India
to emerge global hub
for food products
TIMES
NEWS NETWORK[ TUESDAY, DECEMBER 16, 2003 04:42:40 AM ]
CHENNAI:
The Indian food industry needs to roll out mass consumption basic and
ready-to-cook foods, localise Western products like ketchup and pasta
and customise export products to suit the foreign palate in order to
scale the high-growth ladder.
These
recommendations are part of a sequel to McKinsey’s famed Food and Agricultures
Integrated Development Action (FAIDA) report.
Mckinsey’s
principal Mike Fernandes said at the inaugural session of FoodPro 2003,
the last six years have seen tremendous change in organised retailing,
consumption patterns and product proliferation. Share of processed foods
have increased over 37% in the last 7-8 years.
While
there have been several pluses in institutionalised retailing and product
innovations, none of them have reached a large scale, Mr Fernandes said.
New large players have not yet emerged, profitability levels remain
low, the core wheat, dairy and horticulture industries remain unorganised
and there has been limited addition to infrastructure, the report says.
As
per the trends, food retailing is expected to grow with more and more
people warming up to the idea of convenience stores. It is also expected
that India will emerge as the global outsourcing hub for food products
along with domestic deregulation and further liberalisation.
Mckinsey’s
prescription is that Indian companies should create market-driven linkages
rather than do-it alone or building new infrastructure. Second, companies
should develop an asset-light manufacturing model and innovative distribution
system. Third, they should develop a low-cost business system to acquire
pricing flexibility and compete with the unorganised sector.
The
report has also proposed rationalisation of tax structure, equal access
to farm produce, cutting down of intermediaries between corporates and
farmer and an integrated food law.
