: a number of supply channels can be expected to emerge: ◊ direct supply is likely to be an attractive option ‐ especially to foreign food manufacturers with operations in India and with whom suppliers may have existing relationships ‐ servicing other markets; ◊ direct supply of ingredients to big domestic processors is also likely; ◊ as the market matures, and if demand for imported ingredients for the plethora of mid‐sized food processors grows, then domestic distributors and wholesalers will be important channels to end‐users. ◊ domestic subsidiaries of multinationals and other large local manufacturers will step up direct imports of ingredients or bulk product for repackaging and resale. • consumer food products: when current special licensing arrangements are phased out, a rapid and large increase in the number of importers can also be expected.
LONGER TERM ISSUES As the market grows, some of the early successes which Australian firms may reap with value‐added food exports may prove difficult to maintain in the face of tougher domestic competition. Exceptions will occur when, for example: • Australian processors have a sustainable comparative advantage by virtue of better raw material endowments or other inputs; or • Australian suppliers have technical strengths that enable them to provide tightly specified product to the more demanding segments of the Indian market; or • Australian suppliers are already reaping economies of scale not yet available to Indian processors by virtue of established (Australian) access to regional markets; • Australian product is successfully marketable on the basis of its place of production and, in the process, reaps a premium price. Over time, the pressure will inevitably grow for serious exporters of all but the most specialised and unique products to invest in India, in the face of competition from stronger domestic firms and a growing number of foreign firms with the ‘inside running’. Therefore, developing an effective in‐market presence, normally via direct investment, will emerge as the biggest challenge for Australian processed food producers wishing to create and sustain a significant position in the Indian market.
103 9.3 INDIAN EXPORT GROWTH On the export front, India can also be expected to emerge as a stronger competitor in Middle Eastern and East Asian markets food markets in particular. • India’s exports of processed fruit and vegetables have grown steadily in the past few years; with the recent influx of foreign investment and technology to the sector, export volumes can be expected to grow strongly and gradual improvement in quality can also be anticipated. • India’s big domestic dairy market and the large increases in processing capacity that are coming on line mean that its dairy exports are likely to increase. At present, its principal markets include South Asia and the Middle East but over time, it can be expected to test the water in larger East Asian markets. Given the size of the domestic industry, even a small proportion of domestic output finding its way on to export markets would have a perceptible impact. • Other non‐traditional products to do well might include processed egg products, and once feed costs are under better control and full economies of scale realised, chicken meat. • Exports of traditional products such as seafood, spices and nuts are likely to grow strongly. • India is also likely to remain a significant trader of wheat and rice ‐ with substantial exports in some years and some ‘topping up’ with imports from time to time.
104
Table 9.1: The Indian Food Market: Future Prospects
Indicator Phase I (1991‐1997) Phase II (Next 5 ‐10 Phase III (Long Years) Term) Significant Market Unrestricted access for limited Broader access for most All segments Segments Available to range of commodities (e.g. commodities including phasing pulses). down of licensing, canalisation Exporters: and other NTBs. Ad hoc imports of some restricted commodities e.g. wheat; under Better access (lower duties and tight controls often including less onerous NTBs) for canalisation of imports. manufacturing and food service inputs. Small but growing market for high quality, high value processed and Gradual opening of market for fresh/chilled products for ‘foreign’ consumer products (from zero hotel trade and other special start). import licence holders. Significant Market Consumer food products Access to significant elements Limited exceptions Segments Closed to of consumer product sector to possible in most Most of food service and remain restricted. sensitive sectors. Exporters: manufacturing sector. Restrictions on most sensitive domestic sectors e.g. food grains, dairy to be lifted most slowly, if at all. Principal Market Import restrictions (tariffs and Lessening import restrictions. Substantially lower Constraints: ntbs) and small size of market import barriers. are major impediments. Strong competition from domestic Indian players the principal constraint. Import Channels: Many commodities canalised. Phasing out of canalisation Continuation of liberalisation Direct imports by special licence Initially more items permitted holders (foreign exchange under special licence, then earners). moving to open import. Domestic Indian Generally small, suffering from Steady growth. Strong Indian players Processing Industry: infrastructure and cost emerge (both domestic impediments. Uneven quality. Policy impediments to and foreign -invested corporatisation of sector and firms). Investment in new capacity development of larger firms planned/underway. gradually removed. Economies of scale start to take effect. Faces fierce import competition. Investment Basically welcoming policy, some Further improvement in Investment Environment: restrictions. investment environment. environment broadly compatible with key Domestic competition limited. Asian competitors - keen competition with them. Indian Processed Modest growth from very low Continuing growth Emerges as significant Food Exports: base. price competitive player in some products and markets. Source: INSTATE Pty Ltd
105 Appendix A: Food Market Liberalisation Measures
This Appendix outlines: • the unilateral liberalisation measures outlined by the Indian Finance Minister in his 1997 – 98 budget that was released on April 1, 1997 (Section A.1); and • the three phase timetable as it stood in late 1997 (following negotiations with Australia and a number of India’s other bilateral trading partners) for the complete phasing out by India of all quantitative restrictions on food imports by April 1, 2003, in accordance with WTO requirements, (Section A.2). In essence, the concessions agreed to by India in the second half of 1997 shortened the ten year timetable for phasing out quantitative restrictions to six years and brought forward the timetable for removing restrictions on some products: from phase 3 to 2 and from phase 2 to 1.
A.1 APRIL 1997 EX-IM POLICY LIBERALISATION MEASURES The following outline is based on a report prepared by the US Department of Agriculture in June 1997128.
GUIDE TO THE TERMS 1. Free ‐ means item is on Open General License and is freely importable; 2. SIL ‐ Special Import License, item can be imported by firms which meet certain foreign exchange requirements; 3. Restricted ‐ Imports only allowed with a license, most commonly applies to consumer goods. Licenses are generally not granted and imports of these items are effectively banned, except for imports by hotels and restaurants which can import restricted items subject to foreign exchange earnings; 4. CVD ‐ Countervailing duty, equivalent to the domestic excise duty and applied to the CIF plus duty value of some imports; 5. Canalised ‐ Can only be imported by a state‐run corporation.
128 USDA/FAS, 1997.
106 HS CHAPTER 2: MEAT AND EDIBLE MEAT OFFAL Imports of a few items were recently liberalised (see below), others are restricted. All duties are 10%, no excise.
Item HS Status Duty#
Horse meat 2050000 Free 10% Sheep Off F/C 2068009 Free 10% Sheep Off Frozen 2069009 Free 10% Beche de mer 2109001 Free 10% Note: # signifies an additional 2% duty.
HS CHAPTER 3: FISH, CRUSTACEANS, MOLLUSCS, OTHER AQUATIC INVERTEBRATES Imports of several items were recently liberalised (see below). Other items are restricted. Import duties are 10%, no excise.
Item HS CODE Status Duty#
Hilsa fish 3026901 Free 10% Hilsa fish 3037901 Free 10% Dried fish* 3055100-09 Free 10% Lobster 30611,12 Free 10% Lobster 3061201,09 Free 10% Lobster 30621,22 Free 10% Powdered Shrimp 3062301 Free 10% Shrimp 3062302 Free 10% Live Mussels 3073100 Free 10% Live Octopus 3075100 Free 10% SeaShell Flesh 3079901 Free 10% Jelly Fish 3079902 Free 10% Frozen Prawns 3061303 SIL 10% Crabs 3061400 SIL 10% Other 3061900 SIL 10% Scallops 3072100,2900 SIL 10% Cuttle Fish 3074101,09 SIL 10% Notes: # Signifies an additional 2% duty * Cod, Seer, Bombay Duck, Other.
107 HS CHAPTER 4: BIRDS EGGS, HONEY, EDIBLE PRODUCTS OF ANIMAL ORIGIN For the most part tariffs are 30%. Imports of most items are restricted with the following exceptions:
Item HS CODE Status Duty NFDM 4021001 Free 0 Butter oil 4059001 Free 30%# Bird eggs 4070001 License from Min of Agri 30%# Processed cheese w/o 4063000 SIL 30%# animal fat Note: # Signifies an additional 2% duty.
HS CHAPTER 7: EDIBLE VEGETABLES AND CERTAIN ROOTS AND TUBERS Imports of most items (see importable items below) in this chapter are restricted. Imports by hotels or restaurants are possible. Except for pulses, duties are listed as 10% (plus 2% surcharge), but are waived if products are imported for planting purposes. India is the worldʹs largest pulse importer.
Item HS CODE Status Duty Pulses 7131000-9009 Free 5%# Note: # signifies an additional 2% duty.
108 HS CHAPTER 8 -- EDIBLE FRUIT AND NUTS, PEEL OF CITRUS OR MELONS Imports of most items are licensed. However, a number of nuts and dry fruits are excepted from the licensing requirement. The U.S. exports substantial quantities of shelled and in shell almonds under this exception as well as smaller quantities of pistachios and raisins. Duties are generally 40%.
Item HS CODE Status Duty#
Cashew inshell 8013100 Free 0 Other cashew 8013200,01,02 Free 40% Almond inshell 8021100 Free Rs. 55/kg Almond shelled 8021200 Free Rs. 100/kg Hazelnuts inshell 8022100 Free 40% Hazelnuts shelled 8022200 Free 40% Walnut inshell 8023100 Free 40% Walnut shelled 8023200 Free 40% Chestnuts 8024000 Free 40% Pistachios 8025000 Free 40% Dates 8041000-3 Free 30% Figs fresh 8042000 Free 40% Figs dried 8042002 Free 40% Raisins 8062001 Free 125% Sultanas 8062009 Free 125% Fresh apricots 8091000 Free 40% Apricots dried 8131000 Free 0 Prunes 8132000 Free 40% Citrus and melon peel 8140000 Free 40% Note: # Signifies an additional 2% duty unless fixed or zero, hotels may import at 25% duty.
109 CHAPTER 9: COFFEE, TEA, MATE, SPICES Imports of virtually all items in this chapter are restricted (see exceptions below). Duties are generally 30%.
Item HS CODE Status Duty# Roasted coffee in bulk 9012100.10 Free 10% Roasted Decaf in bulk 9012200.10 Free 10% Black pepper 9041103 Free 30% Vanilla bean 9050001 Free 30% Nutmeg 9081001-2 SIL 30% Mace 9082000 SIL 30% Cumin 9093001.90 SIL 30% Note: # signifies an additional 2% duty except for coffee items.
HS CHAPTER 10: CEREALS Corn may be imported by feed millers subject to an end user condition, wheat may be imported by flour millers subject to an end user condition, and rice with 50% or more brokens and coarse rice with any amount of brokens may be imported freely. Imports of other grains are canalised. Any item in this chapter may be imported for planting subject to the provisions of the 1988 Seed Development Policy. Duties are zero.
HS CHAPTER 11: PRODUCTS OF THE MILLING INDUSTRY Imports of products in this chapter are restricted with the following exceptions: Item HS CODE Status Duty# CVD Rye flour 11021000 SIL 30% 0 Wheat meal 11031102 SIL 30% 0 Oat meal 11031200 SIL 30% 0 Corn meal 11031300 SIL 30% 0 Rice meal 11031400 SIL 30% 0 Other meals 11031900 SIL 30% 0 Worked cereals 1104 SIL 30% 0 Flour of sago 11062001 SIL 30% 0 Tamarind flour 11063002 SIL 30% 0 Coconut milk powder 11063004 Free 30% 0 Malt 1107 Free 30% 8% Starches 1108 Free 30% 8% Wheat gluten 1109 Free 30% 0 Note: # signifies an additional a 2% duty.
110 HS CHAPTER 12: OIL SEEDS AND OLEAGINOUS FRUITS MISCELLANEOUS GRAINS AND FRUIT A mixed bag of items with varying import policies. For items HS CODE 12.01‐12.07 ‐ oilseeds, imports are canalised through the State Trading Corporation or the Hindustan Vegetable Oils Corporation. Oilseed imports are permitted for planting purposes at zero duty subject to the provisions of the 1988 Seed Development Policy. Other importable items follow:
Item HS CODE Status Duty# Hops 1210 Free 40% Sea Weed 12122001 Free 40% Algae 12122009 Free 40% Apricot Kernel 12123001 Free 40% Note: # signifies an additional 2% duty, hotels may import at 25% duty.
HS CHAPTER 13: LAC, GUMS, RESINS AND OTHER VEGETABLE SAPS Almost the entire chapter is freely importable, duties range from 10 to 40%, plus the 2% surcharge, any item made with power is subject to an 8% CVD.
111 HS CHAPTER 15: ANIMAL OR VEGETABLE FATS AND OILS Imports of animal fats HS CODE 15.01 ‐ 15.03 and 15.06 are prohibited. Vegetable, fish, and marine mammal oils are a mixed bag of free imports, SIL and canalisation. Duties range from 10‐40%, duties on prohibited items were cut in the recent budget. The following major vegetable oils are freely importable.
Item HS CODE Status Duty# CVD Soybean 15079000.10 Free 20% 0 Peanut 15089001 Free 20% 0 Peanut 15089009.10 Free 20% 0 Olive 15099000.10 Free 30% 0 Olive 15100000.10 Free 30% 0 Palm olein 15.11 Free 20% 0 Sunflower 15121901.10 Free 20% 0 Safflower 15121902.10 Free 20% 0 Cottonseed 15122900.10 Free 20% 0 Babassu 15132900.20 Free 20% 0 Mustard 15149002.10 Free 20% 0 Rapeseed 15149003.10 Free 20% 0 Linseed 15151900.10 Free 20% 0 Corn 1515.29 Free 20% 0 Sesame 15155000.10 Free 20% 0 Rice bran 15159011.10 Free 20% 0 Inedible 15171000.30 SIL 30% 0 Margarine Note: # signifies an additional 2% duty.
HS CHAPTER 16: PREPARATIONS OF MEAT OR FISH Imports of most items are licensed. However, imports by hotels or restaurants are a possibility. Duties are 40%.
Item HS CODE Status Duty# Other 16029000 SIL 40% Meat juices 16030001 SIL 40% Meat juices 16030009 OGL 40% Note: # signifies an additional 2% duty, hotels may import at a 25% duty.
112 HS CHAPTER 17: SUGARS AND SUGAR CONFECTIONERY Sugars under HS CODE 1702 such as lactose, glucose etc. may be imported in solid but not liquid form at 20 or 40% duties. Items imported by hotels attract a 25% duty. Other importable items follow:
Item HS CODE Status Duty# CVD Sugar 17.01 free 40%* Varies Molasses 17.03 free 10% Rs. 500 Chewing gum 17041000 free 40% 18% Sweet meat 17049001 SIL 40% 8% Notes: # Signifies an additional and an additional 2% duty; * All duties waived for refined and raw sugar.
HS CHAPTER 18: COCOA AND COCOA PREPARATIONS All items in this chapter are freely importable. Import tariffs range from (30%, plus 2%, plus 18% CVD) to (40%, plus 2%, plus 18% CVD).
113 HS CHAPTER 19: PREPARATIONS OF CEREALS, FLOUR, STARCH, MILK Imports of a number of items in this chapter were permitted in 1997. Products not listed below are restricted.
Item HS CODE Status Duty# CVD
Malt extract 19019001 Free 10% 0 Preps of flour or 19019009 Free 10% 0 meal, other Corn flakes 19041001 Free 40% 10%* Crisp bread 19051000 Free 40% 8%* Gingerbread 19052000 Free 40% 8%* Sweet biscuits 19053003 Free 40% 8%* Other wafers 19053009 Free 40% 8%* Mixes/doughs 19012000 SIL 40% 18%* Tapioca 19030000 SIL 40% 0 Pawa/mudi 19041002 SIL 40% 10%* Bulgur wheat 19041003 SIL 40% 10%* Others 19041009 SIL 40% 10%* Prepared foods 19042000 SIL 40% 10%* from unroasted cereal flakes Other 19049000 SIL 40% 10%* Communion 19053001 SIL 40% 8%* wafers. Rusks 19054000 SIL 40% 8%* Other 19059000 SIL 40% 8%* Notes: # signifies an additional 2% duty, hotels can import at 25%; *CVDs apply to items in consumer packaging for retail sale, in 19.05 they apply to items made with the aid of power.
114 HS CHAPTER 20: PREPARATIONS OF VEGETABLES AND FRUITS Imports of a number of items were recently liberalised. Products not listed below are restricted, but can be imported by hotels.
Item HS CODE Status Duty# CVD* Tomatoes P/P 20021000 Free 40% 8% Tomato other 20029000 Free 40% 8% Truffles 20023000 Free 40% 8% Nuts P/P 20081902 Free 40% 8% Pineapple P/P 20081909 Free 40% 8% Grapefruit juice. 20092000 Free 40% 8% Lemon juice 20093001 Free 40% 8% Other citrus fruit juice 20093009 Free 40% 8% Pineapple juice. 20094000 Free 40% 8% Tomato juice 20095000 Free 40% 8% Grape juice 20096000 Free 40% 8% Cucumbers in vinegar 20011000 SIL 40% 8% Onion in vin. 20012000 SIL 40% 8% Chutneys and Indian 20019001-09 SIL 40% 8% pickles Mushrooms P/P 20031000 SIL 40% 8% Other veg or veg 20049000 SIL 40% 8% mixtures Homog. Veg. 20051000 SIL 40% 8% Olives 20057000 SIL 40% 8% Sweet corn 20058000 SIL 40% 8% Homog. Preps. 20071000 SIL 40% 8% Jams, jellies of other 20079909 SIL 40% 8% fruit Cashews R/S 20081901 SIL 40% 8% Other citrus P/P 20083009 SIL 40% 8% Pears P/P 20084000 SIL 40% 8% Apricots P/P 20085000 SIL 40% 8% Cherries P/P 20086000 SIL 40% 8% Peaches P/P 20086000 SIL 40% 8% Strawberry P/P 20088000 SIL 40% 8% Mixtures 20089200 SIL 40% 8% Mango, lemon, 20089901-04 SIL 40% 8% orange pineapp squashes Grapes P/P 20089912 SIL 40% 8%
115 Apples P/P 20089913 SIL 40% 8% Guava P/P 20089914 SIL 40% 8% Other fruit P/P 20089919 SIL 40% 8% Apple juice 20097000 SIL 40% 8% Mango juice 20098001 SIL 40% 8% Notes: # signifies an additional 2% duty, hotel imports subject to 25%; *CVD applies to items in packaging for retail sale.
