FOOD PROCESSING INDUSTRY
Food processing Industry is critical to India’s development, and India is one of the world’s largest producers and consumer of food products, with the sector playing an important role in contributing to the development of the economy. In past few years, India has witnessed strong growth. Due to the growing income of middle class population, there has been a positive impact on consumer spending and consumption in both rural as well as urban areas.
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 by the government.
INSIGHTS TO FOOD PROCESSING INDUSTRY IN INDIA
1. The first and foremost to do is to understand the cultural differences between yourself and the partner.
2. The next action to be done is to always conduct a due diligence on the partner’s venture to which you are partnering with.
3. Appoint legal experts to perform formal legal or commercial due diligence,
4. Before entering into partnership, always prepare a documented Business Plan for the Joint Venture, which in harmony to in principle by both partners before commencing the partnership. The plan needs to include as a minimum.
5. Uncover the Strategic purpose for the JV
6. Do Thorough SWOT analysis
7. Analysis on investment and the payback time
8. Find the target market and the key factors for success and risks in partnering
9. Always prepare a partnership document that covers:
After you perform all the steps above, you are ready to start the mobile food business. Since, food industry is developing,
The total food production in India is expected to double in the next ten years and there is ample opportunity for huge investments in food and food processing technologies, skills and equipments which thereby increases the scope of food processing industry in India. The food processing industry in India stands at US$ 135 billion and is projected to grow with a compound annual growth rate (CAGR) of 10 per cent to reach US$ 200 billion by 2015.
INSIGHTS TO FOOD PROCESSING INDUSTRY IN INDIA
Procedure to start business under Food Processing Sector
Market Research
Market Research is a valuable tool to help 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.
Locational 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 kept in mind. Usually, Government offers subsidy and tax concessions to enterprise for specific states/ locations. And, this is done through locational 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
Brand Research
Brand Research is basic research which determines the brand image of your company or product. It is normally done to create strategies to put together the company’s brand equity in future.
Business Plans
After Brand Research, 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 includes narrative as well as financial worksheets.
FDI Approval
Automatic approval for foreign equity upto 100% is available for most of the processed food items, except alcohol and beer and those reserved for small scale sector(subject to certain conditions)
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.
Incorporation of Business Entity
After the right business entity is decided, the business is required to be registered at the appropriate authority by filing requisite incorporation forms.
Tax Registrations
The tax registrations which are necessary to be done are PAN, TAN, Sales Tax, Excise & Customs Registration, and Service Tax
Commercial Registrations
• 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 Essential Commodities Act, 1955 to make sure that the good quality products are manufactured and sold.
• Registrations under 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 can be Trademark, Patent, Design or Watermark registration
Human Resource Planning
You will need Manpower in different areas like, production (Workers), Supervision (Technicians), and Administration, Sales, Marketing and Misc.
Labor Registrations
Obtaining Registrations under Employees Provident Fund, Employee State Insurance, etc. is important after you employ the employees in your business venture.
Business Funding
As per the nature of the business, there is a requirement to open a factory, procurement of raw materials, so, Banks needs to be contacted for Working Capital requirements, etc.
DO’S
2. The next action to be done is to always conduct a due diligence on the partner’s venture to which you are partnering with.
3. Appoint legal experts to perform formal legal or commercial due diligence,
4. Before entering into partnership, always prepare a documented Business Plan for the Joint Venture, which in harmony to in principle by both partners before commencing the partnership. The plan needs to include as a minimum.
5. Uncover the Strategic purpose for the JV
6. Do Thorough SWOT analysis
7. Analysis on investment and the payback time
8. Find the target market and the key factors for success and risks in partnering
9. Always prepare a partnership document that covers:
Each party’s contribution
Business Responsibilities
Potential in partnering
Expectations by each party in JV
10. Encourage regular and open communications.
11.Establish mechanisms for resolving disputes (mediation/arbitration)
12.Think about the exit options. Clearly mention the clauses relating to dispute, mechanism of resolving the disputes, and the buyer in that case, and the pricing as well.
13.Take professional opinion while forming JV Agreement. Joint Ventures are difficult to form and manage; take assistance of consultants who have formed Joint Ventures before.
14.Be clear on all terms and conditions. No matter how much the partners trust each other, put your agreement in writing.
BUSINESS OPPORTUNITIES AHEAD
• India is one of the fastest growing branded restaurants markets in the world, where the organised eating-out market is estimated at US$ 2 billion and growing at a CAGR of 25 per cent.
• India is world’s second largest producer of fruits & vegetables
• India is the largest producer of milk in the world
• India is the third largest fish producer in the world.
With massive scope for value addition, growing trend in the consumption pattern of processed food products in India and many fiscal incentives being planned by the Government, this sector is capable of maintaining the growth momentum in the future.
BUSINESS IDEA OF THE MONTH
Mobile Food Business
Whenever people are hungry and in want of tasty food, but don’t have time to visit a decent Restaurant, Mobile Food Business is exactly the need of that time. The food may range from anything from diet food to Continental food placed right in an attractive painted food Truck/ big cars (Innovative concepts). Under this business idea, the food will be following the consumers. The food trucks can be operational in schools, colleges and even in offices.
Mobile Food Business, to organize the unorganized street food in India. When, we talk about the Caravan restaurants, we say that it can carry more variety of food and obviously more business. You can even do this business for specific events. So, you have many options to start this business. But before starting, keep in mind that, these Caravan restaurants require both space and money to invest. To start a Caravan restaurant business, you will require a business plan well documented, do research on what will be the menu items, what all interior and comforts you can arrange in such caravan, weather estimations, pick locations weekly, appoint chefs and do marketing.
After you perform all the steps above, you are ready to start the mobile food business. Since, food industry is developing,
