Rise of MSMEs in Food Sector

   2019-12-04       72        Business
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MSMEs (Micro, Medium and Small enterprises) in India have tremendous potential to grow and contribute to the Indian economy.

Long term partnerships with Indian MSMEs having good technical capabilities could not only provide a low-cost advantage but also a source of “frugal innovation” for companies worldwide. An ecosystem with MSMEs could be a source of global competitive advantage for the companies investing in India. The corridors for different sectors would further assist in the creation of the ecosystem for co-development and growth. In particular, the food sector has seen a lot of participation from domestic and global players. The reason for such increased investment in the food sector are as follows:

  • By 2020, Indian food and retail market is projected to touch $800bn with processed food contributing to $500bn and most of it is concentrated in Tier II and III cities. This has led the developing of food parks in these cities, due to which the plants get access to govt subsidies and are in close proximity to raw materials.
  • Huge opportunity for integrated cold chain setup, food quality control and testing labs, dry warehousing, fruit pulp and concentrates, modernization of food and oilseed milling, food flavours, additives and coloring, milk and poultry processing etc, which has led to the entry of large foreign players who are helping Indian MSMEs with technology transfer and setting up captive units in India
  • 4 mega food parks, 7 food testing labs and 9 cold chain projects approved in northeast India along with subsidies to the tune of 80% for setting up plants in these areas. This has led to reducing the burden on Tier I cities which are already grappling with infrastructure issues.
  • Recurring grants in aid ranging from Rs.10 lakhs to 50 lakhs is provided for MSMEs looking to set-up plants in food processing. This is in addition to various state govt schemes which are promoting specific food sectors.
  • Agribusiness opportunity to cater to rural India is almost $330bn and rigorous training being imparted by the food processing ministry for MSMEs in this sector. This has not only led to raise in income in rural households but also promised more stable income flows, farm labor returning back to the farms as agricultural income is more stable and available throughout the year.


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