Indian food retail market expected to touch $827 bn by ’23, says study

India’s food retail market is expected to touch $827 billion by 2023, up from $487 billion in 2017, growing at a compound annual growth rate (CAGR) of 9.23 per cent, with recent reforms making the sector more competitive and market-oriented. These were the findings of a joint study titled Food Value Chain: Partnerships in India, conducted by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) and consulting firm TechSci Research.

In line with Indian Prime Minister Narendra Modi’s vision to double farmers’ incomes by 2022, the growth in India food processing industry in value terms is expected to be more than in volume terms over the coming years, which clearly indicates the increase in prices for Indian commodities across the globe.

The study found out that this highlighted a great opportunity for small-scale farmers, who could associate with the leading exporters to boost their earnings by carrying out either contract farming or increasing the production by using technologically-advanced equipment.

“The northern (29.56 per cent), western (25.39 per cent) and southern (27.19 per cent) regions account for the major share in the Indian food retail sector, whereas the eastern region (17.86 per cent) has a relatively low market share, owing to the presence of the seven sister states, Bihar and Jharkhand, where the concentration of big retail companies is only limited to 4-5 cities,” it added.

“Consequently, companies are focussing on two major factors, namely price control and attracting customers with big offers. The only way to control the price is to source the products directly from manufacturers, which requires the need for world-class logistics services, including storage and warehouse facilities,” highlighted the study.

In addition to these, major equipment/technologies imported in India for the food processing sector are controlled units for automation, fluid control equipment, hygienic and ultra-pure fittings for installation material, analytical instruments for instrumentation process and tank mixing educators for the mixing equipment.

Due to the increasing trend of e-tailing, the need for personalised spaces is expected ?a one-stop farm from where a retailer picks everything to save the cost of sourcing it from different places, especially in one state. Hence, to sustain the cost, contract farming is expected to pick up pace. The partnership between retailers and individuals/companies involved in contract farming will increase.