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(Last updated: 14 Aug 2007)
Trends and opportunities
The market
Agriculture accounts for approximately 25 per cent of India’s gross domestic product and provides employment for about 65 per cent of the working population. India has one of the largest livestock populations in the world and is the world's largest producer of sugarcane (and sugar), tea and pulses. India is among the world’s largest producers of fruits, vegetables, wheat, rice, milk, and spices.
There is minimal value-addition along the Indian food chain; apart from some small-scale operations. However, demand for snack foods, chocolates, soft drinks, dairy products, and other processed products has increased as incomes have risen and tastes and preferences have changed.
Wheat is becoming an important cereal in India. With the general rise in incomes, wheat is replacing coarse cereals and has a growing share of the staples segment where rice dominants. Corporate marketing of branded wheat products, such as wheat flour, has boosted demand. Multinationals and major corporations are able to popularise wheat; delivering clean, packed and branded wheat products to outlets throughout the country.
Although an important source of protein in the Indian diet, the overall per capita supply of pulses has declined. Over recent years, local production has stagnated and failed to keep pace with population growth. Annual production is still short of the demand by a few million tonnes.
While demand for edible vegetable oil has increased rapidly in India, oilseed production has virtually stagnated. Currently, more edible oil is imported to India than any other food product. The most popular imported oils are: palmolein; soya bean; and sunflower.
India is a major buyer of Australian wool; in 2004–05, Australian wool exports to India were valued at A$154 million. India is a significant producer, processor and exporter of woollen products, without a domestic apparel-grade wool growing industry.
India’s domestic market for woollen apparel is expected to grow. There have been discussions regarding the importation of duty free raw wool from Australia that would be processed for re-export.
Although the local production of cotton is sufficient for the textile industry, high levels of contamination, due to typical farming and harvesting practices, compels the domestic textile industry to import cotton for high quality cotton fabrics and value-added ready-made garments. Quantities of woven cotton fabrics are also imported.
The market for high-value dairy products, such as: skimmed milk powder; whole milk powder; butter oil; whey powder; lactose; and energy and health products (eg. vitamin-enriched yoghurts), is growing.
India is a major importer of unprocessed dried fruits and nuts such as almonds, dry dates, figs, raisins and sultanas. The Australian company, Almondco has been exporting to India for several years.
Although India is the second largest producer of fruit and vegetables in the world, an estimated one-third of the combined annual crop is wasted or destroyed due to poor post-harvest techniques and inadequate transportation, refrigeration and processing infrastructures. Only two per cent (approximately) of the total produce is processed commercially.
Restrictions on importing of fruit and vegetables into India were lifted in 1999. Australia’s exports of vegetables and fruits to India in 2004–05 were valued at A$90 million. Australia’s proximity to India and the counter-seasonal harvest are highly advantageous factors, although import duties are high and difficulties can be experienced with import permits.
The Australian Quarantine and Inspection Service (AQIS) and Austrade India can assist exporters with information regarding current issues with import permits.
Opportunities
Australia is perceived in the Indian market as a supplier of quality product. There is potential demand in India for:
- Dairy (butter oil, skimmed milk powder and specialty cheese)
- Pulses (mung beans, chickpeas, lentils and field peas)
- Fresh fruits (mainly apples followed by pears, grapes, citrus)
- Raw cotton
- Abattoir equipment
- Bulk grain handling and storage services/expertise
- Processed foods (juices, bakery products, confectionary and cereal snacks)
- Agribusiness services - modern farming methods, irrigation and water management, soil improvement techniques, organic farming, post-harvest management, aquaculture
- Animal husbandry - cattle and sheep genetics, equine, animal health-related products, animal feed
India is developing the organised retailing segment concept of supermarkets and shopping malls; especially in South India – a method that suits Australian food products by providing greater visibility and shelf space.
Indian authorities estimate losses of A$4 billion worth of grain and 30 per cent of the fresh fruit and vegetable crop due to a lack of storage facilities. The development of facilities will create opportunities for Australian companies.
Competitive environment
China, the USA, and the United Arab Emirates are India’s largest trade partners.
Australia competes with Burma, Canada, Syria and Turkey to supply pulses. Local pulse production is a few million tonnes less than the market demand.
The USA is targeting India as a market for US wool.
Australia competes with Egypt and the USA as the main suppliers of raw cotton imports. The size of the market for exporters is dependent on the level of domestic production.
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