Food processing minister says reforms would help FDI in the food processing sector cross USD 1 billion in the next two years
The Indian government today allowed 100 per cent foreign direct investment (FDI) in trading of food products, including through e-commerce, to provide a boost to the country's food processing sector.
The decision was taken at a meeting chaired by Indian Prime Minister Narendra Modi.
"It has now been decided to permit 100 per cent FDI under government approval route for trading, including through e-commerce, in respect of food products manufactured or produced in India," an official statement said.
The government had in Budget this year announced that 100 per cent FDI would be allowed through FIPB route in marketing of food products produced and manufactured in India.
Department of Industrial Policy and Promotion (DIPP) Secretary Ramesh Abhishek said that 100 per cent FDI has been allowed in marketing of food products without any condition.
Food Processing Minister Harsimrat Kaur Badal had earlier demanded that foreign players looking to invest in the sector should mandatorily invest a portion of their investments in building infrastructure at the farm gate level.
The minister was pitching for a condition that 25 per cent of the foreign inflows should be invested in creating agri-infrastructure.
The food processing sector has attracted USD 5.2 billion FDI during April 2012 to December 2015 period.
Badal had recently said that the foreign direct investment in the food processing sector could cross USD 1 billion in the next two years, helped by reforms in FDI space and streamlining of regulations by food safety regulator FSSAI.
The government is making efforts to double the food processing level of fruits and vegetables, which currently stands at only 10 per cent.
"Price fluctuation in vegetables like tomato can be controlled effectively if we strengthen entire chain of food processing," minister of state for agriculture Sanjeev Balyan said, adding that the government has allowed 100 per cent FDI in this sector as more investment is required.