Introduction 

The agro-based food processing industry is a sector that transforms agricultural raw materials into food products or intermediate ingredients for further processing. It includes activities such as milling, baking, canning, freezing, drying, and packaging of food items. The agro-based food processing industry plays a vital role in enhancing food security, increasing farmers’ income, reducing post-harvest losses, creating employment, and adding value to agricultural produce. The agro-based food processing industry also contributes to the economic development, industrial diversification, and export potential of a country. 

Overview of the Manufacturing Industry 

The manufacturing industry is a broad category that encompasses various sub-sectors, such as food and beverages, textiles, chemicals, machinery, and electronics. The manufacturing industry contributes to the economic growth, industrial development, and technological innovation of a country. According to the World Bank, the manufacturing industry accounted for 16% of the global GDP and 14% of the global employment in 2019. The manufacturing industry also faces several challenges, such as competition, regulation, quality, innovation, and sustainability. 

The food and beverages sub-sector is the largest and most diverse segment of the manufacturing industry, producing a wide range of products, such as cereals, dairy, meat, fruits, vegetables, oils, beverages, confectionery, and snacks. The food and beverages sub-sector is also the most closely linked to the agro-based food processing industry, as it relies on the supply of agricultural raw materials and intermediate ingredients. According to the Food and Agriculture Organization (FAO), the food and beverages sub-sector accounted for 27% of the global manufacturing value added and 29% of the global manufacturing employment in 2018. The food and beverages sub-sector also faces several opportunities and threats, such as changing consumer demand, global trade, food safety, and environmental impact. 

Market Potential 

Global Market Potential 

The global market potential for the agro-based food processing industry is enormous, as the demand for processed food products is driven by several factors, such as population growth, urbanization, income growth, changing consumer preferences, and dietary diversification. According to a report by Grand View Research, the global processed food market size was valued at USD 4.77 trillion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 5.3% from 2020 to 2027. The global processed food market is also segmented by product type, such as bakery and confectionery, dairy, meat, fruits and vegetables, grains and cereals, oils and fats, and beverages. 

The global market potential for the agro-based food processing industry is also influenced by the trends and challenges in the food system, such as food safety, quality, nutrition, sustainability, and traceability. The agro-based food processing industry has to adapt to the changing consumer demands and regulatory standards, as well as the emerging technologies and innovations, such as biotechnology, nanotechnology, artificial intelligence, and blockchain. The agro-based food processing industry also has to cope with the risks and uncertainties posed by the climate change, natural disasters, pandemics, and trade disputes. 

Market Potential in India 

India is one of the largest producers and consumers of food in the world, with a population of 1.3 billion and a GDP of USD 2.9 trillion in 2019. India has a rich and diverse agricultural base, producing a variety of crops, such as cereals, pulses, oilseeds, fruits, vegetables, spices, and livestock products. India also has a huge domestic market, with a growing middle class, rising disposable income, and changing food habits. According to a report by India Brand Equity Foundation (IBEF), the Indian food and grocery market is the sixth largest in the world, with a retail value of USD 608 billion in 2019. 

The agro-based food processing industry is one of the key sectors in the Indian economy, contributing to 9.4% of the manufacturing GDP and 11.5% of the employment in 2018. The agro-based food processing industry in India is also one of the most dynamic and competitive sectors, with a large number of players, ranging from small and medium enterprises to large multinational corporations. According to a report by IBEF, the Indian food processing market size was estimated at USD 263 billion in 2019 and is expected to reach USD 535 billion by 2025, growing at a CAGR of 14.6%. The Indian food processing market is also segmented by product type, such as dairy, fruits and vegetables, meat and poultry, marine, grains and cereals, and packaged foods. 