HS CHAPTER 21: MISCELLANEOUS EDIBLE PREPARATIONS Imports of a number of items were recently liberalised. Products not listed below are restricted, but can be imported by hotels. Item HS CODE Status Duty# CVD*
Instant coffee 21011102.10-20 Free 40% 18% Instant coffee 21011109.10-20 Free 40% 18% Instant coffee 21011200.10-20 Free 40% 18% Yeast 21021000-2000 Free 40% 13% Soya sauce 21031000 Free 40% 8% Tomato ketchup 21032000 Free 40% 8% Mustard 21033000 Free 40% 8% Ice cream 21050000 Free 40% 8% Protein conc 21061000.10 Free 40% 8% consumer good Protein 21061000.90 Free 40% 0 concentrate other Diabetic foods 21069009.10 Free 40% 0 Prep baking 21023000 SIL 40% 13% powders Curry paste 21039001 SIL 40% 8% Chilli sauce 21039002 SIL 40% 8% Other mixed 21039009 SIL 40% 8% condiments Soups, preps for 21041000 SIL 40% 8% soups Homog food 21042000 SIL 40% 8% preps (Non alc.) prep 21069004 SIL 40% 40/18% for beverages Custard powder 21069007 SIL 40% 0 Other 21069009.9 SIL 40% 0 Notes: # signifies an additional 2% duty, 25% for hotels; * for soups, sauces, and ketchups only applies to items packaged for retail sale.
116
HS CHAPTER 22: BEVERAGES, SPIRITS, VINEGAR All items in this chapter are classified as consumer goods effectively banning imports, except ethyl alcohol (HS 22072000) and ice and snow (HS 22019001), which are freely importable, and diabetic beverages (HS 22029000.10) which are on SIL. Imports by hotels or restaurants are possible. Import duties on beer (22.03), wine (22.04, 22.05), and other alcoholic beverages (22.06) are 100%. These items also attract an additional duty of Rs. 9 (25 cents) per litre. Duties on alcoholic beverages under 22.07 and 22.08 are 260%. Ethyl alcohol is subject to a duty of 10%, sacramental wine, and other non‐alcoholic beverages have a duty of 40%. These items do not enjoy the lower duty for imports by hotels. Excise on branded mineral waters increased from 15 to 18%, excise on aerated water is 40%, excise on soya milk is 8%, excise on vinegar and denatured ethyl alcohol is 18%. All imports subject to an additional duty of 2%.
117 A.2. INDIA’S THREE PHASE PLAN FOR REMOVAL OF QUANTITATIVE RESTRICTIONS In early 1997, the WTO found that India could no longer justify the imposition of quantitative restrictions on imports on ‘balance of payments’ grounds ‐ ie. the argument that a country’s external position is so parlous that such controls are necessary as an emergency measure. In May 1997, the Indian Government proposed a 3 phase plan to remove all quantitative restrictions under a ten year timetable (from 1997 to 2006). As a result of negotiations with a number of major bilateral trading partners, the timetable has been accelerated and currently comprises the following three phases: • Phase 1: products for which restrictions were to be removed between 1 April 1997 and 31 March 2000; • Phase 2: products for which restrictions were to be removed between 1 April 2000 and 31 March 2002; • Phase 3: products for which restrictions were to be removed between 1 April 2002 and 31 March 2003; Products falling within each of these three phases ‐ as at mid November 1997 following the conclusion of negotiations between India and Australia ‐ are listed in Tables A1‐1 to A1‐3. Products for which liberalisation was accelerated as a result of the Australia‐India negotiations are highlighted in italics and or bold in Tables A.2.1 and A.2.2.
118 Table A.2.1: Phase I (1 April 1997 to 31 March 2000)
HS Code Product Description 030541.00 Pacific, Atlantic, Danube Salmon, smoked, including fillet 030613.01 Shrimp macrobactium, frozen. 030613.02 AFD shrimp, frozen. 030613.03 Prawns, frozen. 030614.00 Crabs, frozen. 030619.00 Other crustaceans, frozen. 030629.00 Other crustaceans, not frozen. 030710.00 Oysters. 030721.00 Scallops, including queen scallops, of the genera Pecten, Chlamys or Placopecten, live, fresh or chilled. 030729.00 Scallops, including queen scallops, of the genera Pecten, Chlamys or Placopecten, other. 030739.01 Clams, clam meat. 030739.09 Other mussels, other than fresh or chilled. 030741.01 Cuttle fish, live, fresh or chilled. 030741.09 Other cuttlefish and squid, live, fresh or chilled. 030749.01 Squid tubes, frozen. 030749.02 Whole squids, frozen. 030749.03 Squids, dried. 030749.09 Squids, other. 030759.00 Octopus, frozen, dried, salted or in brine. 030760.00 Snails, other than sea snails. 030791.00 Other molluscs and aquatic invertebrates, live, fresh or chilled. 030799.09 Other molluscs and aquatic invertebrates, frozen, dried, salted or in brine. 040310.00 Yoghurt 040410.02 Whey, dry, blocks, powdered 040620.00 Grated or powdered cheese, of all kinds. 040900.00 Natural honey 071110.00 Onions, provisionally preserved, but unsuitable in that state for immediate consumption. 071120.00 Olives, provisionally preserved. 071130.00 Capers, provisionally preserved. 071140.00 Cucumbers and gherkins, provisionally preserved. 071190.01 Green pepper in brine, provisionally preserved. 071190.02 Assorted canned vegetables, provisionally preserved. 071190.09 Other vegetables, provisionally preserved.
119 Table A.2.1: Phase I continued…
HS Code Product Description 071220.00 Onions, dried, whole, cut, sliced, broken or in powder, but not further prepared. 071230.01 Mushrooms, dried, whole, cut, sliced, broken or in powder, but not further prepared. 071230.02 Truffles, dried. 071290.01 Asparagus, dried. 071290.05 Marjoram, oregano. 071290.09 Other dried vegetables, whole, cut, sliced, broken or in powder, but not further prepared. 071410.00 Manioc, fresh, chilled, frozen, or dried. 071490.01 Sago pith. 080111.00 Coconuts, dessicated. 080121.00 Brazil nuts, in shell. 080122.00 Brazil nuts, shelled. 080290.09 Other nuts, fresh or dried, whether or not shelled or peeled. 080300.00 Bananas, including plantains, fresh or dried. 080430.00 Pineapples, fresh or dried. 080440.00 Avocados, fresh or dried. 080450.01 Guavas, fresh or dried. 080450.09 Mangosteens, fresh or dried. 080540.00 Grape fruit, fresh or dried. 080590.00 Other citrous fruit, fresh or dried. 080711.00 Watermelons, fresh. 080719.00 Other melons, fresh. 080720.00 Papaws, fresh. 080820.00 Pears and quinces, fresh. 080930.00 Peaches, including necterines, fresh. 081010.00 Strawberries, fresh. 081020.00 Raspberries, blackberries, mulberries and loganberries, fresh. 081030.00 Black, white or red currants and gooseberries, fresh. 081040.00 Cranberries, bilberries and other fruits of the genus Vaccinium, fresh. 081050.00 Kiwifruit, fresh. 081090.01 Pomegranates, fresh. 081090.02 Tamarind, fresh. 081090.03 Sapota, fresh. 081090.04 Sitafal, fresh. 081090.05 Custard apple, fresh. 081090.06 Bore, fresh.
120 Table A.2.1: Phase I continued…
HS Code Product Description 081090.09 Other fruit, fresh. 081110.01 Strawberries, whether or not cooked, not containing added sugar, frozen. 081110.02 Strawberries, whether or not cooked, containing added sugar, frozen. 081120.01 Raspberries, blackberries, mulberries, loganberries, black, white or red currants and gooseberries, cooked or uncooked, not containing added sugar, frozen. 081120.02 Raspberries, blackberries, mulberries, loganberries, black, white or red currants and gooseberries, cooked or uncooked, containing added sugar, frozen. 081190.01 Other fruits and nuts, cooked or uncooked, not containing added sugar, frozen. 081190.02 Other fruits and nuts, cooked or uncooked, containing added sugar, frozen. 081210.00 Cherries, provisionally preserved. 081220.00 Strawberries, provisionally preserved. 081290.09 Other fruits and nuts, provisionally preserved. 081340.01 Tamarind, dried. 081340.02 Singoda whole (water nut), dried. 081340.09 Other fruit (except dried citrous fruit), dried. 081350.01 Mixtures of nuts. 081350.02 Mixtures of dried fruits. Ex 090121.00 Coffee, roasted, not decaffeinated, other than in bulk packaging. Ex 090122.00 Coffee, roasted, decaffeinated, other than in bulk packaging. 090300.00 Mate. 090420.03 Fruits of the genus Capsicum, dried, crushed or ground. 090420.09 Jamaica pepper, dried, crushed or ground. 090500.02 Vanilla powder. 091099.16 Dhill seed powder. 091099.31 Cardamom husk. 091099.39 Spices husk, spent n.e.s. 110620.09 Flour and meal of other roots and tubers. 110630.09 Flour, meal and powder of other fruits. Ex 120710.01 Oil palm seeds, other than seed quality. 120810.00 Flours and meals of soyabeans. 120890.00 Flours and meals of other oil seeds or oleaginous fruits. 121299.01 Kokam flowers. 121299.02 Mahua flowers. 121299.09 Other vegetable products of a kind used primarily for human consumption, n.e.s.
121 Table A.2.1: Phase I continued…
HS Code Product Description 130190.32 Chilli oleoresins. Ex 130190.49 Other balsam and oleoresins, other than specified crude drugs. 140410.12 Henna leaves. 140410.13 Henna powder. 140490.01 Bidi wrapper leaves. 140490.02 Soap nuts. 140490.06 Soap nut powder. Ex 140490.19 Other crude vegetable materials, inedible, n.e.s., other than specified crude drugs. Ex 151530.00 Castor oil and its fractions, other than edible grades. Ex 151550.00 Sesame oil and its fractions, other than edible grades. 151560.00 Jojoba oil and its fractions. 151590.02 Chulmoogra oil. 151590.03 Mowra oil. 151590.04 Kokam oil. 151590.13 Chillies/capsicum oil. 151590.14 Turmeric oil. 151590.16 Ajwan seed oil. 151590.17 Garlic oil. Ex 151620.03 Hydrogenated castor oil, other than edible grades. Ex 151710.00 Margarine, excluding liquid margarine, other than products of animal origin. 151790.02 Peanut butter. 160100.00 Sausages and similar products of meat, meat offal or blood; food preparations based on these products. 160210.00 Homogenised preparations of other prepared or preserved meat, meat offal or blood. 160220.00 Preparations of liver of any animal. 160231.00 Preparations of turkeys. 160510.00 Crab, prepared or preserved. 160520.00 Shrimps and prawns, prepared or preserved. 160530.00 Lobster, prepared or preserved. 160540.00 Other crustaceans, prepared or preserved. 160590.01 Clams, prepared or preserved. 160590.09 Other molluscs prepared or preserved. Ex 170220.00 Maple sugar and maple syrup, other than in solid form. 170490.01 Sweetmeat 170490.09 Other sugar confectionery, including white chocolate, not containing cocoa
122 Table A.2.1: Phase I continued…
HS Code Product Description 190211.00 Uncooked pasta, not stuffed or otherwise prepared, containing eggs. 190219.00 Other uncooked pasta, not stuffed or otherwise prepared. 190220.00 Stuffed pasta, whether or not cooked or otherwise prepared. 190230.00 Other pasta. 190410.02 Pawa, mudi, etc. 190490.00 Cereals, other than maize, in grain form, pre-cooked or otherwise prepared 190530.01 Communion wafers, sealing wafers, etc. 190530.02 Pastries and cakes 190540.00 Rusks, toasted bread and similar toasted products 190590.00 Other baker's wares 200580.00 Sweet corn, not frozen 200799.09 Jams, jellies marmalades etc of other fruits 200819.09 Other roasted nuts and seeds, n.e.s. 200830.01 Oranges, prepared or preserved. 200830.09 Other citrus fruits prepared or preserved. 200840.00 Pears, prepared or preserved. 200850.00 Apricots, prepared or preserved. 200860.00 Cherries, prepared or preserved. 200870.00 Peaches, prepared or preserved. 200880.00 Strawberries, prepared or preserved. 200891.00 Palm hearts. 200892.00 Mixtures of prepared or preserved fruits 200899.11 Fruit cocktail, prepared or preserved. 200899.12 Grapes, prepared or preserved. 200899.13 Apples, prepared or preserved. 200899.14 Guava, prepared or preserved. 200899.19 Other fruits, prepared or preserved. 200911.00 Frozen orange juice. 200919.00 Other orange juice. 200970.00 Apple juice. 200980.01 Mango juice. 210390.02 Chilli sauce 210390.09 Other sauces 210410.00 Soups and broths and preparations therefore 210690.04 Compound preparations for making beverages (non alcoholic). 220110.00 Mineral waters and aerated waters.
123 Table A.2.1: Phase I continued…
HS Code Product Description 220190.09 Other waters, including natural water, not containing added sugar or other sweetening matter nor flavoured. 220210.01 Lemonade. 220210.09 Other waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter nor flavoured, other than lemonade. 220290.00 Other non alcoholic beverages, not including fruits or vegetable juices. Source: DFAT Note: As a result of recent Australian government negotiations products in italics and bold have been elevated to the 1st phase from the 2nd and 3rd phases respectively of the original schedules.
124 Table A.2.2: Phase II (1 April 2000 to 31 March 2002)
HS Code Product Description
020311.00 Carcasses and half carcasses, of meat of swine, fresh or chilled 020312.00 Hams, shoulders and cuts with bone in, as meat o swine, fresh or chilled 020319.00 Other meat of swine, fresh or chilled 020321.00 Carcasses of swine, frozen 020322.00 Hams, shoulders & cuts with bone, swine, fresh or chilled 020422.00 Cuts of sheep, fresh or chilled 020423.00 Boneless meat of sheep, fresh or chilled 020442.00 Other cuts with bone in, as meat of sheep , frozen 020630.00 Edible offal of swine, fresh or chilled 020641.00 Livers, as edible offal of swine, frozen 020649.00 Other edible offal of swine, frozen 020724.00 Meat and edible offal, of turkeys, not cut in pieces, fresh or chilled 020725.00 Meat or edible offal, of turkeys, not cut in pieces, frozen 020726.00 Cuts and edible offal, of turkeys, fresh or chilled 020727.00 Cuts and edible offal, of turkeys, frozen 020732.00 Meat and edible offal, not cut in pieces, of ducks, geese and guinea fowl, fresh or chilled 020733.00 Meat and edible offal, not cut in pieces, of ducks, geese and guinea fowl, frozen 020810.00 Meat and edible meat offal, of rabbits or hares, fresh, chilled or frozen. 030211.00 Trout, fresh or chilled. 030212.00 Pacific Salmon, Atlantic Salmon and Danube Salmon, fresh or chilled. 030219.00 Other Salmonidae, excluding livers and roes, fresh or chilled. 030221.00 Halibut, fresh or chilled. 030222.00 Plaice, fresh or chilled. 030223.00 Sole, fresh or chilled. 030229.00 Other flat fish, excluding livers and roes, fresh or chilled. 030231.00 Albacore or longfinned tunas, fresh or chilled. 030232.00 Yellowfin tunas, fresh or chilled. 030233.00 Skipjack or strip-bellied bonito, fresh or chilled. 030239.00 Other tunas, excluding livers and roes, fresh or chilled. 030240.00 Herrings, excluding livers and roes, fresh or chilled. 030250.00 Cod, excluding livers and roes, fresh or chilled. 030261.00 Sardines, sardinella, brisling or sprats, fresh or chilled. 030262.00 Haddock, fresh or chilled. 030263.00 Coalfish, fresh or chilled. 030264.00 Mackerel, fresh or chilled.
125 Table A.2.2: Phase II continued…
HS Code Product Description
030265.00 Dogfish and other sharks, fresh or chilled. 030266.00 Eels, fresh or chilled. 030269.02 Dara excluding livers and roes, fresh or chilled. 030269.03 Pomfret excluding livers and roes, fresh or chilled. 030269.09 All other fish excluding livers and roes, fresh or chilled. 030270.00 Fish livers and roes, fresh or chilled. 030310.00 Pacific salmon, excluding livers and roes, frozen. 030321.00 Trout, excluding livers and roes, frozen. 030322.00 Atlantic salmon and Danube salmon, excluding livers and roes, frozen. 030329.00 Other Salmonidae, excluding livers and roes, frozen. 030331.00 Halibut, excluding livers and roes, frozen. 030332.00 Plaice, excluding livers and roes, frozen. 030333.00 Sole, excluding livers and roes, frozen. 030339.00 Other flat fish, excluding livers and roes, frozen. 030341.00 Albacore and longfinned tunas, excluding livers and roes, frozen. 030342.00 Yellowfin tunas, excluding livers and roes, frozen. 030343.00 Skipjack or stripe-bellied bonito, excluding livers and roes, frozen. 030349.00 Other tunas, excluding livers and roes, frozen. 030350.00 Herrings, excluding livers and roes, frozen. 030360.00 Cod, excluding livers and roes, frozen. 030371.00 Sardines, Sardinella, brisling or sprats, excluding livers and roes, frozen. 030372.00 Haddock, excluding livers and roes, frozen. 030373.00 Coalfish, excluding livers and roes, frozen. 030374.00 Mackerel, excluding livers and roes, frozen. 030375.00 Dogfish and other sharks, excluding livers and roes, frozen. 030376.00 Eels, excluding livers and roes, frozen. 030377.00 Sea bass, excluding livers and roes, frozen. 030378.00 Hake, excluding livers and roes, frozen 030379.02 Dara, excluding livers and roes, frozen. 030379.03 Ribbon fish, excluding livers and roes, frozen. 030379.04 Seer, excluding livers and roes, frozen. 030379.05 Pomfret, white or silver, excluding livers and roes, frozen. 030379.07 Pomfret, black, excluding livers and roes, frozen. 030379.08 Ghole, excluding livers and roes, frozen. 030379.11 Thread fin, excluding livers and roes, frozen. 030379.12 Croacker, grouper, hounder, excluding livers and roes, frozen. 030379.19 Other frozen fish, excluding livers and roes.
