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US spells out wish list for investing in Indian food processing

By Mike Stones , 02-Nov-2009

Greater US investment in the Indian food processing and agricultural sectors depends upon the government harmonizing food safety laws and introducing farm reforms and stronger intellectual property protection, according to Bob Milligan, chairman, US Chamber of Commerce.

Speaking at the event Foodpro 2009, organised by the Confederation of Indian Industry, Milligan spelled out the conditions for more wide-ranging investment. To secure more investment, food safety laws should be harmonised with international laws, he said.

India should also reduce tariffs on processed foods to in order to allow US firms to market their products in the country.

Milligan also highlighted the need for central and state governments to unify agricultural markets across the country in order to stimulate the domestic food processing sector.

Intellectual property

Stronger intellectual property protection was needed too. Systems should be introduced which offered safeguards against the illegal transfer of technology to third parties.

Although small and medium Indian companies’ investments in the US have rocketed by more than 80 per cent in the past two years, many US companies prefer to invest elsewhere. That could be remedied if the US and India worked together on policies and technologies that encouraged stronger trade relationships, said Milligan.

Vinita Bali, managing director, Britannia Industries, told the seminar that developing the food processing would also support farmers’ incomes. But, at present, processed and packaged foods face heavy taxes while low farm incomes force some farmers to sell land rather than cultivate it, warned Bali.

India processes less than three per cent of its agricultural produce compared with 70 per cent in the US and Europe, she added.

Agricultural products
Meanwhile, the Associated Chambers of Commerce and Industry of India (Assocham) urged the government last month to make processed foods and primary agricultural products, such as rice, atta and dal, tax free when it introduces its Goods and Service Tax (GST) next year.

Its president, Dr Swati Piramal said zero-rating such products will be essential if the government wants to achieve its aim of increasing the national level of food processing to 10 per cent from the current level of two per cent, he added.

The Foodpro 2009 seminar was held at the Chennai Trade and Convention Centre, Chennai, Tamil Nadu, India.