Food processing industry to get 100% FDI through FIPB route

This will benefit farmers, give impetus to food processing industry and create vast employment opportunities, the Minister added Vanita Peter D’Souza | The Dollar Business

Prior to this proposal, 100% FDI was allowed in the food processing industry through the automatic route while 49% FDI was allowed through FIPB route

  With a view to give an extra boost to the agrarian sector, Finance Minister Arun Jaitley relaxed the FDI regulation in the food processing industry and announced a 100% FDI through FIPB route. The Finance Minister while presenting his third Union Budget said, “Our foreign direct investment (FDI) policy has to address the requirements of farmers and food processing industry. A lot of fruits and vegetables grown by our farmers either do not fetch the right prices or fail to reach the markets. Food processing industry and trade should be more efficient. 100% FDI will be allowed through Foreign Investment Promotion Board (FIPB) route in marketing of food products produced and manufactured in India.” This will benefit farmers, give impetus to food processing industry and create vast employment opportunities, the Minister added. Prior to this proposal, 100% FDI was allowed in the food processing industry through the automatic route while 49% FDI was allowed through FIPB route. Both the industry and ministry had demanded 100% FDI through FIPB route. Earlier during an interview with The Dollar Business, Harsimrat Kaur Badal, Minister of Food Processing Industries, Govt. of India, had said, “I have asked for 100% in food processing for the food grown and processed within the country, and I do see it as a game-changer for the sector. I need to emphasize that this is not the same as the previous government's 100% FDI in multi-brand retailing policy. It is only for food 100% grown and processed in the country. We know the fact that although the industry is seasonal, the overheads in it are incurred throughout the year. That’s why this sector has not been as remunerative as other sectors.”  Badal emphasised that her ministry would ensure that foreign money (FDI) would be used to create infrastructure that has been missing from the sector. “I believe this can play a catalytic role in setting up the infrastructure right, from the farm level to the fork level. It can actually turn the game around. We have reached 10% of our potential today. We have 90% to go. The state I come from – Punjab – is the testimony, where brands such as Walmart (has 20 of its 25 stores) and Pepsi have come in, and have impacted the farmers very positively so far. Also, I wish to assure everyone that with my call for 100% in food retail, no kirana or mom-and-pop store will be harmed in the country,” she added.   

February 29, 2016 | 5:15pm IST.