126 Table A.2.2: Phase II continued…
HS Code Product Description
030380.00 Fish livers and roes, frozen. 030410.00 Fish fillet and other fish meat, fresh or chilled. 030420.01 Hilsa, frozen fillet. 030420.04 Shark, frozen fillet. 030420.05 Seer, frozen fillet. 030420.06 Tuna, frozen fillet. 030420.07 Cuttle fish, frozen fillet. 030420.09 Other frozen fish fillet, n.e.s. 030490.00 Other frozen fish meat. 030510.00 Flours, meals and pellets, of fish, fit for human consumption. 030520.00 Fish livers and roes, dried, smoked, salted or in brine. 030530.00 Fish fillet, dried, salted or in brine, but not smoked. 030542.00 Herrings, smoked, including fillet. 030549.00 Other smoked fish, including fillet. 030561.00 Herrings, salted but not dried or smoked and fish in brine. 030562.00 Cod, salted but not dried or smoked and fish in brine. 030563.00 Anchovies, salted but not dried or smoked and fish in brine. 030569.01 Bombay duck, salted but not dried or smoked. 030569.02 Seer without head, salted but not dried or smoked. 030569.03 Sprats, salted but not dried or smoked. 030569.09 Other fish, salted but not dried or smoked. 040110.00 Milk and cream, not concentrated nor containing added sugar or other sweetening matter, of a fat content by weight, not exceeding 1% 040120.00 Milk, 1 - 6 % fat, Liquid, whole 040229.02 Whole milk, powdered, fat exceeding 1.5% 040410.01 Whey, concentrated, evaporated or condensed 040630.00 Processed cheese, not grated or powdered 040811.00 Dried egg yolks. 040819.00 Egg yolks, other. 040891.00 Other birds' eggs, not in shell, dried. 040899.00 Other birds' eggs, not in shell, other. 070200.00 Tomatoes, fresh or chilled. 070310.02 Shallots, fresh or chilled. 070390.00 Leeks and other alliaceous vegetables, fresh or chilled. 070410.00 Cauliflowers and headed Broccoli, fresh or chilled. 070420.00 Brussels sprouts, fresh or chilled. 070490.00 Other cabbages and edible brassicas, fresh or chilled.
127 Table A.2.2: Phase II continued…
HS Code Product Description
070511.00 Cabbage lettuce, fresh or chilled. 070519.00 Other lettuce, fresh or chilled. 070521.00 Witloof chicory, fresh or chilled. 070529.00 Other chicory, fresh or chilled. 070610.00 Carrots and turnips, fresh or chilled. 070690.01 Radishes, fresh or chilled. 070690.02 Salad, beetroot, fresh or chilled. 070690.03 Horse radish, fresh or chilled. 070690.09 Salsify, celeriac, and similar edible roots, fresh or chilled. 070700.00 Cucumbers and gherkins, fresh or chilled. 070810.00 Peas, fresh or chilled. 070820.00 Beans, fresh or chilled. 070890.00 Other leguminous vegetables, fresh or chilled. 070910.00 Globe artichokes, fresh or chilled. 070920.00 Asparagus, fresh or chilled. 070930.00 Aubergines, fresh or chilled. 070940.00 Cellary other than Celeriac, fresh or chilled. 070951.00 Mushrooms, fresh or chilled. 070952.00 Truffles, fresh or chilled. 070960.01 Green chilli, fresh or chilled. 070960.09 Other fruits of the genus Capsicum or of the genus Pimenta, fresh or chilled. 070970.00 Spinach, New Zealand spinach and Orache spinach, fresh or chilled. 070990.01 Olives, fresh or chilled. 070990.02 Plantain, fresh or chilled. 070990.03 Mixed vegetables, fresh or chilled. 070990.04 Green pepper, fresh or chilled. 070990.05 Pumpkins, fresh or chilled. 070990.09 Other vegetables, fresh or chilled, n.e.s.. 071021.00 Peas, frozen. 071022.00 Beans, frozen. 071029.00 Other leguminous vegetables, shelled or unshelled, frozen. 071030.00 Spinach, New Zealand spinach, and Orache spinach, frozen. 071040.00 Sweet corn, frozen. 071080.01 Terragon, frozen. 071080.09 Other vegetables, frozen. 071090.00 Mixtures of vegetables, frozen. 071290.02 Dehydrated garlic powder
128 Table A.2.2: Phase II continued…
HS Code Product Description
071290.03 Dehydrated garlic flakes 071290.04 Dried garlic 080510.00 Oranges, fresh or dried 080920.00 Cherries, fresh 090411.04 Black pepper, ungarbled, neither crushed nor ground 090411.05 Dehydrated green pepper, neither crushed nor ground 090411.07 Freeze dried green pepper, neither crushed nor ground 090411.08 Frozen pepper, neither crushed nor ground 090420.01 Chilli, dried, crushed or ground 090420.02 Chilli powder, dried 090610.01 Cassia, neither crushed nor ground. 090610.02 Cinnamon bark, neither crushed nor ground. 090610.03 Cinnamon tree flowers, neither crushed nor ground. 090620.00 Cinnamon and cinnamon tree flowers, crushed or ground. 090700.01 Cloves, extracted. 090700.02 Cloves, not extracted. 090700.03 Cloves stems. 091010.03 Ginger, bleached. 091020.01 Saffron, stigma. 091020.02 Saffron, stamen. 091030.03 Turmeric, dry. 091040.01 Tejpat. 091040.02 Thymes. 091040.09 Other bay leaves. 091050.00 Curry. 091091.02 Mixtures of spices. 091091.09 Other mixtures of products of heading No. 09.10. 110210.00 Rye flour 110510.00 Flour, meal and powder of potatoes 110520.00 Flakes, granules and pellets of potatoes 110610.00 Flour, meal and powder of dried leguminous vegetables 110620.01 Flour and meal, of sago 110620.02 Flour and meal, or manioc 110630.01 Flour, mango 110630.02 Flour, meal and powder of tamarind 150910.00 Olive oil, virgin. Ex 150990.00 Other olive oil and its fractions, other than edible grades.
129 Table A.2.2: Phase II continued…
HS Code Product Description
Ex 151000.00 Other oils and their fractions, obtained solely from olives, whether or not refined, but not chemically modified, including blends, other than edible grades. 151590.05 Tobacco seed oil. 151590.06 Sal oil. 151790.01 Sal fat (processed or refined). 160290.00 Other preparations of meat, including preparations of blood of any animal. 160300.01 Meat extracts and meat juices. 160300.02 Fish extracts. 160411.00 Salmon, whole or in pieces, but not minced. 160412.00 Herrings, whole or in pieces, but not minced. 160413.01 Sardines, sardinella and bristling, whole or in pieces, but not minced. 160413.02 Sprats, whole or in pieces, but not minced. 160414.01 Tunas, whole or in pieces, but not minced. 160414.09 Skipjack and Atlantic bonito, whole or in pieces, but not minced. 160415.00 Mackerel, whole or in pieces, but not minced. 160416.00 Anchovies, whole or in pieces, but not minced. 160419.00 Other fish, whole or in pieces, but not minced. 160420.00 Other prepared or preserved fish. 160430.00 Caviar and caviar substitutes. 170290.09 Other sugars, including invert sugar (solid form not restricted) 190190.02 Papad. 190240.00 Couscous. 190300.00 Tapioca and substitutes therefor, prepared from starch, in the form of flakes, grains, pearls, siftings or in similar forms. 190410.03 Bulgar wheat. 190410.09 Other prepared foods obtained by the swelling or roasting of cereals or cereal products. 190420.00 Prepared foods obtained from unroasted cereal flakes or from mixtures of unroasted cereal flakes and roasted cereal flakes or swelled cereals. 200490.00 Other vegetables and mixtures of vegetables, prepared or preserved otherwise than by vinegar or acetic acid, frozen. 200510.00 Homogenised vegetables, not frozen. 200520.00 Potatoes, not frozen. 200540.00 Peas, not frozen. 200551.00 Beans, shelled, not frozen. 200559.00 Other beans, not frozen. 200560.00 Asparagus, not frozen. 200570.00 Olives, not frozen.
130 Table A.2.2: Phase II continued…
HS Code Product Description
200590.00 Other vegetables and mixture of vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen. 200799.01 Jams, jellies marmalades etc. of mango 200799.02 Jams, jellies marmalades etc of guava 200799.03 Jams, jellies marmalades etc of pineapple 200799.04 Jams, jellies marmalades etc of apple 200811.00 Ground nuts, otherwise prepared or preserved, n.e.s. 200819.03 Roasted or fried fruits of vegetable products, n.e.s. 200980.09 Other single fruit or vegetable juice 200990.00 Mixture of juices 210420.00 Homogenised composite food preparations 220900.01 Brewed vinegar. Source: DFAT Note: As a result of recent Australian government negotiations products in bold have been elevated to the 1st phase from the original WTO schedules 3rd phase.
131 Table A.2.3: Phase III: (April 1 1002 to 31 March 2003).
HS Code Product Description
020329.00 Other meat of swine, frozen. 020410.00 Carcasses and half carcasses, as meat of lamb, fresh or chilled. 020421.00 Carcasses and half carcasses, as meat of sheep, fresh or chilled. 020430.00 Carcasses and half carcasses, as meat of lamb, frozen. 020441.00 Carcasses and half carcasses, as meat of sheep, frozen. 020443.00 Boneless meat of sheep, frozen. 020450.00 Meat of goats, fresh, chilled or frozen. 020680.01 Edible offal of sheep or goats, fresh or chilled. 020690.01 Edible offal of sheep or goats, frozen. 020711.00 Meat and edible offal, of fowls of the species Gallus Domesticus, not cut in pieces, fresh or chilled. 020712.00 Meat and edible offal, of fowls of the species Gallus Domesticus, not cut in pieces, frozen. 020713.00 Cuts and edible offal, of fowls of the species Gallus Domesticus, fresh or chilled. 020714.00 Cuts and edible offal, of fowls of the species Gallus Domesticus, frozen. 020734.00 Fatty livers, as meat of ducks, geese and guinea fowls, fresh or chilled. 020735.00 Other cuts and edible offal, of poultry, fresh or chilled. 020736.00 Other cuts and edible offal, of poultry, frozen. Ex 020890.00 Other meat or edible meat offal, fresh, chilled or frozen, other than of protected species. 021011.00 Hams, shoulders and cuts, with bone in, as meat of swine, salted, in brine, dried or smoked. 021012.00 Bellies (streaky) and cuts, as meat of swine, salted, in brine, dried or smoked. 021019.00 Other meat and edible meat offal, of swine, salted, in brine, dried or smoked. Ex 021090.09 Other meat and edible meat offal, salted, in brine, dried or smoked; edible flours and meals of meat or meat offal, other than of protected species. 040130.00 Milk and cream, not concentrated nor containing added sugar or other sweetening matter, of a fat content by weight, exceeding 6%. 040210.03 Milk food for babies, concentrated or containing added sugar or other sweetening matter, in powder, granules or other solid forms, of a fat content by weight not exceeding 1.5%. 040210.09 Other milk and cream, concentrated or containing added sugar or other sweetening matter, in powder, granules or other solid forms, of a fat content by weight, not exceeding 1.5%. 040221.00 Milk and cream, concentrated, not containing added sugar or other sweetening matter, in powder, granules or other solid form of a fat content, by weight exceeding 1.5%. 040229.03 Milk for babies, containing added sugar or other sweetening matter, in powder, granules or other solid forms, of a fat content, by weight, exceeding 1.5%.
132 Table A.2.3: Phase III: continued… HS Code Product Description
040229.09 Other milk and cream, containing added sugar or other sweetening matter, in powder, granules or other solid forms, of a fat content, by weight, exceeding 1.5%. 040291.00 Milk and cream, not containing added sugar or other sweetening matter, other. 040299.02 Whole milk, containing added sugar or other sweetening matter, other. 040299.03 Condensed milk, containing added sugar or other sweetening matter, other. 040299.09 Other milk and cream, containing added sugar or other sweetening matter, other. 040390.01 Butter milk. 040390.09 Curdled milk and cream, kephir and other fermented or acidified milk or cream. 040490.00 Other products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, n.e.s. 040510.00 Butter derived from milk. 040520.00 Dairy spreads. 040590.02 Melted butter (ghee). 040610.00 Fresh cheese, including whey cheese and curd. 040640.00 Blue-veined cheese. 040690.00 Other cheese. 071010.00 Potatoes, uncooked or cooked by steaming or boiling in water, frozen. 071290.06 Potatoes, whether or not cut or sliced, but not further prepared. 071420.00 Sweet potatoes. 071490.09 Other edible roots and tubers with high starch or inulin content, fresh or dried. 080119.01 Coconuts, fresh. 080119.02 Cocunuts, dried. 080290.01 Betel nut, whole. 080290.02 Betel nut, split and ground. 080290.03 Nuts, areca. 080450.02 Mangoes, fresh. 080450.03 Mangoes, sliced dried. 080520.00 Mandarins, clementines, wilkings and similar citrus hybrids, fresh or dried. 080530.00 Lemons and limes, fresh or dried. 080610.00 Grapes, fresh. 080810.00 Apples, fresh. 080940.00 Plums and sloes, fresh 081090.07 Lichi, fresh. 081290.01 Mango slices in brine, provisionally preserved. 081290.02 Mango pulp, provisionally preserved.
133 081330.00 Apples, dried.
Table A.2.3: Phase III: continued…
HS Code Product Description
090111.01 Coffee, not roasted, not decaffeinated, arabica plantation A. 090111.02 Coffee, not roasted, not decaffeinated, arabica plantation B. 090111.03 Coffee, not roasted, not decaffeinated, arabica plantation C. 090111.09 Coffee, not roasted, not decaffeinated, arabica plantation, other grades. 090111.11 Coffee, not roasted, not decaffeinated, arabica cherry AB. 090111.12 Coffee, not roasted, not decaffeinated, arabica cherry PB. 090111.13 Coffee, not roasted, not decaffeinated, arabica cherry C. 090111.14 Coffee, not roasted, not decaffeinated, arabica cherry B/B/B. 090111.19 Coffee, not roasted, not decaffeinated, arabica cherry other grades. 090111.21 Coffee, not roasted, not decaffeinated, rob parchment AB. 090111.22 Coffee, not roasted, not decaffeinated, rob parchment PB. 090111.23 Coffee, not roasted, not decaffeinated, rob parchment C. 090111.29 Coffee, not roasted, not decaffeinated, rob parchement other grades. 090111.31 Coffee, not roasted, not decaffeinated, rob cherry AB. 090111.32 Coffee, not roasted, not decaffeinated, rob cherry PB. 090111.33 Coffee, not roasted, not decaffeinated, rob cherry C. 090111.34 Coffee, not roasted, not decaffeinated, rob cherry B/B/B. 090111.35 Coffee, not roasted, not decaffeinated, rob cherry bulk. 090111.39 Coffee, not roasted, not decaffeinated, rob cherry other grades. 090112.00 Coffee, not roasted, decaffeinated. 090190.00 Coffee husks and skins; Coffee substitutes containing coffee in any proportion. 090210.01 Tea green in packets not exceeding 25 g. 090210.02 Tea green in packets exceeding 25 g. but not exceeding 1 kg. 090210.03 Tea green in packets exceeding 1 kg. but not exceeding 3 kg. 090220.01 Tea green in packets exceeding 3 kg. but not exceeding 20 kg. 090220.02 Tea green in bulk. 090220.03 Tea green (ball, brick, tablet etc). 090220.04 Tea green waste. 090230.01 Tea black in packets not exceeding 25 g. 090230.02 Tea black in packets exceeding 25 g. but not exceeding 1 kg. 090230.03 Tea black in packets exceeding 1 kg. but not exceeding 3 kg. 090240.01 Tea black in packets exceeding 3 kg. but not exceeding 20 kg. 090240.02 Tea black, leaf in bulk. 090240.03 Tea black, dust in bulk.
134 090240.04 Tea bags. 090240.05 Tea black (ball, brick, tablets, etc). 090240.06 Tea black waste.
Table A.2.3: Phase III: continued…
HS Code Product Description
090411.01 Pepper, neither crushed nor ground, long. 090411.02 Light black pepper and pinheads, neither crushed nor ground. 090411.06 Pepper pinheads, neither crushed nor ground. 090411.09 Other pepper (white), neither crushed nor ground. 090412.00 Pepper, crushed or ground. 090420.04 Chilly seed, dried, crushed or ground. 090830.01 Cardamoms, large. 090830.02 Cardamoms, small, Aleppy green. 090830.03 Cardamoms, small, coorg green. 090830.04 Cardamoms, small bleached, half-bleached, or bleachable. 090830.06 Cardamoms, small, mixed. 090830.07 Cardamom powder. Ex 090910.01 Aniseed, other than for sowing and planting. Ex 090910.02 Badiyan seed, other than for sowing and planting. Ex 090920.01 Corriander seed, other than for sowing and planting. 090920.02 Corriander powder. Ex 090930.02 Cumin, other than black, other than for sowing and planting. Ex 090940.00 Seeds of caraway, other than for sowing and planting. Ex 090950.01 Fennel seed, other than for sowing and planting. 090950.02 Fennel powder. Ex 090950.03 Juniper seed, other than for sowing and planting. 091010.02 Ginger, unbleached. 091010.04 Ginger, powder. 091010.09 Other ginger, including dried. 091030.02 Turmeric, powder. 091091.01 Curry powder. 091099.09 Other spices, n.e.s. 091099.11 Tejpat powder. 091099.12 Cassia powder. 091099.13 Cumin powder. 091099.14 Celery powder. 091099.15 Fenugreek powder. 091099.18 Mustard powder.
