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Ingredients are an important part of India’s economic growth

INTERVIEW: Head of Agriculture and Food at the Danish embassy in India Ashish Paliwal talks about what is going on in the Indian market for ingredients and what we can expect in the future.

A growing population and development of preferences is shaping the market.

Danish Agriculture and Food Council: What trends in relation to ingredients is seen in the Indian market?
Ashish Paliwal: The food ingredient sector is driven by overall promising prospects for the Indian food industry, and the ingredients are expected to be an important part of the next growth wave in India. The expected growth of the coming years will be shaped by a growing Indian population, rising disposable incomes, double income in households, urbanization and better living standards. These factors will promote the demand for natural colors, flavors and additives as well as promote the development of consumer preferences (including higher demand for healthy and functional foods). In particular, emulsifiers, sweeteners, flavors and preservatives will be key products.

The Indian population is experiencing an increase of lifestyle diseases due to to consumers’ changing lifestyle and eating habits. However, there is also a greater awareness of the possible health problems related to particular foods. Therefore, there is also a growing demand for health and wellness products and ingredients that fall within these categories.

These trends have led to increased production of different flavours of starch, food gum and texturing ingredients, which have breeding ground in the large wheat and corn cultivation in India. Trends have created a huge spectrum for ingredients for the use of ingredients.

India has an impressive basis for food production, but the market opportunities must emerge, as in the Western world. Food ingredient actors should utilize the current situation at a faster pace than previously.

Increased focus on health and multi functionality

DAFC: How can we expect the Indian marked for ingredients to look in the future?
Ashish Paliwal: India is at the beginning of an exponential growth phase, and it is expected that the high growth will continue over the next five years. There are good business opportunities for all kinds of ingredient manufacturers and suppliers. Food ingredients are a fast growing billionaire industry – not only in India but worldwide. The revolution in the food and beverage market, especially in relation to processed food, has created endless opportunities for new products in the Indian market for ingredients.

The market for new product concepts is driven by a sedentary lifestyle, adding a greater focus on healthy food and low fat worldwide. These product concepts often benefit from the multifunctionality of the ingredients used, for example, food ingredients used for food products that have clinically proven health benefits. The four countries with the greatest potential in the market for special food ingredients are India, China, Russia and Brazil, all geared to the rapidly growing trend in the area.

 

The revolution in the food and drink market, especially in relation to processed food, has created endless opportunities for new ingredient products in the Indian market.

Investment in R&D can give advantages

DAFC: What can Danish ingredient businesses, exporting to the Indian market, do to adjust to the development?
Ashish Paliwal: India represents an obvious export opportunity for Danish producers and suppliers of ingredients, partially as a result of the country’s large consumer base. It is evident that Danish companies invest in R & D with the purpose of adjusting products to Indian demand and market dynamics. Research can also be conducted towards developing innovative specialty ingredients that can be used in various food and beverage applications – in India as well as in the rest of the world.

Danish ingredient companies, however, should be aware that there are also major challenges associated with the country’s broadened geography, food culture and agricultural production systems. Example: In India, about half of the national milk production comes from buffalo and the other half from cattle. However, this combination varies geographically, so Danish suppliers must adapt their products depending on the raw material available. Cottage cheese is a popular domestic dairy product in India, and the quality of the product is affected by the milk cultures used. To ensure good quality and deliciously cooked cottage cheese, the cultures should be processed in accordance with the local area’s purchase of cattle and buffalo milk, which is often purchased as a mixture, ie. without the possibility of  a separation of the products.

Lack of research and development

DAFC: What challenges do you see as the biggest? And how do you think they are best overcome?
Ashish Paliwal: Although the Indian food industry is expanding rapidly, the level of food processing is still lower compared with other countries. The biggest problem facing the sector is lacking in research and development, the gap between the industrial and academic world, qualification difference, technology gap, the achievement of global quality standards, an increase in the number of small and unstructured actors as well as administrative barriers. In addition, the lack of lack of connections across the value and food chain, inadequate framework conditions for agriculture and processing and incapacitated marketing systems are other important challenges for this sector:

It is a common misconception that India is highly protected by strict trade barriers. If we talk about tariff barriers it is true to some degree, but other trade barriers are less strict. The Indian market is not a closed market, but of course there are challenges associated with trade – like in all other countries. The trade barriers present in India involve application procedures for imports of food products as well as an uneven business dynamics between the states.
With the emergence of the Indian government’s political focus on the food processing sector, where the sector is part of a strategic sector in “Making In India” campaign, the food processing sector will have a considerable time for growth ahead, and it is therefore decisive to focus on the existing defects, in order to eliminate them beforehand.

Want to know how Danish solutions can help your business in India? Take a closer look at Denmark’s strongholds here.

Five facts about India and India’s food sector

  1. India is the world’s third largest economy with a 7.1 pct. growth rate and 1.3 billion inhabitants.
  2. India is the world’s largest producer of milk (155.5 million tons), but a Danish cow is 20 times more productive than an Indian cow.
  3. India is the world’s largest producer of bananas, papayas and mangoes.
  4. More than 40 percent of the Indian agro- and food production is lost due to poor storage facilities, lacking infrastructure or lacking cooling solutions. The loss equals the UK’s total food production.
  5. During April-August 2017, India exported agricultural and processed food products totaling USD 7.26 billion to more than 100 countries, chief among them are the Middle East, Southeast Asia, the EU and the US.
    Source: Confederation of Danish Industry

Source: DAFC