Market Potential in Andhra Pradesh and Telangana 

Andhra Pradesh and Telangana are two neighboring states in the southern region of India, with a combined population of 130 million and a combined GDP of USD 221 billion in 2019. Andhra Pradesh and Telangana are also among the leading agricultural states in India, producing a variety of crops, such as rice, maize, cotton, sugarcane, tobacco, chilies, turmeric, mango, banana, and citrus. Andhra Pradesh and Telangana also have a large consumer base, with a high per capita income, urbanization, and literacy rate. 

The agro-based food processing industry is one of the priority sectors in both Andhra Pradesh and Telangana, as it offers immense opportunities for value addition, employment generation, and export promotion. According to a report by the Confederation of Indian Industry (CII), the agro-based food processing industry in Andhra Pradesh and Telangana had a combined turnover of USD 17 billion in 2018, accounting for 6.5% of the national turnover. The agro-based food processing industry in Andhra Pradesh and Telangana is also expected to grow at a CAGR of 10% from 2019 to 2024, reaching a turnover of USD 28 billion by 2024. The agro-based food processing industry in Andhra Pradesh and Telangana is also segmented by product type, such as rice, spices, fruits and vegetables, oilseeds, dairy, and bakery. 

Growing Demand 

The growing demand for the agro-based food processing industry in India, and especially in Andhra Pradesh and Telangana, is driven by several factors, such as: 

• The increasing population and urbanization, which create a higher demand for convenient, ready-to-eat, and packaged food products. 
• The rising income and purchasing power, which enable consumers to spend more on quality, variety, and premium food products. 
• The changing consumer preferences and awareness, which influence consumers to seek more healthy, nutritious, organic, and functional food products. 
• The growing domestic and international tourism, which expose consumers to different cuisines and cultures, and stimulate the demand for ethnic, regional, and exotic food products. 
• The expanding retail and e-commerce sector, which provide greater access and availability of food products to consumers across different regions and segments. 
• The increasing government support and initiatives, which facilitate the development and promotion of the agro-based food processing industry. 

Market Size and Growth Projections 

The market size and growth projections for the agro-based food processing industry in India, and especially in Andhra Pradesh and Telangana, are based on the following assumptions and sources: 

• The Indian food processing market size is estimated at USD 263 billion in 2019 and is expected to reach USD 535 billion by 2025, growing at a CAGR of 14.6%, according to IBEF. 
• The agro-based food processing industry accounts for 65% of the Indian food processing market size, according to the Ministry of Food Processing Industries (MoFPI). 
• The agro-based food processing industry in Andhra Pradesh and Telangana accounts for 6.5% of the national turnover, according to CII. 
• The agro-based food processing industry in Andhra Pradesh and Telangana is expected to grow at a CAGR of 10% from 2019 to 2024, according to CII. 

Based on these assumptions and sources, the market size and growth projections for the agro-based food processing industry in India, and especially in Andhra Pradesh and Telangana, are as follows: 

Subsidies and Incentives 

Government of India 

The government of India provides various subsidies and incentives to the agro-based food processing industry, under the schemes and policies of the MoFPI. Some of the major subsidies and incentives are: 

• The Pradhan Mantri Kisan Sampada Yojana (PMKSY), which is an umbrella scheme that aims to create modern infrastructure and efficient supply chain for the food processing sector. The PMKSY has seven sub-schemes, such as Mega Food Parks, Integrated Cold Chain and Value Addition Infrastructure, Creation of Backward and Forward Linkages, Creation of Infrastructure for Agro-Processing Clusters, Operation Greens, Food Safety and Quality Assurance Infrastructure, and Human Resources and Institutions. The PMKSY provides financial assistance in the form of grants-in-aid, ranging from 35% to 75% of the eligible project cost, depending on the sub-scheme, the location, and the category of the beneficiary. 
• The Production Linked Incentive (PLI) Scheme for Food Processing Industry, which is a new scheme that aims to support the expansion of the processed food manufacturing capacity and exports. The PLI scheme offers incentives to the eligible manufacturers of ready-to-cook, ready-to-eat, fruits and vegetables, marine, and mozzarella cheese products, based on their incremental sales and minimum production thresholds. The PLI scheme provides incentives at the rate of 4% to 10% of the incremental sales value, subject to a maximum of INR 10 billion per beneficiary, for a period of six years from 2021-22 to 2026-27. 
• The Agri Export Policy, which is a policy that aims to boost the exports of agricultural and processed food products, by addressing the challenges and opportunities in the global market. The Agri Export Policy has several components, such as infrastructure development, logistics improvement, market access, quality and standards, research and development, and promotion and branding. The Agri Export Policy provides various incentives and benefits to the exporters of agro-based food products, such as duty drawbacks, tax refunds, export subsidies, credit guarantees, and insurance covers. 