135 091099.19 Spices, powder n.e.s. 091099.21 Coriander powder. 091099.22 Fennel powder. Ex 100110.00 Durum wheat, other than seed quality.
Table A.2.3: Phase III: continued…
HS Code Product Description
100190.02 Wheat (not seed) for human consumption. Ex 100190.03 Meslin, other than seed quality. Ex 100200.00 Rye, other than seed quality. Ex 100300.00 Barley, other than seed quality. Ex 100400.00 Oats, other than seed quality. Ex 100590.00 Maize, other, other than feed grade maize fit only for use as poultry or animal feed. Ex 100610.00 Rice in the husk, other than seed quality. 100620.00 Husk (brown) rice. 100630.01 Rice, parboiled. 100630.02 Basmati rice. 100630.09 Other rice. 100640.00 Broken rice. Ex 100700.00 Grains sorghum, other than seed quality. Ex 100810.00 Buckwheat, other than seed quality. Ex 100820.01 Jawar, other than seed quality. Ex 100820.03 Bajra, other than seed quality. Ex 100820.04 Ragi, other than seed quality. Ex 100830.00 Canary seed, other than seed quality. Ex 100890.00 Other cereals, other than seed quality. 110100.00 Wheat or meslin flour. 110220.00 Maize flour. 110230.00 Rice flour. 110290.00 Flour of other cereals. 110311.01 Groats of wheat including semolina. 110311.02 Meal of wheat. 110312.00 Groats and meal of oats. 110313.00 Groats and meal of maize. 110314.00 Groats and meals of rice. 110319.00 Groats and meal of other cereals. 110321.00 Pellets of wheat. 110329.00 Pellets of other cereals.
136 110411.00 Rolled or flaked grains of barley. 110412.00 Rolled or flaked grains of oats. 110419.00 Rolled or flaked grains of other cereals. 110421.00 Other worked grains of barley. 110422.00 Other worked grains of oats. 110423.00 Other worked grains of maize.
Table A.2.3: Phase III: continued…
HS Code Product Description
110429.00 Other worked grains of other cereals. 110430.00 Germ of cereals, whole, rolled, flaked, or ground. Ex 120100.00 Soya beans, whether or not broken, other than seed quality. Ex 120210.01 Ground nuts, not roasted or otherwise cooked, in shell, H.P.S., other than seed quality. Ex 120210.09 Ground nuts, not roasted or otherwise cooked, in shell, n.e.s., other than seed quality. 120220.01 Ground nuts, shelled, kernels, H.P.S. 120220.09 Ground nuts, shelled, kernels, n.e.s. 120300.00 Copra. Ex 120400.00 Linseed, whether or not broken, other than seed quality. Ex 120500.00 Rape or Colza seeds, whether or not broken, other than seed quality. Ex 120600.00 Sunflower seeds whether or not broken, other than seed quality. Ex 120710.09 Nuts and kernels of other palm, other than seed quality. Ex 120720.00 Cotton seeds, other than seed quality. Ex 120730.00 Castor oil seeds, other than seed quality. Ex 120740.00 Sesamum seeds, other than seed quality. Ex 120750.00 Mustard seeds, other than seed quality. Ex 120760.00 Safflower seeds, other than seed quality. 120792.00 Shea seeds. 120799.01 Ajams, whether or not broken. 120799.04 Mango kernel, whether or not broken. 120799.05 Niger seeds, whether or not broken. 120799.06 Kokum, whether or not broken. Ex 121210.00 Locust beans, including locust bean seeds, other than seed quality. 121230.09 Apricot stones, peach or plump stones and kernels. 120799.09 Oil seeds and oleaginous fruits, whether or not broken, n.e.s. 121299.03 Unroasted chicory roots. 130219.06 Extracts, neem. 150710.00 Soyabean crude oil, whether or not degummed.
137 150810.00 Crude ground nut oil. 151110.00 Crude palm oil. 151190.00 Other palm oil and its fractions. 151211.01 Sunflower seed oil, crude. 151211.02 Safflower seed oil, crude. 151221.00 Cotton seed crude oil. 151311.00 Coconut oil, crude. 151319.00 Coconut oil, refined.
Table A.2.3: Phase III: continued…
HS Code Product Description
151321.00 Palm kernel or babassu oil, crude. 151410.01 Crude Colza oil. 151410.02 Crude mustard oil. 151410.03 Crude rapeseed oil. 151511.00 Crude linseed oil. 151521.00 Crude maize oil and its fractions. 151590.12 Cardamom oil. 151590.15 Niger seed oil. Ex 151790.09 Imitation lard and other prepared edible fats, n.e.s., other than products of animal origin. 160232.00 Preparations of fowls of the species Gallus Domesticus. 160239.00 Preparations of other poultry. 160241.00 Hams and cuts thereof. 160242.00 Shoulders and cuts of swine. 160249.00 Other preparations of swine. Ex 170211.00 Lactose and lactose syrup, containing by weight 99% or more lactose, other than in solid form. Ex 170219.00 Other lactose and lactose syrup, other than in solid form. 170230.01 Glucose liquid, not containing fructose or containing in the dry state less than 20% by weight of fructose. Ex 170230.03 Dextrose, other than in solid form. 170240.01 Glucose liquid, containing in the dry state at least 20% but less than 50% by weight of fructose. Ex 170240.03 Dextrose, containing in the dry state at least 20% but less than 50% by weight of fructose, other than in solid form. Ex 170250.00 Chemically pure fructose, other than in solid form. Ex 170260.00 Other fructose and fructose syrup, containing in the dry state more than 50% by weight of fructose, other than in solid form. 190110.01 Malted milk (including powder for infant use, put up for retail sale). 190110.09 Malt extract for infants, for retail sale.
138 190120.00 Mixes and doughs for the preparations of bakers' wares of heading No. 19.05. 200110.00 Cucumbers and gherkins, prepared or preserved by vinegar or acetic acid. 200120.00 Onions, prepared or preserved by vinegar or acetic acid. 200190.01 Chilli pickles. 200190.02 Green pickles. 200190.03 Mango pickles. 200190.04 Mango chutnies. 200190.05 Tomato chutnies and paste. 200190.06 Lemon chutnies.
Table A.2.3: Phase III: continued…
HS Code Product Description
200190.07 Tamarind paste, concentrate, puree. 200190.09 Other vegetables, fruits, nuts, and other edible parts of plants, prepared or preserved by vinegar or acetic acid. 200310.00 Mushrooms, prepared or preserved otherwise than by vinegar or acetic acid. 200410.01 Potato chips, fried, frozen. 200410.09 Other potato preparations, frozen. 200600.00 Fruits, nuts, fruit peel and other parts of plants, preserved by sugar. 200710.00 Homogenised preparations of fruit or nut puree and fruit or nut paste, being cooked preparations. 200791.00 Citrus fruit preparations. 200819.01 Cashewnuts, roasted, and/or salted. 200899.01 Mango squash. 200899.02 Lemon squash. 200899.03 Orange squash. 200899.04 Pineapple squash. 200899.09 Other fruit squash. Ex 210111.02 Coffee aroma, other than instant coffee. Ex 210111.09 Other extracts, essences and concentrates of coffee, and preparations with a basis thereof, other than instant coffee. Ex 210112.00 Preparations with a basis of extracts, essences or concentrates or with a basis of coffee, other than instant coffee. 210120.01 Instant tea. 210120.02 Quick brewing black tea. 210120.03 Tea aroma. 210120.09 Other extracts, essences and concentrates of tea or mate, and preparations with a basis thereof. 210130.01 Chicory roasted. 210130.09 Other roasted coffee substitutes, extracts, essences and concentrates
139 thereof. 210230.00 Prepared baking powders. 210390.01 Curry paste. 210690.01 Soft drink concentrates. 210690.02 Paan masala including scented supari (betel spices prepared). 210690.03 Sugar syrup containing flavouring or colouring material, n.e.s. 210690.06 Churna for paan. 210690.07 Custard powder. Ex 210690.09 Other food preparations, n.e.s., other than diabetic food preparations. 220300.00 Beer made from malt. 220410.00 Sparkling wine.
Table A.2.3: Phase III: continued…
HS Code Product Description
220421.01 Port and other still red wines, in containers holding 2 l. or less. 220421.02 Sherry and other still white wines in containers holding 2 l. or less. 220421.09 Other wine, including grape must in containers holding 2 l. or less. 220429.01 Port and other still red wines, other. 220429.02 Sherry and other still white wine, other. 220429.09 Other wine including grape must, other. 220430.00 Other grape must, otherwise than with fermentation prevented or arrested by the addition of alcohol. 220510.00 Vermouth and other wine of fresh grapes, flavoured with plants or aromatic substances, in containers holding 2 l. or less 220590.00 Vermouth and other wine of fresh grapes, flavoured with plants or aromatic substances, other. 220600.00 Other fermented beverages (cider, perry, mead). 220710.01 Rectified spirit. 220710.09 Undenatured ethyl alcohol of an alcoholic strength by volume of 80% vol. or higher, other. 220820.00 Spirits obtained by distilling grape wine or grape marc. 220830.00 Whiskeys. 220840.00 Rum and Tafia. 220850.00 Gin and Geneva. 220860.00 Vodka. 220870.00 Liqueurs and cordials. 220890.00 Other undenatured ethyl alcohol of an alcoholic strength by volume of less than 80% vol., and other spirituous beverages. 220900.02 Synthetic vinegar. Source: DFAT
140 Appendix B: Major Foreign Investors in the Indian Food Industry
Table B1: Some Major Foreign Collaborations in the Food Processing Industries
Indian Firm Foreign Collaborator Product/Activity
Glaxo Laboratories India Pvt. Glaxo Laboratories Infant milk food Ltd Britannia Biscuits Co Ltd Baker Pabfins (Exports) Ltd, Biscuits UK Pepsi Foods Ltd Pepsico Inc, USA Processed fruits and vegetables; Soft drink concentrates Fishing Falcons Pvt Ltd TAE EUN Coopn Co Ltd, Tuna fishing South Korea Kancor Flavours & Extracts Ltd Mccormick USA Oleoresins, spice, food processing VST Industries Ltd High Value Horticultures plc, Food processing UK Kellogg Co Kellogg Co, USA Cereal products Tetra Pak India Pvt Ltd Baldurin BV, Holland Packaging machinery Tatum Shanchi India Ltd Tatum Farms, USA Poultry products Nestle India Ltd Nestle Ltd, Switzerland Infant weaning foods Jagatjit Ind Ltd General Mills Inc, USA Texturised soya Protein breadings Smithkline Beecham Ltd Smithkline Beecham Powdered milk SKW Associates Pvt Ltd, Barry Lederman & Associates Mineral water Faridabad Pvt Ltd, London Larsen & Toubro Ltd, Bombay Cherry Burrill Process Bread spread plant Equipment, USA Wens Agro Foods Ltd, New 1. FENCO, Parma, Italy Multipurpose fruit and Delhi 2. CIBS International vegetables processing plant Services, USA Turratti Food Processing Turratti Sri, Italy Food processing machinery Machines Ltd, New Delhi Alfa Laval (India) Ltd, Bombay Alfa Laval Separation AB, Sell cleaning type hermatic milk Sweden separator Pronto Foods Pvt Ltd, Bombay Panafin SPA, Italy Fully processed ready sea food Innovative Marine Foods Ltd, Farmland Industries Inc, Individual quick frozen marine Kerala USA; products Transnational Enterprises Inc, Canada Larsen & Toubro Ltd, Bombay Westfalia Separator AG, Milk/Cream separators Germany
141 RNT Estates Ltd, Calcutta Haegens Holland BV, Processed & canned asparagus Netherlands Ganesh Valley Agro Industries Food Industries Planning & Fruit juices, concentrates & pulp & Farms Pvt Ltd Bombay Servicing Ltd, Switzerland Incorporated Daub Verhoeven Daub Verhoeven BV, Holland Bakery machinery Ltd, Baroda International Cocoa Products Nestle SA, Switzerland Chocolates Ltd SAF Yeast, Bombay Leaseffie et Cie, France Yeast Buhler India Ltd, Bangalore Buhler Ltd, Switzerland Floor rolling plant & food milling plants Haryana Coated Papers Ltd Reitzel Industries Holding, Processed foods, pickles Switzerland Rosschem Industries Ltd, Unitron Chemicals Ltd, Food grade phosphoric acid Bombay Taiwan Breweries India Pvt Ltd Scodiper UBY, Switzerland Beer & stout Pancham Agriculture Farms Allied Sea Foods Pvt Ltd, Prawns Ltd, Bombay Singapore HSR Builders Pvt Ltd, Calcutta Eskin SA, Germany Fish culture by intensive farming Indo-Dutch Proteins Ltd, Nederlandse Industrie Van Egg powder & products Hyderabad Eiprodukten, Netherlands Saptrishi Agro Industries Ltd, Dalsem Veciap BV, Holland Canned white button Madras mushrooms Lacto-Protein India Ltd Valio Engg Ltd, Helsinki, Lactose, casein, whey protein Finland etc Hindustan Lever Ltd Shinto Bussan, Tokyo, Japan Surioni & other fish products Indian Beverages Ltd, Bombay Harlen Fine Foods, Processed coconut products Singapore Dadi Batsara Krupp, Germany Mineral water Spadler, Belgium Indo Nissin Foods Ltd C.Itoh Co Ltd, Japan Noodles Superior Investment (India) Ltd, Hanchal Exports, West Banana puree New Delhi (110% EOU) Germany Shri MK Modi N Delhi Haegens of Holland Mushrooms (110% EOU) Indo-Dutch Foods Ltd, New Genssen Kessel, Holland Mushrooms Delhi (100% EOU) Temptation Foods Ltd, Pune Han and Hak Beheer, F&V processing (110% EOU) Holland Reitzel India Ltd, New Delhi Poupon & Rietzel Industries, Processed foods, pickled & F& (100% EOU) Switzerland VP Kotputili (Rajasthan) Fenco, Italy & Cam Finance, Tomato paste, mango paste, Switzerland guava paste MTL Foods, UK (100% EOU) Shri R Modi (NRI) Pickles and food spices Saptrishi Agro Industries Ltd, Dalsam Veciap, Holland Mushrooms New Delhi (100% EOU)
142 Shri HL Solanki, NRI (100% Shri HL Solanki, NRI, UK Processed vegetables EOU) Mushroom Impex India Ltd Asiaway Industries, Israel Mushrooms (100% EOU) and Galil Engineering of Israel Northland Agro Industries Ltd, NRI participation Tomato paste, mango New Delhi (100% EOU) concentrate, guava concentrate Classic Agro Foods Ltd, Madras Alimenta Spa, Italy and NRI Fruit concentrates (100% EOU) Mandeep Mushroom Pvt Ltd Turatti, Italy Mushrooms (100% EOU) Western Fruit and Vegetables Unipektin, Switzerland Pineapple juice concentrate Ltd, Ahmednagar (100% EOU) Raksons Leasing and Finance Dalsern Veciap, Holland Mushrooms Ltd, New Delhi (100% EOU) Great Western Industries, Ramond John Killer of F&V preserved in acetic acid Bangalore (Karnataka) (100% Australia EOU) India Beverages Ltd, Bombay Harlen Fine Foods, Coconut water, coconut cream, (100% EOU) Singapore coconut cocktail Amer India Ltd (100%EOU) Shri Padam Khana, NRI Processed fruit and vegetables Shri Karan Singh NRI Processed vegetables Eskay Agro-Tech Ltd, Asiaway Industries Ltd, Hong Mushrooms Hyderabad Kong Pansai Foods Ltd, New Delhi Food Industries Planning and Fruit juice concentrates and Servicing, Switzerland, NRI purees D’Eure Foods Ltd, Hyderabad ITA SRL, Italy Banana puree Farmtech Agro Exports Ltd, AEM BV, Netherlands Mushrooms Hyderabad Rajasthan Oil Tech Ltd, New Macon Engg Ltd, UK Cultivation and canning of Delhi Design Devioff AB, Sweden button mushrooms JV Huys BV, Holland Flavorade TN Pvt Ltd, Madras Dohtar Gmbh, Germany Fruit and juice concentrate Eqitorial Provendored Pvt Ltd, Don Hodgson, Australia Natural dried, dehydrated Bangalore Jan Hodgson, Australia vegetables, fruits etc. Ganesh Valley Foods Ltd, IBS, SRL Italy Seasonal fresh fruit Bombay Indo-Italian Foods Ltd Andre &CIESA, Switzerland, Dehydrated onions NRI Satnam Heaqes Ltd, New Delhi Haegens of Holland BV Mushrooms Netherlands (Financial and Technical Collaboration) Classic Agro Foods Ltd AWI Industries Ltd, Hong Mushrooms Bhuvaneshawar (Orissa) Kong Gatil Engg, Israel, NRI Kusum Products Ltd, Calcutta DC & Associates Ltd, Hong Mushrooms Kong REIL Products Ltd, New Delhi Tropical Foods Engg SRL, Substantial expansion
