Food For Thought: Why Maharashtra Is The Ideal Market For Agro And Food Processing Businesses

India is the second-largest food-producing market in the world. The country’s food market – comprising everything from pulses, vegetables, and fruits to milled products and alcoholic beverages – is growing at a CAGR of 11%. And, one-third of this growth is driven by its processing sector alone. Currently, the Indian agro and food industry stands at US$ 230 billion, but in the next five years, it is expected to reach a staggering figure of US$ 535 billion. The key player in driving that growth is Maharashtra, one of India’s largest commercial and industrial centres.

Over the years, Maharashtra’s food processing sector has attracted more than $158 million of investments, making it an ideal destination for food processing businesses in the country. Out of the top 10 food processing companies operating in India, four are headquartered in Mumbai; these are Hindustan Unilever, Mondelez Foods Pvt Ltd (Cadbury), Parle Agro, and Venkys India Ltd. Other major food processing players in the state include MTR, Britannia, McCain, PepsiCo, Haldiram’s, and Nestle.

Maharashtra’s infrastructure advantage at a glance

In FY17, Maharashtra accounted for 17% of India’s food processing industry and 15% of the national food exports. The third-largest state in India in terms of geographical area, Maharashtra houses 225 lakh hectares of cultivable land, 720 km of coastline (that connects to several ports in America, Asia, and Europe), and nine agro-climatic zones, all of which adds to the food processing asset of the state. 

Unlike many other states in India, all of Maharashtra’s 36 districts contribute to its food processing industry, actively participating in making it the highest contributor to India’s Gross Domestic Product (GDP). Known as the wine capital of India, Nashik, for instance, has some of the largest homegrown and international wine companies, currently accounting for 90% of India’s wine production. As the second-largest producer of fruits in the country, Maharashtra houses large-scale production units for fruits like mango, banana, and orange in districts including Jalgaon, Jalna, Kolhapur, Latur, Nagpur, Satara, and Ratnagiri. Further down the coast, districts such as Mumbai, Mumbai-Suburban, and Raigarh account for 8.8% of the total share of the country's marine produce. 

Another factor that complements Maharashtra’s food processing system is its well-connected and well-built air-cargo facilities and multimodal logistics. The state bagged the title of the top-performing state under Transport Connectivity Pillar in Export Preparedness Index 2020. Following this development, there has been an increase in commercial real-estate projects in the state, especially around its major food processing hubs such as Nagpur, Aurangabad, and Pune. Lending more weight to the momentum of growth, the state authorities are planning to launch four new food parks in Dindori (Nasik), Bidkin (Aurangabad), Dight (near Mumbai), and Butibori (Nagpur). These projects will be followed by the establishment of a 500-acre food park in Aurangabad Industrial City (AURIC), which will be a part of the upcoming 1500-KM-long Delhi-Mumbai Industrial Corridor.

Further in its line of robust food infrastructure which includes eight specialised food parks, three mega food parks, three wine parks and three floriculture parks, Maharashtra will also build mini food parks for MSMEs with a minimum of 10 acres of land each. Moreover, to accommodate new businesses, the state will construct 12 out of 63 approved agro and food processing clusters under the Agro Processing Scheme of India 2021.

Keeping all processing units in focus, the state has taken strategic steps to build 118 (*455) soil testing labs, 32 cold chains, eight Agri Export Zones (AEZ), eight food processing units for implementation of HACCP/ISO and six national research centres. It also has 11 large food testing labs which include both NABL (the National Accreditation Board for Testing and Calibration Laboratories) and FSSAI (the Food Safety and Standards Authority of India).

Regulatory support to micro food processing businesses in the state

In the last five years, the state’s food industry has begun operations of 41 large food processing units and introduced 10,000 new job opportunities in the market. These achievements not only represent the state’s infrastructural capabilities but also reflect its liberal and business-friendly policies.
For instance, in its Industrial Policy 2019, the Maharashtra government recognised agro and food processing sector as a thrust sector with the potential to generate employment and spearhead industrial development in the state. To complement the growth opportunities, the policy also assures land allotments and incentives for the sector. According to the Package Scheme of Incentives 2019, secondary and tertiary food processing units in the state shall also be eligible for fiscal and non-fiscal incentives. 

Home to the third-largest population of farmers in India, the state’s food processing sector not only contributes 7% to GSDP and 15% to Industrial GSDP but also directly benefits and supports its large number of agrarian workers. To expand the potentials of its micro-businessmen, the state actively provides 60% of food processing costs to farmers’ organisations under its Agri Revival Scheme. Similarly, through its Chief Minister’s Agriculture and Food Processing Scheme 2017, the state provides required technology and skilling programs to the rural youth and SMEs. So far, almost 158 projects have benefitted from the scheme. In the next five years, the state aims to empower 20,000 more micro food processing units in partnership with Prime Minister Formalisation of Micro Food Processing Enterprises Scheme.

As a state that also contributes 12% to the total share of the horticulture produce of the country, Maharashtra has implemented a scheme under National Horticulture Campaign. It provides financial assistance to horticulture businesses in building pre-chilling homes, primary mobile processing centres, and integrated cold chain systems.

With the advent of food e-commerce and a drastic shift in consumption patterns in the last decade, the Indian food processing industry is gearing up to become one of the fastest-growing industries. According to Strategic Investment Research Unit (SIRU), the increasing food consumption is expected to reach US$ 1.2 trillion by 2025-26. In the wake of such developments, Maharashtra, a land with immense natural and industrial advantages complemented by zealous regulatory support, has emerged as the ideal destination for small and large food processing businesses in the country. In doing so, the state is poised to consolidate India’s position as the food producing and processing capital of the world.