Government of Andhra Pradesh 

The government of Andhra Pradesh provides various subsidies and incentives to the agro-based food processing industry, under the schemes and policies of the Department of Industries and Commerce. Some of the major subsidies and incentives are: 

• The Andhra Pradesh Food Processing Policy 2015-20, which is a policy that aims to promote the development and growth of the food processing sector in the state, by creating a conducive environment and providing attractive incentives. The Andhra Pradesh Food Processing Policy 2015-20 has several features, such as single window clearance, land allotment, infrastructure development, skill development, and market linkages. The Andhra Pradesh Food Processing Policy 2015-20 provides various incentives and concessions to the investors in the food processing sector, such as capital subsidy, interest subsidy, power subsidy, stamp duty reimbursement, VAT/CST/GST reimbursement, and quality certification subsidy. 
• The Andhra Pradesh Mega Food Park Scheme, which is a scheme that aims to establish mega food parks in the state, by providing state-of-the-art infrastructure and common facilities for the food processing units. The Andhra Pradesh Mega Food Park Scheme has several components, such as processing units, cold storage, dry warehouse, quality control lab, effluent treatment plant, and administrative building. The Andhra Pradesh Mega Food Park Scheme provides financial assistance in the form of grant-in-aid, up to 50% of the project cost, subject to a maximum of INR 500 million per mega food park, for a period of five years from 2016-17 to 2020-21. 
• The Andhra Pradesh Food Processing Society (APFPS), which is a society that aims to facilitate the implementation and monitoring of the food processing schemes and projects in the state, by acting as a nodal agency and a single point of contact. The APFPS has several functions, such as project appraisal, fund release, project supervision, project evaluation, and project coordination. The APFPS also provides technical guidance, training, and consultancy services to the stakeholders in the food processing sector. 

Government of Telangana 

The government of Telangana provides various subsidies and incentives to the agro-based food processing industry, under the schemes and policies of the Department of Industries and Commerce. Some of the major subsidies and incentives are: 

• The Telangana State Food Processing Policy 2017, which is a policy that aims to transform the state into a food processing hub, by leveraging its agricultural potential and providing competitive advantages. The Telangana State Food Processing Policy 2017 has several objectives, such as value addition, employment generation, waste reduction, quality improvement, and export promotion. The Telangana State Food Processing Policy 2017 provides various incentives and benefits to the entrepreneurs in the food processing sector, such as investment subsidy, interest subsidy, power subsidy, stamp duty exemption, VAT/CST/GST reimbursement, and patent registration subsidy. 
• The Telangana State Industrial Project Approval and Self-Certification System (TS-iPASS), which is a system that aims to provide speedy and hassle-free clearances and approvals for the industrial projects in the state, by adopting a self-certification and online mode. The TS-iPASS has several features, such as single application form, single window portal, time-bound processing, deemed approval, and grievance redressal. The TS-iPASS also provides various facilitation and support services to the investors, such as land bank, infrastructure, utilities, and incentives. 
• The Telangana State Industrial Development Corporation (TSIDC), which is a corporation that aims to promote the industrial development and growth in the state, by providing financial and technical assistance to the industrial units. The TSIDC has several functions, such as project identification, project appraisal, project financing, project implementation, and project monitoring. The TSIDC also provides consultancy, advisory, and training services to the entrepreneurs and industrialists. 