143 Italy concentrates etc Assam Co Ltd, Guwahati Monterey Mushroom Inc, Mushrooms USA Ganesh Valley Ltd, Bombay IBS SRL, Italy Fresh fruits/ pulps concentrate Sunripe Foods Ltd, Hyderabad NRI Mango and other fruit pulps concentrate Chaken Agro Inds, Ltd, Pune NRI Dehydrated onions Friendly Agro Inds Ltd, Pune Dalsem Veciap BV, Holland Mushrooms Pramod Lath, Bombay Henschel Exports GmbH, Dehydrated onions and other Germany dehydrated vegetables N Rama Krishna, Vijayawada NRI Mushrooms (AP) Pierce Leslie & Co Ltd, Madras Peirce Lesli and Co Ltd, UK Cashew kernels and cashewnut liquid and food products etc Ideal Vitamin Food Products Ltd Harlen, Singapore Coconut products, dairy milk, mineral water, and other fruit ad fruit products in aseptic Tetra Pak PMP Electronics Ltd, New Delhi Santa Monica International Spice oil and oleoresins Inc, USA AVT Indl. Products, Cochin Mccorormick Inc., USA Whole spices 500o Cochin MT sterilised ground/blend spices – 5000MT Vimal Chaturvedi, New Delhi Franken BV, Holland Cultivation, processing and packing of white mushrooms Flavorade TN Pvt Ltd, Madras Dohler GmbH, Germany Fruit juice concentrate, flavours for food and beverages etc Mrs C Nirmala, Hyderabad Dalsem-Veciap, Holland Mushroom cultivation and canning Anup, New Delhi Dalsem-Veciap, Holland Mushrooms Tatum Sachi India Ltd, Tatum Farms, USA Poultry products Rajendra Place, New Delhi Shiva Egg Products, Food Engg. Services Egg products Rajapalayam, Tamil Nadu Indo-Dutch Proteins Ltd, Nederlandse Ind Wan, Egg products Hyderabad Netherlands Punjab Meats Ltd, Dehradun, Asian Investment Buffalo meat products UP Corporation, Philippines SS Agarwal Ovobell Ltd, Belgium Egg products Balaji Foods & Feeds Ltd, Ovotec International Deonar Egg products & lysozime Hyderabad McDonald Corporation McDonald Corporation Various meat & vegetable products Tilaknagar Distilleries, Altier, France (Technical) Wine Maharashtra Jagatjit industries, Punjab Alko Ltd, Finland (Technical) IMFL UB Group United Distillers(UK Scotch/Whiskey
144 (Financial) To be decided Seagram Company Ltd, Scotch/Whiskey Canada (Financial) Jagatjit Industries Ltd UP Hiram-Walker Group, UK Scotch/Whiskey (Financial) Polychem Ltd, Maharashtra IDV, UK (Financial) Scotch/Whiskey Perfetti India Ltd Perfetti SPA, Milano, Italy Chewing gum and toffees Wrigley India td Wm Wrigley Company, USA Chewing gum and confectionary products Britco Foods Co (P) Ltd Coca Cola South Asia Soft drink concentrates Holdings Eilem Foods India Private Ltd Mars Inc, USA Cocoa based confectionary Lotus Chocolate Co Ltd Sunshine Allied Investments Chocolates and cocoa products Ltd, Singapore (Financial Collaborator); GCIH Trade Marks Ltd, Hong Kong (Technical Collaborator) Bush Marketing Pvt Ltd Twining & Co Ltd, London Tea, coffee, cocoa chocolate products Dabur India Ltd Agrolimen SA, Spain Chewing gum and other confectionary products Chellappa Rajendra Prasad Associate Coffee Merchant, Instant coffee London (Financial collaborator); Brazilian Food Project Commercio LTDA, Brazil (Technical collaborator) Jagna Chemicals, AP H Consultant, Germany Beer (Technical & Financial) Vijay Breweries Ltd Carlsberg International A/s, Beer Denmark (Technical & Financial) Rajasthan Breweries Ltd Danbrew A/s, Denmark Beer Rajasthan (Technical) Winsome Breweries Ltd, Heninger Brau, Germany Beer Rajasthan (Technical & Financial) To be decided Fosters Brewing Group, Beer Australia Grover Vineyards Pvt Ltd Finser Financial Services Ltd, Wine and brandy UK (Technical & Financial) Gruma, India Fruma SA Dc CV, Mexico Chapattis, Tortillas and Tortilla chips Dew Home Products Ltd, New Asia Pacific Ventures Ltd, Wheat & flour milling plant and Delhi Singapore; salt; Dancake, Portugal; Cakes, cup cakes, Swiss rolls, rusks Continental Grain Co, USA Soya meal, rapeseed meal, groundnut meal and rice Nihalsons Impex Pvt Ltd, New Nuts Co, (Nigeria) Ltd Nigeria Basmati Rice, pulse
145 Delhi Beta Brands, Singapore Ready to eat snack foods T Vardarajan, Bombay Monte Bianco Spa, 20098, Sugar cones, wafer cones San Gluliano M, Italy Douglas Leing & Co Ltd, Alcohol Glasgow, UK Indo Canadian Enterprises Ltd, HZFAU Inc Corp Ontairo, Water, including natural water New Delhi Canada Warner Lambat, USA Chewing gum etc Beltek Canadian Water Ltd New Prime Water Canadian Ltd, Mineral water Delhi Alberia, Canada Conwood Food Inds Ltd, Emirates Trading Agency, Lactose, Cassein and other Bombay Dubai UAE dairy products Trendy Tropical Foods Ltd, New Gauthew SA, France Peanut butter Delhi The Indian Yeast Co Ltd, Mauri Fermentation Yeast Calcutta Sydney, Australia Pinnacle Flavours & Chemicals Tastemaker bv, Netherlands Flavours of various types Pvt Ltd, Bombay Cochin Natural Flavours, SA Rene Laurend France Oleoresins of spices Cochin Girau Dan Roure Flavours MK Modi, New Delhi Macqens, Netherlands Mushrooms in packed form Hind Industries Ltd, Sahibabad Seanet Pty Ltd Boneless veal (buffalo) meat UP Australia frozen Nemix Agrochik Pvt Ltd, New Nemix Inc, USA Establishing boiler farm Delhi Chemicals & Plastics India Ltd Dragoco (Far East) Ltd Food flavour Hong Kong Inter Fresh Food (India) Ltd, ALISTAIR MECCOWN Frozen meat Madras Australia Ashely International Ltd, Suzanne Way, Australia Processed & preserved Bangalore gherkins and other vegetables Sugam Agro-Tech Ltd, Asia Ventures International Button mushrooms Hyderabad Ltd, Baharin Asian Vegpro Industries Ltd, Henschel Export, Germany Dehydrated onions, garlic, Calcutta ginger, vegetables South Asian Mushrooms Ltd, Macon Agri Ltd, Northern Cultivation & processing of Bhopal Ireland white button mushrooms Alpine Biotech Ltd,Indore Dalsem Vaciap, Netherlands Button mushrooms Radhe Shyam Agro Food Ltd, Bellai Barter Trade Pte Ltd, Potato powder Ahmedabad Singapore Bay Island Fisheries, Andaman Tawakhal Agricultures Ltd Marine products Nicobar Islands Cadbury Schweppes Flavouring concentrates, fruit based beverages PMP Electronics Ltd, Delhi Fortune International, USA Blended spice oil and oleoresin Tikkoo Corporation Hosten Brauerei AB, Beer Germany Fosters Brewing Group Beer
146 Australia Markwell Breweries Deiminger Kronenbrau AB Beer Germany Indo European Breweries Ltd Brawerei Hurliman, Beer Switzerland Kool Breweries Hofbran Manchen, Germany Beer Mohan Meakins Ltd McDonald & Maire Scotch whiskey etc. Source: Food Processing Industries in India
147 Appendix C: Major Domestic Food Processing Groups
Table C1: Major Domestic Food Processing Groups
Name of Company Major Brands Major Products
Processed Fruits and Vegetables
Kissan Products Ltd Kissan, Dippy Canned and bottled fruit and vegetable products WIMCO Ltd Sunsip Tropical fruit pulps and concentrate, juices, jams etc Neslte India Ltd Maggi Sauces Godrej Foods Ltd Godrej Fruit juices, tomato puree, paste, ketchup and juice Pepsi Fods Ltd Hostess, Ruffles Tomato paste, pear juice concentrate, pear puree and potato wafers Parle Ltd* Maaza Ready to serve beverages Terai Foods Ltd Frozen fruits and vegetables NDDB Safal Frozen fruits and vegetables
Dairy Products
Nestle India Ltd Milkmaid, Cerelac, Sweetened condensed milk and Lactogen milk powder Milkfood Ltd Milkfood Ghee, ice cream and other milk products Smith Kline Beecham Ltd Horlicks Malted milkfood, ghee, butter, powdered milk, milk fluid and milk based baby foods Indodan Industries Ltd Indana Condensed milk, skimmed milk powder, dairy milk whitener, chilled and processed milk Gujarat Cooperative Milk Amul Butter, cheese and other milk Marketing Federation Ltd products HJ Heinz Ltd** Farex, Complan, Infant milkfood, malted food Glactose, Bonniemix, Vitamilk Cadbury Bournvita Malted food Modern Dairies JK Dairy & Foods
Poultry and Meat Products
148 Allana & Sons, Bombay Allana Frozen buffalo meat Frigo Refico Allana Ltd, Allana Frozen buffalo meat Bombay Hind Industries Ltd, New Sibaco, Eatco Frozen buffalo meat, Delhi chilled/frozen sheep & goat meat Alkabeer Exports Ltd, Alkabeer Frozen buffalo meat, Bombay chilled/frozen sheep & goat meat PML Industries, PML Frozen buffalo meat Chandigarh UP Pashudhan Udyog, CDF Pork and other meat products, Aligarh canned meat manufactures AP Meat & Poultry, APSMPC Pork and other meat products Hyderabad Pigpo, New Delhi Pigpo Pork and other meat products MAFCO, Bombay MAFCO Pork and other meat products Ranchi Bacon Factory, Pork and other meat products Ranchi Rajasthan Meat and Wool Canned meat manufactures Marketing Federation, Alwar Frigo Refico Allana Ltd, Allana Canned meat manufactures Aurangabad Venkateshwara Venky’s Food Poultry products Hatcheries, Pune DeeJay, Bangalore Poultry products
Beer and Alcoholic Beverages
United Breweries Ltd Kingfisher, Kalyani Beer Herbertsons Ltd Bagpiper, Royal, Hard liquors Royal Velvet, Treasure, Cavalier Shaw Wallace & Co Karmazov, Beer and hard liquors Director’s Special, Haywards McDowell & Co Ltd McDowells, Liquors Diplomat, Caesar Mohan Meakins Old Monk, Golden Beer and liquors Eagle, Black Knight Jagatjit Industries Ltd Aristocrat, Black Whiskey Velvet
Other
Britannia India Britannia Bread and buns Parrys Confectionery Candy, sweets, toffees Amrut Ind Food Processing Dalmia India Food Processing
149 Satnam Overseas Food Processing NEPC Agro Foods Food Processing Oswal Agro Furane Food Processing Lakshmi Overseas Food Processing RT Exports Food Processing DCW Home Exports Food Processing Shri Vardhman Overseas Food Processing Sidhartha Soya Products Food Processing KJ International Food Processing
Source: Food Processing Industries in India, Instate research. * Parle has now been merged with Coca Cola, although the brand Maaza continues to be sold. **HJ Heinz Ltd took over Glaxo.
150 Appendix D: Australian Presence in India
In August 1997, the value of investment by Australian Food and Beverage companies totalled A $ 45 million.
Table D1: Australian Companies with a Presence in India, August 1997
Australian Company Representative in India Product/ Industry ANZ Group ANZ Grindlays Bank P.l.c. Banking and 55 Collins St 90 Mahatma Gandhi Road financial services Melbourne NSW 3000 Mumbai 400 023 Phone: 61-3-9658 2877 Mr. Mehli Mistri Fax: 61-3-9658 2091 Chief Executive Officer Phone : 91-22-262 1849 Fax : 91-22-262 4924
Accor Asia Pacific Accor Asia Pacific Hotels Level 46, MLC Centre 3rd Floor, 7-A Kashi House 19-29 Martin Place A Block, Connaught Place Sydney NSW 2000 New Delhi 110001
Mr Peter Hook Mr Roland Garaud General Manager – PR Chief Executive Phone: 61-2-367 0888 Phone: 91-11-331 7208/ 372 3878 Fax: 61-2-367 0899 Fax: 91-11-332 2369
Acumen Management Acumen Management Services (South Asia) Quality assurance, Services Pty Ltd Pvt Ltd Environmental 22/28 Vore St 537 Clover Centre, Moledina Rd management, Silverwater NSW 2141 Pune 411 001 HACCP Mr Martin Vlanderen Mr Firdaus Dastoor Managing Director Chairman Phone: 61-2-97483077 Phone: 91-212-637668 Fax: 61-2-97486559 Fax: 91-212-681656
ADI Stanilite Communications (India) Pvt Ltd Trunkswitch, Ground Floor, Parramatta Rd C-665 New Friends Colony Villageswitch, Silver Water NSW 2141 New Delhi 110065 Cellswitch, CDMA, Mr Glen Zerafa Major Gen SK Dhawan (Retd) WILL Regional Business Manager – Chief Executive Officer India Phone: 91-11-692 2589 Phone : 61-2-9325 1500 Fax: 91-11-691 6085 Fax: 61-2-9325 1600
Advanced Energy Systems Das Lagerway wind turbines Ltd Hybrid diesel - 14 Bodie Hall drive Developed plot no35 solar photovoltaic Technology Park Guindy Industrial Estate power generation Bentley WA 6102 Chennai- 600 032 systems Ph: 09 4704633 Mr VRRaghunathan Fax: 09 4704504 Managing Director Ph: 91 44 2348724 Fax: 91 44 2348727
Air International Pty Ltd Voltas Limited Automotive Air
151 80 Turner St, 5/4 Nagar Rd, Pune 411 014 Conditioner Port Melbourne VIC 3207 Mr David Thomas Systems Mrs Gwen Petley Operations Manager Joint Venture Liason Phone: 91-212-684892 Phone: 61-3-96444222 Fax: 91-212-681046 Fax: 61-3-96453292
Albion Hat & Co Pty Limited RK International Sporting goods, 578 Princes Highway 32 Tagore Nagar, sports protective St Peters NSW 2044 Jalandhar - 140 002 equipment Mr Tony Henson Punjab Managing Director Mr Rajan Kohli Phone: 61-2-95575522 Managing Director Fax: 61-2-95171522 Phone: 91-181-254812 Fax: 91-181-255512 Email: albion@arcalbcomau
Amatek Rocla C/- Koyna Industries Limited Pre-stressed Frankston Rd Subhash Estate, Jogeshwari concrete pipes Dandenong VIC 3175 Mumbai 400060 Mr Dale Martin Mr Kotnis Manager Technology Sales Phone : 61-3-9767 4559 Fax : 61-3-9791 2781
Argyle Diamonds Argyle Diamond Sales Limited Technical services 2 Kings Park Rd 117 Maker Chambers VI (11th Floor) supporting West Perth WA 6005 220 J Bajaj Marg diamond rough Mr Andrew Murray Nariman Point sales Manager Corporate Services Mumbai 400021 Phone : 61-9-482 1166 Ms Nirupa Bhatt Fax : 61-9-482 1161 Senior Customer Services Officer Phone: 91-22-2855384 Fax: 91-22-2040845
Astec Pty Ltd C/- National Asphalt Products and Building products Dana Court, Dandenong Construction Company and Rd Melbourne VIC 3175 Khivraj Complex II, Nandanam construction Mr Geoff Pember 480 Anna Salar General Manager Madras 600035 Phone: 61-3-97068626 Mr KSManian Fax: 61-3-97013641 Managing Partner 61-3-98228346 Phone: 91-44-4330063/ 4330585 Telefax: 91-44-8237054
Austeng Pty Ltd Pioneer Austeng Pvt Ltd Fuel/Electric 78-80 Douro St 202 A IInd Floor, Amee, 167 Dixit Rd, Vile Furnaces for Nth Geelong VIC 3215 Parle (E), Mumbai - 400057 cremation Mr Ross George Mr Nikhil Y Mehta Managing Director Director Phone: 61-52-782044 Phone: 91-22-6180618 Fax: 61-52-785176 TeleFax: 91-22-6177672
Austral Insulation (WA) Pty Ltd Indo Austral Laminates Prefabricated Cold 1 Denninup Way Y23/B1, 5th Ave, Anna Nagar Storages and Malaga WA 6062 Madras - 600 040 Buildings Mr Les Robinson Mr D Abboy General Manager Managing Director Phone: 61-9-2494022 Telefax: 91-44-6283708
152 Fax: 61-9-2494180
Australian Broadcasting Australian BRdcasting Corporation Media services Corporation A-11 West End 221 Pacific Hwy New Delhi 110021 Artarmon NSW 2064 Mr Edmond L Roy Mr Tony Hill Chief of Bureau - South Asia International Editor Phone: 91-11-687 2337 Phone: 61-2-9333 1500 Fax: 91-11-687 2153 Fax : 61-2-9950 4162
Australasian Chemical Pty Ltd Australasian Chemical (I) Pvt Ltd Cleaning Services, 4 Balfour Rd 133 RPS Colony, Sheikh Sarai, Phase-I Manufacturing of Springfield SA 5062 New Delhi 110017 synthetic DrJSPradhan & Dr(Mrs) LtCol Ranjit Singh (Retd) detergents, Kulwant Pradhan Director cosmetic and Director Phone: 91-11-646 7453 pharmaceutical Phone: 61-8-231 0204 Fax: 91-11-621 7701 items Fax: 61-8-338 2108
