NEW DELHI, 9 February 2018: Union Minister for Commerce and Industry Mr. Suresh Prabhu today announced that the government was working on an agriculture export strategy that would give primacy to value addition and job creation. He emphasised on the potential of marine products export, for which the Agricultural and Processed Food Products Export Development Authority (APEDA) had been given specific targets for value added exports.
Inaugurating the 11th edition of 'FICCI Foodworld India 2018' on the theme 'Capitalising Food Processing in the Digital Era', Mr. Prabhu urged the food processing industry professionals to develop processed food items that appeal to the palates of the consumers in export markets. This segment needs to be exploited aggressively apart from exporting Indian food products for use by Indians overseas.
Processed, ready-to-eat food, produced under good regulation with regard to safety and standards, Mr. Prabhu said, was a great opportunity for the manufacturing sector with the attendant beneficial effect on downstream industries.
Mr. Prabhu also released a FICCI-YES BANK report on 'Start-Ups: Transforming India's Food Processing Economy'.
Mr. J P Meena, Secretary, Ministry of Food Processing Industries, pointed out that while the availability of credit to food processing units was a challenge, the government was looking at the feasibility of having sector-specific financial institutions to take care of the credit requirements. The government would look for partnerships with the industry to resolve the issue, he added.
He said indigenous production of machinery and equipment required by the industry has remained a grey area. In this regard, industry should provide relevant inputs to R&D institutions so that mechanisation was in tune with the requirements. In packaging, the excessive reliance on the use of plastics was an area of concern, he said and added that the time was ripe to develop bio-degradable alternatives to plastics.
Mr. Ashish Bahuguna, Chairman, Food Safety Standards Authority of India (FSSAI) assured industry that the spate of regulations on food standards and safety will abate in the next 6 to 12 months. Industry, he said, would be given ample time to align their products and processes seamlessly to the new standards.
He added the budget announcement on creating farmer producers' organization would go a long way in connecting with the farmers. The government, he said, would facilitate the aggregation of farmers and their linkage with food standards and government schemes.
Mr. Sanjay Sharma, Chair, FICCI Food Processing Committee, stressed that the food processing sector was today characterised by three major changes, namely, changing consumer tastes, digitalization and availability of finance. The digital age, he said, would build the industry for the next big step.
The inaugural session was also addressed by Mr. Hemant Malik, Co-Chair, FICCI Food Processing Committee and Mr. Dilip Chenoy, Director General, FICCI.
The day-long convention witnessed a CEOs' panel discussion on the growth and opportunity in food processing, digitalization in food marketing, innovation and opportunities for food start-ups and building of consumer trust.
According to Mr. Rana Kapoor, MD & CEO, YES BANK & Chairman, YES Global Institute, "India has developed a vibrant entrepreneurial landscape and steadfastly strengthened its position as the third largest start-up ecosystem globally. This is visible in our Food Processing sector and associated ecosystem, which has witnessed a wave of entrepreneurship with disruptive and futuristic ideas, especially in the last five years. Collaborations, linkages and partnerships among key stakeholders including start-ups, will help develop scalable future-ready solutions, supported by conducive Government policies. Progressive Government initiatives such as Startup India, Atal Innovation Mission, a dedicated Women Entrepreneurship Cell in NITI Aayog and numerous startup-dedicated investment funds, are playing a key role in fostering the culture of innovation and entrepreneurship in India."
The FICCI-YES BANK report states that a robust regulatory environment can enable a favorable macro-economic environment to nurture the growth and development of technology-based startups. The government has also taken note of this trend and it is expected that 'Startup India' will facilitate this growth and development by putting in place the right steps towards creating a nurturing ecosystem for startups. Late stage startups ? by virtue of their maturity and relatively proven business models have much easier access to funds. However, the current uncertainty in the Indian market means that early stage startups are finding it difficult to raise funds at a stage where they need the maximum financial support. In this scenario a government backed fund such as SETU (Self Employment and Talent Utilization) Fund can prove to be a reliable resource, desperately needed for these startups to get started. Such a fund can make a real difference to the ecosystem and provide momentum to the wave of innovation that has begun in India.
A streamlined tax regime can remove hurdles which impact startups and small businesses in India, including venture investment, technology, and mergers and acquisitions. The government can reclassify what constitutes 'services' for tax purposes, to help clarify the application of the term to software product businesses, including startups. Startups will also benefit from an exemption of income and sales tax, to facilitate their growth and development by making operations more viable. There should be tax breaks/ depreciation for startups procuring items essential for businesses like hardware, software and communication equipment among others.
The report states that taxation on investments that are made in startup enterprises must adequately reflect associated risks of such enterprises, especially as gains made out of successful exits are redeployed for investment. This principle is currently reflected in the pass-through status accorded to venture capitalist funds. Incubators should be encouraged to avail of the benefits extended from time to time, and for them to be considered SEBI-approved investors. To encourage the sector's long-term growth the government can look at an enhanced taxation regime for incubators, including rendering them exempted from taxes as well as the customs duty which is levied on the purchase and import of goods needed for the incubators.
Given their role in mentoring and connecting innovators to business growth opportunities, funds contributed to incubators should be treated at par with investments in research and development (R&D) activities for businesses, and proportionally the entities that contribute funds to incubators should also be eligible for the 200% tax benefit that is currently applicable to R&D investments.
The role of industry is very critical is boosting the StartUp ecosystem. An institutionalized collaborative mechanism between the industry and the StartUps is of utmost importance. Such platforms provide an opportunity to discuss on ground challenges and share experiences with each other for mutual benefits. Regular interactions with the industry helps the startups get guidance and assistance from industry veterans.
FICCI MEDIA DIVISION
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