Thais urged to invest in India's food-processing industry

Food processing, an inherent strength among Thai companies, could expand tremendously if the companies involved decide to venture into India, leading panelists from the subcontinent said yesterday.

"Food processing is an industry that is set to grow at a cumulative average growth rate of about 10 percent per year to $314 billion by 2015 from $200 billion currently," said Sameer Barde, a director of the Federation of Indian Chambers of Commerce and Industry, which has about 225,000 companies under its wing directly or indirectly.

Mr Barde said that out of this figure, about 53 percent was in the food-processing segment, an area in which India was decades behind countries such as Thailand.

"If you look at just the waste, due to lack of infrastructure, we are talking about $9 billion annually," he added.

India, which has a population of 1.07 billion people and a middle class of about 400 million, is the world's 11th largest economy and has been trying to attract foreign direct investment in various sectors including food processing.

Although India is the world's largest producer of fruits, vegetables, tea, milk and dairy products, it exports very few of them due to the lack of infrastructure, technology and know-how in processing, an area in which Thai companies have major strengths.

"The potential investment required over the next couple of years is in the range of $23 billion to build the food-processing infrastructure, an indication to the potential that could lie ahead for those who wish to venture," Mr Barde said.

Food processing, according to P.I. Suvrathan, the secretary of the Ministry of Food Processing Industries, has become one of India's biggest priorities and over the next two months the government hoped to pass key regulations on standards in order for the industry to prosper.

"This is an industry where we can learn from the success of Thailand, we want to learn from the processes, technology and efficiencies, and together India and Thailand could complement each other for Thailand to achieve its status as the Kitchen of the World," Mr Suvrathan said at a seminar attended by 11 Indian and 24 Thai companies.

"Thai companies should take the opportunity to tap into the robust growth of the Indian economy and their growing middle class by trying to set up ventures in the agricultural and agro food-processing segments," Suriya Jungrungreangkit, the caretaker industry minister, said in his opening remarks.

He said that although trade between India and Thailand had increased since the bilateral free trade agreement was signed two years ago, what was lacking was private investment.

Two-way trade, expected to reach $3 billion by the end of this year, is projected to rise to $4 billion by the end of 2007, said Vivek Katju, the Indian ambassador to Thailand.

He said that although investment from the two countries had been made in the manufacturing sector in the past, it was now time to explore more opportunities in the lucrative food-processing business, which grew 42 percent in 2005.

India currently allows 100 percent foreign direct investment in the agro-processing industry.