Autoliv Australia Pty Ltd RHW Autoliv Automotive 1521 Home Highway 16, Visveswaraian Industrial Estate, Occupant Campbellfield VIC 3061 1st Main Rd Off Whitefield Rd, Restraints Mr Lindsay Beeson Mahadevapura Post Marketing Manager Bangalore - 560048 Phone: 61-3-93599822 Mr V Raghu Fax: 61-3-93599811 General Manager Phone: 91-80-8510452 Fax: 91-80-8511215
AWFaber-Castell (Australia) AWFaber-Castell (India) Pvt Ltd Writing/ Drawing/ Pty Ltd Camlin House, Andheri (E) Office products 69 O’Connell St Mumbai - 400 059 Smithfield NSW 2164 Mr Anup Rana Mr Anup Rana Managing Director Director - Asia/Pacific Phone: 61-2-97255666 Fax: 61-2-97255356
BHP Company Ltd BHP Company Ltd Mineral 600 Bourke St 4th Floor, World Trade Tower Melbourne VIC 3000 Barakhamba Lane, Connaught Circus Mr Michael Spencer New Delhi 110001 Media Relations Manager Mr George Stupple Phone: 61-3-609 3333 General Manager - Corporate Affairs Fax: 61-3-609 3015 Phone: 91-11-332 6055 372 1023 Fax: 91-11-332 6054
BHPE-Kinhill Joint Venture BHPE-Kinhill (India) Pvt Ltd Specialized 441 St Kilda Rd A-302 Rishi Apartments, engineering Melbourne VIC 3004 Alaknanda, Kalkaji, consultancy and Mr John Gillett New Delhi 110019 management Director Mrs Rita Mukerji services Phone: 61-3-9867 5911 Managing Director Fax: 61-3-9820 4579 Phone: 91-11-646 2884/
153 647 0731 Fax: 91-11-646 5298
BHP Steel Coated Products BHP Steel Coated Products Division Joint venture for Division Uttam Steels Ltd, manufacture of Coated Products Division Uttam House, galvanised sheets 55 Sussex St 69, PD'Mello Rd, Sydney NSW 2000 Mumbai 400 003 Mr Steven TH Wong Mr Rajinder Miglani Operations & Development Chairman & Managing Director Manager - International Phone: 91-22-342 0557/ Business 343 0864 Phone: 61-2-9239 4444 Fax: 91-22-343 0527 Fax: 61-2-9239 4377
Boral Ltd Boral Asia Pacific Pte Ltd Plasterboard and 676 Lorimer St Port Sista’s F-5 Unity Building building materials Melbourne VIC 3207 JCRd, Bangalore - 560 002 Mr Don Prior Mr Sid Jain General Manager Market Development Manager Phone: 61-3-92142138 Phone: 91-80-2244296 Fax: 61-3- 96461912 Fax: 91-80-2234927
BP Solar Australia Pty Ltd Tata BP Solar India Ltd Solar Photo-voltaic 1/100 Old Pittwater Rd Plot No78, Electronic City, cells Brookvale NSW 2100 Hosur Rd, Bangalore, Karnataka 562 158 Mr Ken Brown Mr Arun Vora Director Manager Phone: 61-2-938 5111 Phone: 91-80-8520083 Fax: 61-2-939 1548 Fax: 91-80-8520972
Britax Rainsfords Pty Ltd Britax Motherson (P) Ltd Manufacturer of Sherriffs Rd B-7 Sector 7, NOIDA 201301 passenger Lonsdale SA 5162 Mr Naveen Ganzu vehicle’s Interior & Mr Valdis REvele Managing Director Exterior Mirrors Business Development & Phone : 91-11-8542604/ Marketing Manager 8553005 Phone : 61-8-3017777 Fax: 91-11-8529720/ Fax: 61-8-3847634 8558375
Bud-Pak Pty Ltd Acrow India Limited Packaging 40 Railway St, Wickham 10 World Trade Centre Arcade Machinery Newcastle NSW 2293 Cuffe Parade, Colaba Mr Robert Brook Mumbai - 400 005 Chairman & CEO Mr SNRajadhyax Phone: 61-49-693788 Chief Executive Fax: 61-49-621495 Phone : 91-22-2189994/ 2180933 Fax: 91-22-2184294
Building Technologies Hyderabad Industries Ltd Building panel (Australia) Pty Ltd Sanatnagar boards Suite 13, 27 Sydney Rd Hyderabad - 500 018 Manly NSW 2095 Mr SKSharma Mr RHornibrook General Manager - Export Managing Director Phone: 91-40-270601/ 272315 Phone: 61-2-99776605 Fax: 91-40-271227
154 Fax: 61-2-99762185
Bulk Material Services Pty Ltd BMCH Coal Tech Pvt Ltd Coal benefaction 77 Ridge St, Post Box 314 C-23, Friends Colony, and bulk materials Gordon NSW 2072 New Delhi 110065 handling Mr Ken Butcher Mr Pravin Agarwal Director Director Phone: 61-2-9499 2188 Phone: 91-11-683 0075/ Fax: 61-2-9499 2680 684 9844 Fax: 91-11-684 9845
Burns Philp Food Holdings Pty The Indian Yeast Company Ltd Yeast Production Ltd 5 Chunawalla Estate 7 Bridge St Kurla-Andheri Rd, Andheri (E) Sydney NSW 2000 Mumbai 400059 Mr Ray Skinner Mr VP Iyer General Manager General Manager Phone: 61-2-259 1111 Phone: 91-22-8369806 Fax: 61-2-259 1378 Fax: 91-22-8369803 Burns Philp (India) Limited 46/1 Chamiers Rd Chennai – 28 Mr S Garapathy Managing Director Phone: 91-44-4320321/ 4320331 Fax: 91-44-4320311
Cable Belt Australia Pty Ltd Cable Belt India Cable belt systems Suite 5 1st Flr Maitland Plaza Suite 8, 3rd Floor, Sindur Plaza, for bulk materials Elgin St 42 Montieth Rd, Egmore , handling Maitland NSW 2320 Madras 600008 Mr Peter Connell Mr Ashok Pereira Director - Operations Vice President - Indian Operations Phone: 61-49 342 699 Phone: 91-44-855 4554 Fax: 61-49 342 616 Fax: 91-44-855 4932
Cairn Energy Asia Limited Command Petroleum (India) Pvt Limited Oil and gas Level 1, 191 New South Head Wellington Plaza, 2nd Floor, No 90 explorer and Rd Anna Salai, Madras 600 002 producer Edgecliff NSW 2027 Australia Dr Bruce Mc Carthy Mr Bun C Hung Executive Director - Ravva Project Managing Director Phone: 91-44-855 5300 Phone: 61-2-9362 4233 Fax: 91-44-855 5310 Fax: 61-2-9362 4248
Chemical Mining & Industrial Deccan Mechanical & Chemical Industries Wear resist pipe, Service Pty Ltd Ltd Fittings and Kits 38 Ivedon St, Banyo 78, Bhosari Industrial Estate Brisbane QLD 4014 Pune 411026 Mr David Ricketts Mr KRNatu Export and Project Manager Managing Director Phone: 61-7-32670044 Phone: 91-212-790994/ 790020 Fax: 61-7-32670990 Fax: 91-212-790774/ 354185
Cottee Corporation Pty Ltd Cottee Corporation Pty Ltd Casein Level 3 Tower Bldg 47 Indiana Dairy Specialities Ltd Manufacture Neridah St 98 Kalina Agrahara Begur
155 Chatswood NSW 2067 Hubli National Park Rd, Bangalore 560 083 Mr Ross Cottee Mr TR Vardarajan Director Managing Director Phone: 61-2-9988 3922 Phone: 91-80-663 3253 / Fax: 61-2-9988 3733 91-80-640 542 Fax: 91-80-558 5966
Colliers Jardine Pty Ltd Colliers Jardine Profession Real 152-158 St Georges Terrace M-66, Commercial Market Estate Services Perth WA 6000 Greater Kailash - II, New Delhi 110 048 Mr David Fowler Phone: 91-11-6453855-58 General Manager Fax: 91-11-6453859 Phone: 61-9-2616666 Colliers Jardine Fax: 61-9-2616611 Thakur Niwas 5-A 1st Floor 173 Jamshedji Tata Rd Churchgate, Mumbai 400 020 Mr Micheal WJThompson Managing Director Phone: 91-22-2822151 Fax: 91-22-2828150
CMPS&F Pty Ltd Ramani Chemasea Entech Systems Pvt Ltd Engineering 390 St Kilda Rd HIG Flat 132/2, 34th Cross St Consultant Melbourne VIC 3004 Fifth Ave, Besant Nagar, Mr Robert Anscombe Madras 600 090 Project Manager Mr KGRamani Phone: 61-03-9272 6666 Executive Director Fax: 61-03-9272 6610 Phone: 91-44-491 3838/ 412 530 Fax: 91-44-491 9972
Cuno Pacific Pty Ltd Cuno Filtration Asia Pvt Ltd Industrial filtration 140 Sunnyhold Rd "Agora" S-25 Greater Kailash Part II systems and Blacktown NSW 2148 New Delhi 110 048 products Mr Tony Johnson Mr Sanjay Sapra Marketing Manager (Asia) Country Manager Phone: 61-2-9671 3700 Phone: 91-11-647 1849 Fax: 61-2-9831 1737 Fax: 91-11-646 3189
Datacraft Technologies Pty Ltd Datacraft ICIM Ltd State of Art IT 252-254 Maroondah Highway Dubash House 4th Floor Communication Moorookbark VIC 3138 15 JM Heredia Marg and Network Mr Chris Johnston Ballard Estate Solution Managing Director Mumbai 400 038 Phone: 61-3-9727 9111 Mrs Lynette Saldhana Fax: 61-3-9726 5300 Chief Executive Phone: 91-22-2616378/ 2673061 Fax: 91-22-2673036
Economist Intelligence Unit Economist Intelligence Unit Level 6, 90 Mount St C-1/70 Safdarjung Development Area North Sydney NSW 2060 New Delhi 110 016 Mr Richard Martin Mr Prasanna Srinivasan Director Director - Consulting Phone: 61-2-9955 2848 Phone: 91-11-6856792 Fax: 61-2-9929 7794 Fax: 91-11-6858665 ECS Mining Software Systems Tata Consultancy Services Mining software 500 Moss Vale Rd 10th Floor,ITC Centre and consultancy Bowral NSW 2576 4 Russel St services
156 Mr Andrew Uebergang Calcutta - 700 016 Marketing Manager Mr Chinmoy Sarkar Telefax: 61-48-612122 Associate Consultant Phone: 91-33-296865/ 290707 Fax: 91-33-2265530
Edwards Energy Systems Pty Solar Edwards India Solar geysers Ltd 6 Vasant Apartments 109 Vulcan Rd Vasant Vihar, New Delhi Canning Vale WA 6155 Maj HS Rai Mr Vaughan Boultwood Phone: 91-11-6149124 Export Marketing Manager 91-11-6149127 Phone: 61-9-4551999 Fax: 91-11-6149125 Fax: 61-9-4551201
Essington Asia Pacific Pty Ltd Essington Group Development & Level 2, 349 Pacific Highway 3rd Floor, Arhay Apex Centre Investment in Crows Nest NSW 2065 24 College Rd, Madras 600 006 Hotel, Forestry and Mr MLEdwards Mr M Jayaram Water Managing Director Director - India Phone: 61-2-99290922 Phone: 91-44-8279755 Fax: 61-2-99232558 Fax: 91-44-8278262
Foster’s Brewing Group Raly Breweries Limited Brewing- Foster’s Limited Plot No 28, Aditya Nagar Lager 77 Southbank Boulevard Garkheda, Aurangabad Southbank VIC 3006 Maharashtra 131005 Mr Geoff Bainbridge Mr Amir Momin Manager-Strategy & Business Chief Financial Officer Development - Asia Phone: 91-240-354638 Phone: 61-3-96332507 Fax: 91-240-351673 Fax: 61-3-96332518 Foxboro L&N Pty Ltd Leeds & Northup Australia Pty Limited Supervisory control 18-20 Mandible St Alexandria 23 Shewa Apartment 33 B systems Sydney NSW 2015 3rd Rd, Khar (W) Dr Barry J Mann Mumbai 400 052 Managing Director Mr Amit Datta Majumdar Phone: 61-2-9581 1500 Regional Sales Manager Fax : 61-2-9319 1120 Phone: 91-22-604 3760 /604 3761 Fax: 91-22-604 6302
Futuris Industrial Products Pty Pioneer Friction Limited Composite railway Ltd 16 Taratalla Rd brake blocks 6 Wenban St Calcutta 700088 Wetherill Park NSW 2164 Mr YR Rao Mr T Carpani General Manager Managing Director Phone: 91-33-478 4661-668 Phone : 61-2-9604 1155 Fax: 91-33-478 4886 Fax: 61-2-9604 2258
GBC Scientific Equipment Pty Nulab Equipment Co Pvt Ltd Scientific Ltd Labhouse Plot No F-13 Equipment 12 Monterey Rd Opp SEEPZ Marol MIDC Dandenong VIC 3175 Mumbai - 400 093 Mr Peter Liddell Mr Ashok Motwani Marketing Manager Managing Director Phone: 61-3-92133666 Phone: 91-22-8321420 Fax: 61-3-92133677 Fax: 91-22-8368275
GEMCO Bharat Electronics Limited Driver Training
157 461 Scarborough Beach Rd Jalahilli Post Simulators Osborne Park WA 6017 Bangalore-560013 Ms Amanda Miller/Roy Lesley Mr K R Prakash Marketing Co-ordinator Manager R&D Phone: 61-9-4468844 Phone: 91-80-309 5404 Fax: 61-9-4463404 Telefax: 91-80-8380135
Gerard Industries Elcon-Clipsall India Limited Consumer and 12 Park Terrace M-79, 1st Floor, Greater Kailash 2, Industrial electrical Bowden SA 5007 Commercial Centre, fittings Robert Fantozzi New Delhi-110048 Manager-Export Barry Moss Phone: 61-8-82690511 Director-National Sales & Marketing Fax: 61-8-83401724 Phone: 91-11-6473251/6213179 Fax: 91-11-6213179
GHD-Macknight Pty Ltd GHD-Macknight Private Ltd Consultant- Civil Level 3 Kenlynn Centre, 457 62C Grand Paradi engineers Upper Edward St August Kranti Marg Brisbane QLD 4000 Mumbai 400 036 Mr Alex Macknight Mr David Birley Director Director Phone: 61-7-38319033 Telefax: 91-22-3637744 Fax: 61-7-38321140
GIO Reinsurance GIO Reinsurance Reinsurance Level 11, 117 Clarence St C/o Sanmar Group, 8 Cathedral Rd Sydney NSW 2000 Madras 600 086 Mr Garry Abrahams Mr B Natraj, Business Development Executive Director-Corporate Manager Phone: 91-44-8273333 Phone : 61-2-92498249 Fax: 91-44-8269359 Fax: 61-2- 92993540
Govan Industries Pty Ltd Govan Industries (India) Pvt Ltd Explosion 156-160 Bamfield Rd 207 Effbee Apartment, 5 Sai Baba nagar protected electrical West Heidelberg VIC 3081 Borali West, Mumbai 400 092 apparatus, hoses Mr Dilip Khotkar Mr Saurabh Joshi and fittings Manager – Exports Director Phone: 61-3-9459 4211 Phone: 91-22-8656368 Fax: 61-3-9458 1109 Fax: 91-22-8656369
Green & Gold Enterprises Pty Green & Gold Enterprises (I) Pvt Ltd Sports goods Ltd Bldg No 49, Ground Floor 69 High St, Carlton Gandhi Nagar, Bandra (E) Sydney NSW 2218 Mumbai 400 051 Mr Shree Shirodkar Mr Rudra Nadkarni Phone: 61-2-95538033 Manager Fax: 61-2-95538405 Phone: 91-22-6450184 Fax: 91-22-6439412
Heat and Control Australia Heat and Control Food processing 407 Creek Rd, PO Box 57 10, Kassa Major Rd systems MtGravatt Brisbane - 4122 Egmore, Madras QLD Mr Sailesh Patel Phone: 61-7-3495122 Phone: 91 44 826 9357 Fax: 61-7-3438371 Hydromet Corporation Hydromet (India) Ltd Processing of Limited31-45 Smith St No79 Industrial Suburb Chemical residues Marrickville NSW 2040 Yeshwantpur, Bangalore
158 Mr Lakshman Jayaweera Mr M Venkatasubramani Director Director Phone: 61-2-5171188 Phone: 91-80-3372830 Fax: 61-2-5503523 Fax: 91-80-3373292
ICI Australia Explosives ICI India Limited Packaged and Bulk Level 6, Tower A, Citadel Explosives Business Area Explosives, Bldgs ICI House, 34 Chowringhee Rd Initiating 799 Pacific Highway Calcutta 700 071 Explosives, Chatswood NSW 2067 Mr Rajiv Jain Industrial Mr Alan King Vice President - Explosives Nitrocellulose and General Manager Phone: 91-33-296842/ Blast Management Phone: 61-2-8445500 2457421 Services Fax: 61-2-8445544 Fax: 91-33-2490401
IDP Education Australia IDP Education Australia Educational 1 Geils Court Suite Nos20-21, S1 Ground Floor Services Deakin ACT 2600 International Trade Tower, Nehru Place Mr Denis Blight New Delhi - 110 019 Director Mr Henry A S Ledlie Phone: 61-6-285 8222 Country Manager Fax: 61-6-285 3036 Phone: 91-11-6467535/ 6429767/6215973 Fax: 91-11-6481262/6440627
The Interface Program Pty Ltd The Interface Education Program Pvt Ltd Marketing & PO Box 256 D1/55, Vasant Vihar, New Delhi 110 057 promotion of Drummoyne NSW 2047 Ms Louanne M Hancock Australian C/o Mr John DGouu Executive Director education services Chartered Accountant Phone: 91-11-6145833/ 6146485 on-shore education Phone: 61-2-8197236 Fax: 91-11-6146899 program Fax: 61-2-811606 developments
Inteltec Communicaitons Electromark Devices (Bombay) Pvt Ltd Nurse call products 41 King Edward Rd 304 Lotus House, 33 A New Marine Lines - Healthcare Osborne Park WA 6017 Mumbai 400020 Mr Clive Stein Mr Mahavir Shete General Manager Managing Director Phone: 61-9-2442899 Phone: 91-22-2089573 Fax: 61-9-2442725 Fax: 91-22-2088003
International Standards International Standards Certifications (South Certification Certifications Pty Ltd Asia) Pty Ltd Training ISO 9000, The Quality Centre, 14 541 Grover Centre ISO 14000, Q5 Jelopea Ave 7 Moledina Rd, Pune 411 001 9000 Homebush West NSW 2140 Mr Firdaus Dastoor Mr Tony Wilde Chairman-cum-Managing Director Chairman-cum-Managing Phone: 91-212-637668 Director Fax: 91-212-681656 Phone: 61-2-97466738 Fax: 61-2-97461649 Email : twilde@flnetau
John Hamilton & Co Private Limited Consultancy #2492, 17th Main Rd HAL II Stage, Bangalore 560 008 Mr John Hamilton Phone: 91-80-5296152/ 5294559 Fax: 91-80-5293982 Email: hamilton@johnhamiltoncom