Marketing and Sales 

The marketing and sales strategy for the agro-based food processing industry in India, and especially in Andhra Pradesh and Telangana, is based on the following factors, such as: 

• The target market, which consists of the potential customers and segments for the agro-based food products, such as households, hotels, restaurants, caterers, retailers, wholesalers, exporters, and institutional buyers. 
• The market analysis, which involves the assessment of the market size, growth, trends, opportunities, threats, and competition for the agro-based food products, using various tools and techniques, such as SWOT analysis, Porter’s five forces analysis, PESTEL analysis, and market research. 
• The market segmentation, which involves the division of the target market into smaller and homogeneous groups, based on the characteristics and needs of the customers, such as geographic, demographic, psychographic, and behavioral. 
• The market positioning, which involves the creation of a unique and favorable image and identity for the agro-based food products in the minds of the customers, using various elements, such as product, price, place, and promotion. 
• The marketing mix, which involves the formulation and implementation of the optimal combination of the four Ps of marketing, namely product, price, place, and promotion, for the agro-based food products, to achieve the desired marketing objectives and customer satisfaction. 
• The sales plan, which involves the development and execution of the sales activities and processes, such as sales forecasting, sales budgeting, sales force management, sales training, sales promotion, sales distribution, and sales evaluation, for the agro-based food products, to achieve the desired sales volume and revenue. 

Production Scale and Investment 

The production scale and investment for the agro-based food processing industry in India, and especially in Andhra Pradesh and Telangana, are based on the following factors, such as: 

• The production capacity, which refers to the maximum quantity of agro-based food products that can be produced in a given period of time, using the available resources and technology. The production capacity depends on the type, size, and nature of the agro-based food processing unit, such as micro, small, medium, or large scale. 
• The production cost, which refers to the total amount of money spent on the production of agro-based food products, including the fixed and variable costs. The fixed costs are the costs that do not vary with the level of production, such as land, building, machinery, and equipment. The variable costs are the costs that vary with the level of production, such as raw materials, labor, power, and transportation. 
• The production efficiency, which refers to the ratio of the output to the input of the production process, indicating the effectiveness and productivity of the agro-based food processing unit. The production efficiency can be measured by various indicators, such as yield, quality, wastage, downtime, and profitability. 
• The production technology, which refers to the methods, techniques, and equipment used for the production of agro-based food products, involving various stages, such as procurement, storage, processing, packaging, and distribution. The production technology can be classified into traditional, modern, or advanced, depending on the level of mechanization, automation, and innovation. 
• The production location, which refers to the place where the agro-based food processing unit is situated, affecting the availability and accessibility of the resources and markets. The production location can be selected based on various criteria, such as proximity to raw materials, labor, power, water, transport, and customers. 
• The production regulation, which refers to the rules, standards, and guidelines that govern the production of agro-based food products, ensuring the safety, quality, and compliance of the agro-based food processing unit. The production regulation can be imposed by various authorities, such as the Food Safety and Standards Authority of India (FSSAI), the Bureau of Indian Standards (BIS), the Agricultural and Processed Food Products Export Development Authority (APEDA), and the Export Inspection Council of India (EIC). 

The production scale and investment for the agro-based food processing industry in India, and especially in Andhra Pradesh and Telangana, can be estimated based on the following assumptions and sources: 

• The production scale is measured in terms of kilograms per hour (kg/h) of agro-based food products. 
• The investment is measured in terms of Indian rupees (INR) of the total project cost, including the fixed and working capital. 
• The investment is based on the average project cost of the agro-based food processing units, as per the MoFPI and the National Bank for Agriculture and Rural Development (NABARD). 

Based on these assumptions and sources, the production scale and investment for the agro-based food processing industry in India, and especially in Andhra Pradesh and Telangana, can be estimated as follows: