Almost 47% of entrepreneur had given thought to start with food processing unit but due to some or other hurdles they couldn’t make out. So, to bridge the gap between, MBP has developed the document to guide the budding entrepreneur.
India is the world’s second largest producer of food next to China, and has the potential of being the biggest with the food and agricultural sector. The food processing industry is one of the largest industries in India. It is ranked fifth in terms of production, consumption, export and expected growth. The food industry is on a high as Indians continue to have a feast. Fueled by what can be termed as a perfect ingredient for any industry -large disposable incomes – the food sector has been witnessing a marked change in consumption patterns, especially in terms of food. Increasing incomes are always accompanied by a change in the food basket.
The current size of Indian food Industry is around $40 billion and it is expected to grow by 27% – 30% and it will take double fold growth in next 3 years by considering today’s increasing pattern of demand.
The main reason to invest in Food Processing Industry in India is its quick growth. In addition to this reason, there are other reasons such as vast source of raw material, shift from conventional farming of food grains to horticulture, India’s huge population out of which major part of urban middle class are significantly changing the food habits, Low production cost, change in consumption patterns, introduction of food parks and the attractive fiscal incentives.
Emerging Food Markets –
• Food Processing or manufacturing
• Cold storage market
• RTE & RTM Food Market
• Food service institutional market
• Defense market
• Ingredients market
• Parlor market
Procedure to start Food Processing Unit –
Market Research :
Finding out the market potential for decided product or for which product there is market. Market Research is a valuable tool to minimize risks and gain success. After having basic understanding of the business idea, Economic and Industry Analysis needs to be performed to understand the environment around the business of food processing in the present scenario. Detailed secondary Market Research needs to be done to size the market, competitors and trends.
Business Conceptualization :
On the basis of outcomes of market research, you need to finalize the business concept as to what will be your core business line. The decision must be on the rational fundamentals.
Business Structuring :
Business Structuring is very important decision while starting the business. There are different types of entity which can be formed in India, such as Private Limited Company, Public Limited Company, Partnership Firm or Limited Liability Partnership (LLP). So, the right business structure is required to be decided.
Location Analysis :
Ideally, one must locate the project or factory near to the place of raw materials, but there are other factors as well which are to be keep in mind. Usually, Government offers subsidy and tax concessions to enterprise for specific states/ locations. And, this is done through location analysis under which all the factors are kept in mind, including tax and government incentives, availability of manpower, power, water, land price etc. to find the best suitable location or state in India
Business Plan Formulation :
Business Plan needs to be formulated as it is very important road map to gauge where you are and where you want to be. It is the blueprint of your business with narrative as well as financial worksheets.
Goals, Policies & Strategy Formulation:
The business concept which you have decided to go for, need to be directed with proper goals, policies and strategy as to guide your run in this corporate world.
Sourcing Business Fund:
As per the nature and size of the business, there is a need of funds, so you need to find out most appropriate way to get it.
Registration under Company Act 2013:
After the right business entity is decided, the business is required to be registered at the appropriate authority by filing requisite incorporation forms. Also, the tax registrations which are necessary to be done are PAN, TAN, Sales Tax, Excise & Customs Registration, and Service Tax.
Registration with relevant food authorities:
• Food License from Health Department
• Trade License
• Registrations under Shops & Establishment Act and under Factories Act
• Industrial License under Industrial (Development & Regulation) Act, 1951
• Licenses under the Essential Commodities Act, 1955 to make sure that the good quality products are manufactured and sold.
• Registrations under the Food Safety and Standards Act, 2006 and under Standard and Weight Measure Act
• Other registrations, keeping in mind the exact business under food processing industry
Intellectual Property Rights Registration:
To protect the brand name, IPR registrations are necessary which are Trademark, Patent, and Design or Watermark registration.
Infrastructural Settings:
You need to set up proper infrastructural support like; land, building, water, electricity, transport, etc.
Mecha-structural Settings
You need to evaluate, select and install the machinery & automation support for the manufacturing of food products.
Human Resource Planning:
You will need Manpower in different areas like, production (Workers), Supervision (Technicians), and Administration, Sales, Marketing and Misc.
Strategy Implementation:
Now this is the time to implement, whatever you formulated. Like Operational, HR, Marketing & Sales strategy.
This is how you get started with your food manufacturing unit, but make sure that you are evaluating each affecting decision and step with your guide or mentor.
Growth Drivers of Indian Food Industry: –
• 2nd largest arable land in the world
• 20 agri climatic region
• Largest producer of pulses, milk, tea, cashew, meat, spices, wheat, sugar cane, rice, vegetables and fruits.
• Largest livestock population
• Rising in consumption expenditure
• Favorable government assistance
• Increasing capital investments
The Government has formulated and implemented several Plans and Schemes to provide financial assistance for setting up and modernizing food processing units, creation of infrastructure support for research and development and human resource development in addition to other promotional measures to encourage the growth of the processed food sector. Food processing is a large sector that covers activities such as agriculture, horticulture, plantation, animal husbandry and fisheries. It also includes other industries that use agriculture inputs for manufacturing of edible products.