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JNA Telecommunications Global Tele-Systems Ltd Total Information Limited Global House, Prabat Rd, Lane No 15, Solutions 16 Smith St Erandwane, Pune-411 004 Chatswood NSW 2067 Mr H K Gohil Mr Kevin Fernandez Manager Transmission Group Director-International Phone: 91-212-359939 Business Fax: 91-212-358277 Phone: 61-2-9935 5555 Fax: 61-2-9417 1666 e-mail: corporate@jnacomAustrade website: www.jnacomau
John Holland Group Pty Ltd John Holland Construction (India) Pvt Ltd Infrastructure 492 St Kilda Rd 348 Tardeo A/c Mkt, Tardeo, Mumbai 400 privatisation, Melbourne VIC 3004 034 materials handling Mr Jeff Horsley Mr Owen C Mayhew Financial Controller Director/ General Manager Phone: 61-3-9898 0209 Phone: 91-22-4921888 Fax: 61-3-9868 0200 Fax: 91-22-4931021
Jord Engineers Pty Ltd Jord Engineers India Ltd Capital equipment 11 Atchison St 506, Marble Arch, 5th Floor manufacturer Crows Nest NSW 2065 Race Course Rd Mr John Holden Vadodara 390 007 Managing Director Mr Rakesh Chaturvedi Phone: 61-2-9439 7700 Managing Director Fax: 61-2-9906 3313 Phone: 91-265-334 683/689 e-mail: Fax: 91-265-334 680 jh%jordengineers@notesanzn Jord Engineers India Ltd etau 504, Vishwananak, Chakala, Andheri (E), Mumbai Phone: 91-22-8365676 Fax: 91-22-8376816
Kockums Bulk Systems Pty TTG Industries Ltd Pneumatic Ltd Vanagaran Rd, Ayanambakkan conveying 270 Dundas St Chennai 602102 Thornbury VIC 3106 Mr S Ramesh Mr Ivan Price Marketing Ececutive Director Phone: 91-44-6251592/6257109 Phone: 61-3-94167010 Fax: 91-44-6257780 Fax: 61-3-94167177 Kvaerner John Brown Pty Ltd Davy Powergas India Private Limited Project Level 3/600 Davy House Powergas House Engineering, St Kilda Rd 177 Vidyanagari Marg, Kalina Consultancy and Melbourne VIC 3004 Mumbai 400 098 Management Mr Mark Toner DrRama Iyer Services Managing Director Managing Director Phone: 61-3-9272 3444 Phone: 91-22-611 2150 Fax: 61-3-9272 3333 Fax: 91-22-611 0361/6130
Laservision (Aust) Pty Ltd Laservision India Ltd Laser graphic 50 Carters Rd 192 1st Floor, T Chowdiah Rd systems for Dural NSW 2158 Sadashivanagar advertising
160 Mr Simon McCartney Bangalore 560 080 Phone: 61-2- 658 1000 Mr Mahesh Babu Fax: 61-2-651 3217 Managing Director Telefax: 91-80-3310897 Matrix Telecommunications Matrix Paging India Pvt Ltd Radio Paging and Limited 209 Ansal Bhawan, VSAT services Level 13, 139 Macquaire St 16, Kasturba Gandhi Marg Sydney NSW 2000 New Delhi 110001 Mr Richard Freyer Mr Rajiv Ghanate Chief Executive Director-Business Development Phone : 61-2-251 4241 Phone : 91-11-371 2959 Fax: 61-2-252 4071 Fax: 91-11-372 2481
Mackenzie Hydrocarbons Pty Hindustan Dorr-Oliver Ltd Refinery Ltd Dorr-Oliver House, 806-810 Nicholson St Chakala, Andheri (East) North Fitzroy VIC 3068 Mumbai 400099 Mr Gary Mackenzie Mr GK Apte Managing Director Regional Manager Phone : 61-3-9482 3445 Phone : 91-22-832 5541 Fax: 61-3-9482 1195 Fax: 91-22-836 5659/ 8218418
Malika Holdings Pty Ltd Malika Pty Ltd Female apparel 44 Oxford St 1796, 1st Floor, Kotla ubarakpur and accessories – Collingwood VIC 3066 New Delhi 110003 export Mr Bill White Mr John A Larsen Director Managing Director Phone : 61-3-419 8388 Phone : 91-11-463 3685 Fax: 61-3-416 1047 91-11-463 3908 Telex 34497 Fax: 91-11-463 3071/4610682
Mark Sensing Australia Pty Ltd Premier Paper Products Joint venture for 31 Jersey Rd 34 Venkatasamy Rd manufacture of fax Bayswater VIC 3153 RS Puram paper Mr Gordon Poole Coimbatore 641002 Chairman Mr P Nagaraj Phone: 61-3-720 7886 Phone: 91-422-44870/ 44822 Fax: 61-3-720 7950 Fax: 91-422-44822 Telex: 91-0855-334 PPP IN
Melba Industries (Australia) Rajasthan Spinning & Weaving (Bhilwara Automotive Pty Ltd Group) Textiles 4-10 Cambrian Ave 40-41 New Friends Colony, Preston VIC 3072 New Delhi 110065 Mr Barend Van Den Hoek Mr R S Dugar Export Manager President Phone: 61-3-94702188 Phone: 91-11-6832350 Fax: 61-3-94782300 Fax: 91-11-6838720
Micro Packaging Engineering Precision Foils Pvt Ltd Flexible packaging Pty Ltd 9, Bombay Mutual Bldg, manufacturers - 3 -7 East St PMRd, Mumbai Printed, embossed, Lidcombe NSW 2141 Mr Tapan Shah punched foil and Mr Michael Antao Director laminated
161 Director Phone: 91-22-266 5463/ 2693908 structures for food Phone: 61-2-646 3666 Fax: 91-22-266 1865 and beverages Fax: 61-2-649 1239
MIM Holdings Pty Ltd MIM Holdings Pty Ltd Copper Smelting MIM Bldg 410 Ann St Sterlite Industries (I) Ltd Technology Brisbane QLD 4000 Dhanraj Mahal 5th Floor Mr RW Greenelsh Apollo Bunder Rd Manager Marketing – Mumbai 400 039 Technology Mr Anil Aggarwal Phone: 61-7-833 8000 Chairman & Managing Director Fax: 61-7-832 2426 Phone: 91-22-2855551-54 Fax: 91-22-204 8688
Mineral Control Vishwa Microprocessors Pvt Ltd On line ash / Instrumentation Ltd 62 A, Hazra Rd Density 17 Station Rd Indoroophilly Calcutta 700 019 Gauge/Moisture Brisbane QLD 4068 Mr Sanjay Pasari Monitors Mr Andrew Swoan Director Marketing Director Phone: 91-33-4748812 Phone: 61-7-3378 3455 Fax: 91-33-4748810 Fax: 61-7-3378 5898
Moldflow Pty Ltd Geometric Software Services Company Ltd Computer aided 259-261 Colchester Rd Plant 19-A, Pirojshanagar, Vikhroli Engineering Kilsyth VIC 3137 Mumbai 400 079 software Mr Marc Dulude Phone: 91-22-5171166 Chief Executive Officer Fax: 91-22-5172239 Phone: 61-3-9720 2088 Geometric Software Services Company Ltd Fax: 61-3-9729 0433 Pawan Complex, 45/8+9/B Shiela Vihar Colony Off Karve Rd Kothrud, Pune - 411 038 Mr V Kumar Chief Executive Phone: 91-212-335572 Fax: 91-212-364472
Mineral Technologies Delta Mining and Technical Services Pvt Ltd Mining plant CityLinks Industrial Estate 824C, Deccan Gymkhana, manufacture & 11 Elysium Rd Prof Kale Rd, Pune – 411004 Consulting QLD 4211 Mr SKBasu Services Mr IJTerrill Manager - Eastern India Principal Consultant-Asia Mr VLKurian Phone: 61-755-253575 Manager - Western India Fax: 61-755-253810/ Phone: 91-212-358509 399863 Fax: 91-212-477800/ 457569 Delta Mining and Technical Services Pvt Ltd 13, Kalbatru Rd, Prabhadevi Mumbai-400025 Col Moghe-Manager (Finance), Phone: 91-22-4228337
M Rutty & Co Pty Ltd Vero President Systems Pvt Ltd Modular 4 Beaumont Rd 303, New India Industrial Estate, Andheri (E) enclosures for Mt Kuring-Gai NSW 2080 Mumbai 400 093 electronics Mr Marc Rutty Mr Sudhir Seth Managing Director Managing Director Phone: 61-2-9457 2288 Phone: 91-22-832 1724/ Fax: 61-2-9457 2299 832 0397 Fax: 91-22-837 2012
162
National Australia Bank National Australia Bank Limited Banking and Limited 1/IV, Park Wood Estate, financial services 500 Bourke St Rao Tula Ram Marg Melbourne VIC 3000 New Delhi 110 022 Phone: 61-3-9641 3500 Mr D Ramesh Chand Fax: 61-3-9641 4925 Regional Representative Phone: 91-11-617 5032/ 6177599 Fax: 91-11-617 5027 e-mail: natausdel@sm6sprintrpgemsvsnlnetin
Olex Cables Olex Cables Optic fibre 207 Sunshine Rd A-7 1st Floor, Gulmohar Park, Tottenham VIC 3012 New Delhi 110048 Mr Andrew Stobart Mr Shishir Sinha General Manager Manager Phone: 61-3-92814444 Phone: 91-11-686 7602/ Fax: 61-3-93152527 7466/7599/5487 91-11-696 4223 Fax: 91-11-686 7604
Oral Tech Australia Pty Ltd Sri Siddhi Vinayaga Dental Care Ltd Manufacturer of Suite 12 160 Wecker Rd 8/1 Kripa Sankari St preventive dental Mansfield QLD 4122 WMambalam, products Mr Kris Ramamurthy Tamil Nadu 600 033 Director Dr S Natarajan Phone: 61-7-32121736 Director Fax: 61-7-32121776 Phone: 91-44-4834823 Fax: 91-44-4834823
Orford Sales Pty Ltd Amtrex Appliances Ltd Glass door 75 Vacy St 9th Floor `Abhijeet’ Mithakhali Six Rds, merchandisers Toowoomba QLD 4350 Ahmedabad Mr John Orford Mr AN Chandramouli Managing Director Head - Commercial Refrigeration Phone: 61-76-382555 Phone: 91-79-6560672 Fax: 61-76-385326 Fax: 91-79-6425635
Omex Oil Qld Clive Stephens and Associates Pvt Ltd Technology Unit 8, 169 Queens Rd 32 Archbishop Makarios Marg, transfers in Kingston 4114 QLD Golf Links Lubricants Oils, Mr Clive Stephens New Delhi 110003 Coal, Power Director Mr Rahul Tripathi Plants, Mining Phone: 61-7-808 8979 General Manager Fax: 61-7-808 3862 Phone: 91-11-4638118/ 4641153/4638119 Fax: All the above
Pacific Marina Developements Indo-Pacific Developments Pvt Ltd Marine & off-shore Pty Ltd B-9, Saket, New Delhi 110 017 Construction, 7/130 Kingston Rd, Mr Ranaji Ganguly Engineering Underwood Managing Director Brisbane QLD 4119 Phone: 91-11-662083/ 6428696 Mr John Cramp Fax: 91-11-6964791 Financial Controller Phone: 61-7-3808 7188 Fax: 61-7-3808 7012
163 P&O Containers Limited P&O Containers (Indian Agencies) Pvt Ltd Containers 160 Sussex St Tolstoy House, 15-17 Tolstoy Marg shipment Sydney NSW 2000 New Delhi 110 001 Mr Keith Kenneally Mr RK Patney General Manager Regional Manager Phone: 61-2-93648544 Phone: 91-11-3712040 Fax: 61-3-93648459 Fax: 91-11-3716691 P&O Ports Keemat Rai Bldg, 77/79 Maharishi Karve Rd Marine Lines Mumbai 400 002 Capt Jimmy Sarbh Regional Representative Phone: 91-22-2610570/ 90 Fax: 91-22-2622070
Quality Assurance Services Quality Assurance Services Certified auditors 1 The Crescent 208, Kedia Arcade, 92 Infantry Rd for Quality Homebush NSW 2135 Bangalore 560 001 Certification Mr Gary Casey Mr A Shivalingaiah International Manager General Manager - India Operations Phone: 61-2-9746 4900 Phone: 91-80-5559861/5 Fax: 61-2-9746 8460 Telefax: 91-80-5596230
Qantas Airways Limited Qantas Airways Limited Airline services 203 Coward St Mohan Dev, 13 Tolstoy Marg, Mascot NSW 2020 New Delhi 110001 Phone: 61-2-9691 3636 Mr John Powell Fax: 61-2-9691 8858 District Sales Manager Phone: 91-11-3355384/ 9027 Fax: 91-11-3321434
Rapid Roller Company Pty Ltd Jay Rapid Roller Ltd Rubber rollers and 10 Abbott St 403 Vikram Tower, PVC Fabrics Fairfield VIC 3078 Rajendra Place Mr WL Wilkins New Delhi 110 008 Managing Director Mr Sukhbir Singh Phone: 61-3-497 2066 Managing Director Fax : 61-3-497 3763 Phone: 91-11-574 7600 / 9691/ 9692 Fax: 91-11-574 5900
RFI Industries Pty Ltd RFI Electronic Industries Pty Ltd Joint venture for 54 Holloway Dve 405 Karan Centre, SD Rd manufacture of Bayswater VIC 3153 Secunderabad 500 003 shielded chambers, Mr David R Johnston Mr SP Mishra / Mr Rakesh Mishra power and telecom General Manager Phone: 91-40-811 708/847924 filters, air vents, etc Phone: 61-3-762 6733 Fax: 91-40-845 573 Fax: 61-3-762 8501
Riede Systems Pty Ltd Riede Systems India Ltd Dynamic Weighing Unit 3, Block G, 1-3 315, Jyoti Shikhar Systems Endeavour Rd 8, Distt Centre, Janak Puri Woolooware NSW 2230 Delhi 110 058 Mr Maurice G Greenwood Mr Vipin Chopra Manager - Market Director Development Phone: 91-11-5535612/ 5530138 Phone: 61-2-95241154 Fax: 91-11-5509762 Fax: 61-2-95242508
164 Rio Tinto Limited Rio Tinto India Pvt Ltd Mining and 55 Collins St 12th Floor, Gopal Das bhawan exploration Melbourne VIC 3000 28, Barakhamba Rd Mr Ian Gould New Delhi Group Executive Phone : 91-11-371 9735-39 Phone: 61-3-92833000 Fax: 91-11-371 9746 Fax: 61-3-92833707 Mr Charles Lutyens Managing Director RTZ-CRA India Private Limited 128/1 Ulsoor Rd Bangalore , Karnataka - 560 042 Mr John Bartram Director - Exploration Phone: 91-80-559 8080 Fax: 91-80-559 1042
Robsearch Australia Pty Ltd Khemka Instruments Pvt Ltd Consultancy 11th Floor, 80 Arthur St Shakespeare Court, 21A service for Mines North Sydney NSW 2060 Shakespeare Sarani and Minerals Mr RDButler Calcutta 700 017 Principal Consultant Mr Prakash Khemka Phone: 61-2-99573199 Director Fax: 61-2-99544011 Phone: 91-33-2479751/54 Fax: 91-33-2401934
Rutherford Cable Repairs Pty Ismac Rutherford Cable Repairs Pvt Ltd High voltage Ltd Industrial Area, Kokar, Ranchi flexible trailing 3 Kyle St Bihar 834 001 cable repair and Rutherford NSW 2320 Mr Anup Poddar mining & electrical Mr Richard Macey Director equipments Managing Director Telefax: 91-651-314904 Phone: 61-49-327200 Fax: 91-651-200703 Fax: 61-49-324148
Shomega Limited Selvel Advertising Private Limited Pre-production, 77 Whiteman St 10/1B, Diamond Harbour Rd graphic arts large South Melbourne VIC 3205 Calcutta, West Bengal 700 027 format digital Mr Kevin Mclaine Mr NDMehta printing Phone: 61-39-6963677 Managing Director Fax: 61-39-6968525 Phone: 91-33-4796795 Fax: 91-33-4795365
Sinclair Knight & Partners Sinclair Knight & Partners ENPROTEC 57 Labouchere Rd Mantec Consultants Pvt Ltd Project South Perth WA 6151 D-1000 New Friends Colony (environmental Mr A J Gale New Delhi 110 065 project study) Environmental Services Mr Arvinder S Brara Manager Managing Director Phone: 61-9-367 8588 Phone: 91-11-684 9023/6912435 Fax: 61-9-474 1409 Fax: 91-11-684 2531 e-mail: delhimantec@axcessnetin
165 SMC Pneumatics (Australia) SMC Pneumatics (India) Pvt Ltd Compressed air Pty Ltd 9 Udyog Vihar, Phase –I control, purification 18 Hudson Ave (PO Box 581) Gurgaon 122 016| and transport Castle Hill NSW 2154 Mr RajMalhotra equipment Mr Peter GDriver Director Chairman and Managing Phone: 91-124-340300 / Director 34 1300 Phone: 61-2-9354 8222 Fax: 91-124- 342111 Fax: 61-2-9634 7764
Snowy Mountains Engineering Snowy Mountains Engineering Corporation Civil engineering Corporation Limited Limited projects 220-226 Sharp St 205 Golf Links Cooma NSW 2630 New Delhi 110 003 Mr J A N Boniface Mr Mike Price Chief Executive Officer Mr SK Dhar Phone: 61-64-520 222 Country Manager Fax: 61-64-520 400 Phone/Fax: 91-11-460 1162
Solahart Industries Pty Ltd Parchani Farm, Kishan Garh, Solar geysers 112 Pilbara St Off Mall Rd, Vasant Kunj, Welshpool WA 6106 New Delhi-110070 Phone : 61-9-4586211 PO Box-8812, Vasant Vihar Post Office, Fax: 61-9-3518034 New Delhi-110057 e-mail: Mr Mike Eastwood solahart@solahartcomau Regional Manager - South Asia Phone : 91-11-6133470 Fax: 91-11-6133470 e-mail: eastwdmj@giasdl01vsnlnetin
Southern Pacific Hotels SP Hotels India Pvt Ltd Hotel services Corporation Park Royal, Nehru Place, Level 9, 504 Pacific Highway New Delhi 110 019 St Leonards NSW 2065 Joseph Nietlisbach Mr Graham Wackett General Manager CEO Phone: 91-11-6223344 Phone: 61-2-9935 8300 Fax: 91-11-6224288 Fax: 61-2-437 6811 e-mail: General Manager@parkroyalwiprobtemsvsnlnetin
Stylus Marketing Pty Ltd Coromandel Stylus Ltd Joint venture for 111-121 Warren Rd Parry House, 43, Moore St manufacturing bath Smithfield NSW 2164 Chennai - 600 001 tubs Ph:02 9892 1133 Mr RRavikumar Fax:02 9892 1884 Sr Manager- Corporate Phone: 534 0376 Fax: 534 2822
Sydney IVF Pty Ltd Sydney IVF Medical technology 187 Macquarie St Malpani Nursing Home Sydney NSW 2000 Near Colaba Bus Depot Dr Robert Jansen Mumbai Managing Director Dr Aniruddha Malpani Phone: 61-2-221 5964 Phone : 91-22-215 1065 Fax: 61-2-233 7519 91-22-215 1066 Fax: 91-22-215 0223
166 Simba Textile Mills Pty Ltd Forbes Gokak Ltd Terry towel 12 Kearney St 2nd Floor Forbes Bldg manufacturing Bayswater VIC 3153 Charanjit Rai Marg Mr Anil Somaia Port Mumbai 400 001 Director Mr DJ Madan Phone : 61-3-9729 5700 Managing Director Fax: 61-3-9720 3814 Phone : 91-22-200 4392 Fax: 91-22-200 7378
Seanet Pty Ltd Seanet H-398 Narain Vihar Abattoir Seanet Building, Hillary’s Boat New Delhi 110 028 Harbour, Sorrento Quay Mr Sanjay Verma Perth WA 6025 Indian Representative Mr Greg Poland Phone: 91-11-5794696/ Managing Director 5790250 Phone : 61-09-246 4800 Fax: 91-11-5794696 Fax: 61-09-246 4801
Simoco Pacific Pty Ltd Simoco International Ltd UHF/VHF Wireless 745 Springvale Rd 912-915 Tolstoy House Equipment & radio Mulgrave VIC 3170 Tolstoy Marg trunking systems Mr Peter W Bentley New Delhi 110 001 Managing Director Mr Anton W Abrahams Phone: 61-3-95743666 Managing Director Asia-South Fax: 61-3-95743620 Phone: 91-11-3738944-49 Fax: 91-11-3738950
Surpac Software International Wipro Information Technology Surpac Mining Plc No3 3rd Floor, Pretoria St Software 180 Fauntleray Ave Calcutta 700 071 Redcliffe WA 6104 Mr Partho Das Gupta Mr Geoff Bebb Regional Marketing Manager Managing Director Phone: 91-33-2428489/ 2428491 Phone: 61-9-4781411 Fax: 91-33-2425910 Fax: 61-9-2777639
Tech-Dry Pty Ltd Tech-Dry (India) Pvt Ltd Siliconates / 3 Henry St 847/1, 100 Feet Rd, Bangalore waterproofing Windsor VIC 3181 DrSPBhatnagar material DrDouglas Kagi Managing Director Director Phone: 91-80-558 9159/3864 Phone: 61-3-699 8202 Fax: 91-80-528 9159 Fax: 61-3-521 3094
Telectronics International Pty Telectronics International Pty Ltd Cardiac Ltd F/12, Everard Nagar, pacemakers 5 Orion Rd Eastern Express Highway, Lane Cove NSW 2066 Sion Mumbai 400 022 Phone: 61-2-9413 6271 Mr Tony Fernandes Fax: 61-2-9418 7019 Country Representative India Phone : 91-22-409 7359/ 407 0134 Telstra International Telstra International Ltd Telecommunication 2/23 Ventnor Ave 501-507 Tolstoy House, s West Perth WA 6001 Tolstoy Marg, Mr John Lillywhite New Delhi 110 001 Regional Manager Mr Sanjay Modak Phone : 61-9-491 8101 Regional Director (India) Fax: 61-9-221 2675 Phone: 91-11-335 5985-86 Fax: 91-11-335 5987
167 Thermal Ceramics Australia Murugappa Morgan Thermal Ceramics Refractory ceramic Clastonbury Ave Limited fibre and products Unanderra NSW 2526 Post Box 1570, 28 Rajaji Salai Mr Robert C Blayney Madras 600 001 Managing Director Mr Kailash Agnani Phone : 61-42-711 077 Vice President Fax: 61-42-716 278 Phone: 91-44-510 607 Fax: 91-44-510 613 / 510 378
TNT Express Worldwide TNT Express Worldwide (I) Pvt Ltd Express 280 Coward St 15 Queens Rd Distribution, Mascot NSW 2020 Bangalore Karnataka 560 052 Express Courier, Mr James McCormac Mr Ian Ferguson Cargo Country General Manager Chief Executive Mr Geoff Woodland Phone: 91-80-220 5858 National Operations Manager Fax: 91-80-220 5889 Phone : 61-2-317 7717 Fax: 61-2-693 1048
Vergola Pty Ltd Vergola India Ltd Joint venture for 13 Watervale Drive Unity House, 2nd Floor manufacture of Green Fields SA 5107 8 Mama Parmanand Marg roof/window Mr Jitendra Ragunath Opera House, Mumbai 400 004 screens and Director Mr Vinay Kumar roofing material Phone: 61-8-8250 7007 Executive Director Fax: 61-8-8281 1251 Phone: 91-22-367 1533 Fax: 91-22-369 5438
Village Rdshow Ltd Priya Exhibition (P) Ltd Cinema 206 Bourke St 50 West Regal Building Entertainment Melbourne VIC 3000 Connaught Place Complexes Mr Robert Kirby New Delhi 11001 Chairman Mr Ajay Bijli Phone: 61-3-667 6666 Director Fax: 61-3-663 1972 Phone: 91-11-310 410 / 373 2089/ 3340605 91-11-3552131 Fax: 91-11-374 7139
168 Warman International Pty Ltd Indure Warman Ltd Slurry pumps 1 Marden St Indure House (Near Savitri Cinema), Greater Artarmon NSW 2064 Kailash II Mr Tino Morassut New Delhi 110 048 Manager - SE Asia Pacific Mr Varghese George region General Manager Phone: 61-2-9934 5239 Phone : 91-11-646 9462 / 9642 Fax : 61-2-9934 5201 Fax: 91-11-646 9566/ 623 8393
Indure Warman Ltd 7 A Middleton St, Block B Calcutta Mr PP Sarkar National Sales Manager Phone: 91-33-2472564 Fax: 91-33-403888
Indure Warman Ltd Flat No103 Gulshan II Juhu X Lane Andheri (W) Mumbai 400 058 Mr SSinha Roy Sales Manager Phone: 91-22-6212778 Fax: 91-22-6247533 Western Australia - Western Australia Trade Office Trade & Investment Department of Commerce & 5th Floor, Sterling Centre, 16/2, Facilitation Office Trade Dr Annie Besant Rd, 169-170 St Mumbai - 400 018 George’s Terrace WA 6850 Mr Monish Paul Mr John Loney Regional Director International Relations Phone: 91-22-4974081/ 4974082 Phone: 61-9-3275666 Fax: 91-22-4938445 Fax: 61-9-3223361 White Industries Australia White Industries Limited Piparwar Project Limited Piparwar Project, 7A Middleton St 60 Miller St Calcutta 700 071 Sydney NSW 2000 Mr SK Mukherjee Mr Alan Roy Liaison Manager Director International Mining Phone: 91-33-2406759 Phone 61-2-9922 3777 91-33-4664631 Fax: 61-2-9923 2427 91-33-4664607 Fax: 91- 33-2400842 World Geoscience World Geoscience Ltd Geophysical Corporation Limited 99 Surya Nagar, Bhubaneswar survey equipment 65 Brockway Rd Orissa 751 003 Floreat WA 6014 Mr Ian C Cook Mr John O’Callaghan Project Manager Geographic Manager Phone: 91-674-404763 Phone: 61-9-2736480/ Fax: 91-674 404765 2736466 Fax : 61-9-2736460
WRS Pacific Ltd 44 Kings Park Rd West Perth WA 6000 Mr William Trevor Lunt Director Source: DFAT
169 APPENDIX E: OVERVIEW OF INVESTMENT CONDITIONS
The following table compares the openness of the Indian economy to foreign investment with the policies adopted by three other Asian markets in terms of the regulatory framework as well as some of the key incentives offered to foreign investors.
Table E.1: Comparison of FDI Regulatory Framework - Some Major Developing Countries
India China Indonesia Philippines
Foreign ownership 100 % foreign equity 100 % foreign ownership Foreign shareholding No restrictions on foreign permitted in power permitted in certain up to 100 % ownership except in sector and EOUs. industries permitted in listed areas included under Approval for 100 % companies except Foreign Investment equity in others on a banks, financial Negative List. case-by-case basis. Foreign joint venture institutions and no- go zones) but Special laws relating to Automatic approvals partners should own at certain industries e.g. least 30 % of equity shareholding to be for enterprises with reduced to 49 % or overseas shipping, mini- foreign equity of 51 % less within 20 years hydro-electric power, may in 35 notified high of local operation? limit extent of foreign priority industries. equity.
Investment Policy - Infrastructure, Agricultural Export oriented Export oriented and high priority sectors Information development, Advanced industries advanced technology technology, food / new technology industries processing, tourism / projects, export oriented hotel and 30 other industries sectors. Investment Policy - Arms and ammunition Security related sectors, 23 restricted sectors Mass media, restricted / prohibited and allied items of exploiting, developing including 12 Engineering, retail trade, sectors defence equipment and processing precious prohibited sectors rice and corn production, including defence mineral resources, retail including foreign defence related activities, aircraft and warships, and catering business, logging, retail and SME domestic market atomic energy, coal projects involving wholesale trade, enterprises, import and and lignite, mineral assembly for domestic radio and TV wholesale activities oils, minerals sale only with imported broadcasting, specified in the components and projects alcoholic beverages, Schedule to the producing native fireworks etc. Atomic Energy products or traditional (Control of Production export products. and Use) Order, 1953, railway transport. Approval Board Establishment of high The approval of the The Investment Co- No licensing powered board (FIPB) Ministry of Foreign Trade ordinating Board requirements. to consider FDI for and Economic (BPKM) offers Government operates large projects in Cooperation (MOFTEC) information and One stop action centre totality and free of any required for all foreign guidance to with representatives from pre-determined investment. prospective all government agencies standards. investors, processes that an investor will have applications, issues to deal with when making Foreign investment permits and licenses an investment proposal. eligible for automatic Processing of investor applications normally and monitors clearance processed implementation etc. by the Reserve Bank handled by accounting of India (RBI) in 2 - 4 firms, law firms and weeks. consulting firms in China Source: Manual for foreign collaboration and investment in India, Pacific Economic Cooperation Council for APEC, DFAT
170 Table E.2: Incentives for Encouraging FDI: Some Major Developing Countries
India China Indonesia Philippines
MIGA Membership Yes No Yes No Bilateral investment Yes Yes - with 57 guarantees countries Statutory guarantee No guarantee against No nationalisation Freedom from Guarantees foreign investment against expropriation expropriation. nationalisation or against expropriation except for or nationalisation However, has revocation of public use or in the interest of excellent track record ownership or national welfare and up on for not expropriating restriction of rights of payment of just compensation. assets. control and management. Recent government policies minimise threat of nationalisation. Employment of Permitted Permitted Permitted Permitted foreign nationals Taxation No national treatment. No national treatment National treatment, National treatment; tax incentives Tax incentives tax incentives for available for foreign investment available for foreign Tax incentives priority sectors investment depending available for foreign on location and investment depending industry sector. on location and industry sector. Exchange controls Remittance of capital Controlled by the None. No controls No controls on repatriation of permitted. All other Bank of China. over the repatriation capital, dividend and profit remittances subject to Numerous and of profits. remittance. Reserve Bank of India detailed rules on all rules and conditions foreign exchange of the collaboration transactions agreement. Source: Manual for foreign collaboration and investment in India, Pacific Economic Cooperation Council for APEC, DFAT
171 APPENDIX F: CONSOLIDATED BIBLIOGRAPHY
AGEXPORTER, Indiaʹs Hotels Open Their Doors to U.S. Food Products, January 1996. AIC Online, Indian Hortibusiness, March 1997. Asian Business Review, Where the Money will be made in India’s food boom, August 1997. A & M, Processed Foods, 30 November, 1994. Australian Bureau of Statistics (ABS). Business Asia, Indian Market Ripe for Picking, 11 August 1997. Business World 1996, The Gravy Train, July 7, 1997. Business World, Boomtime in the Backwaters, February 16 ‐ 28, 1997. Dairy India 1997, Fifth Edition, 1997. DFAT, Country Economic Brief ‐ India, 1997. Euromonitor, Asian Consumer 1997, 4th Edition, 1997. Express Investment week, Food Processing ‐ Opportunities Unlimited, June 2, 1997. Far Eastern Economic Review, Dream Harvest, 20 February 1997 FAS Online, USDA, India’s hotels open their door to US Food Products, February 28, 1997. FAS Online, USDA, India ‐ Food Market Overview, July 15, 1996. FAS Report, USDA, Vegetable Oil imports here to stay, March 4, 1997. Food and Agriculture Integrated Development Action Report. Food and Agriculture Organization (FAO), United Nations. Food Industry Business Report, June 12, 1995. Foodpro 95 ‐ Book of Presentations, Processing for viable commercial horticulture, Confederation of Indian Industry, 1995. Food Processing Industries in India, Investment opportunities 1995‐96, Ministry of Food Processing Industries, Government of India, 1995. India Business Information Service. Indian Agriculture, 1996. Indian Food Processing ‐ A Sunrise Industry, Seminar held by the Confederation of Indian Industry, New Delhi, 26 August 1996. INSTATE Pty. Ltd., Agribusiness and Processed Food Development in South East Asia, RIRDC, 1993. Investment Opportunities in Agribusiness in India; Agribusiness ‘96 ‐ Conference Proceedings. Ministry of Food Processing Industries, Annual Report, Government of India, 1996‐97.
172 Monthly Statistics of the Foreign Trade of India, 1995‐96. Prospects for organised retailing in India - A need for partnership, Spencer & Co. RBI Annual Report. Tata Services Ltd, Department of Economics and Statistics, Statistical Outline of India, 1996 – 97, December 1996. The Australian Financial Review, Indian food on Trade Table, May 23, 1997. The Economist Intelligence Unit Ltd., Country Reports, India, Agriculture, April 13, 1995. The Economist Intelligence Unit Ltd., Business Reports, India, Retailing ‐ Emerging Trends, March 1, 1996. The Economist Intelligence Unit Ltd., Country Reports, India, Economy ‐ May 3, 1996. The Economist Intelligence Unit Ltd., Business Operations Reports, India, Franchising, January 21, 1997. The Economist Intelligence Unit Ltd., Business Operations Reports, India, Consumer Market, April 9, 1997. The Economist Intelligence Unit Ltd., Views Wire, India Industry, Reform ignores crucial SSI body, May 12, 1997. The Economist Intelligence Unit Ltd., Business Operations Reports, India, Economic Policy Indicators, July 15, 1997. The Economist Intelligence Unit Ltd., Viewswire, India Industry, Food Processing sector Overview, September 10, 1997. The Economist Intelligence Unit Ltd., Consumer Marketing in India, December 1993. The Economic Times 1995, Packaged Foods ‐ Need to develop new techniques, 31 May, 1995. The Economic Times, No Threat from MNC’s, October 7, 1997. The Economic Times Internet Edition, Loaf that Bread, 24‐30 September 1997. The Far Eastern Economic Review, The Real Bosses of India, June 13, 1996. The Financial Express, Indian Task Force Projects: $8 billion Investment in Food Sector, May 14, 1997. The Financial Times, Asia Intelligence Wire, India Food retailing and distribution, July 9, 1997. The Financial Times, Asia Intelligence Wire, India – Plan panel calls for policy support to food processing sector, October 13, 1997. The Financial Times, Survey of India, November 17, 1995. The Financial Times, India’s supermarket sweep, September 12, 1997. The Hindu Business Line, Supermarkets: Has their time come?, Oct 21, 1995.
173 The Hindu Business Line, Wanted ‐ A Mega Plan for Food Processing Sector, July 29, 1996. The Hindu Business Line, Packeted Teas ‐ Preferred by one and all, September 19, 1996. The Hindu Business Line, Felling farm controls, March 7, 1997. The Hindu Business Line, Excise duty will affect food‐processing units, March 12, 1997. The Economic Times, Investment Limit for SSI’s hiked Five‐fold to Rs. 3 Cr., February 8, 1997. The Hindu Business Line, Sec 4A of the Central Excise Act – Best when not used May 31, 1997. The Hindu Business Line, Bubbling Over, August 7, 1997. The Hindu Business Line, Another KFC restaurant in Delhi Soon, August 21, 1997. The Hindu Survey of Indian Industry, C & I Guide, 1996.
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