Infrastructural bottlenecks, high food inflation, varied food

preferences & low brand consciousness, challenge the efficiency of

Indian food supply chain

NEW DELHI, March 28, 2014. The Indian food supply chain is marred by infrastructural
bottlenecks, high food inflation, varied food preferences and low brand consciousness,
said Dr. Arpita Mukherjee, Co-author and Professor, ICRIER, here today.

Addressing a seminar on Food Supply Chain in India: Analyzing the Potential for
International Businessorganized by FICCI in association with IIM Calcutta, she underlined
the need to address the policy gaps in the agriculture and food processing industry.

Dr. Mukherjee suggested that a stronger regulation to check anti-competitive practices and
consumer protection; streamlining sourcing and supply chain; fiscal reforms
implementation of GST and uniform taxes for processed food; efficient implementation of
FSSA; rationalizing import duties and trade policies; learning from global best practices and
inter-governmental collaboration and information sharing, could be some of the steps in
enhancing the efficiency of the value chain.

She added that besides regulatory, fiscal and trade-related barriers, inconsistency in supply
of raw material, lack of processable quality agricultural raw material, improper handling of
products, lack of cold storage and inadequate working capital and use of inferior technology
had emerged as some of the biggest challenges for the food supply chain.

Mr. Bijou Kurien, Chairman, FICCI Retail Committee, said, The role of food in the economic
and social development of India cannot be underestimated. Connecting the producers of
agricultural products and livestock with the processors and producers of food and finally
with the consumers is a mammoth task. Unless, we work in an integrated manner, we will
never realize benefits for our farmers and sustained quality and availability for our
consumers.

Dr. Sanjeevan Bajaj, CEO, FICCI Quality Forum, said that a well-developed food value chain
is expected to increase farm gate prices, reduce wastages, ensure value addition, promote
crop diversification, generate employment opportunities as well as export earnings. Further,
it benefits both the ends of the chain i.e. the farmers and the consumers, as farmers tends
to get better price for their products and consumers too need to pay less.

On the occasion, a report on Food Supply Chain in India: Analyzing the Potential for
International Business was released (report summary attached) . The report analyses the
potential for international businesses in the food supply chain of India. Specifically, looks at
their modes of entry and operation and their contribution to the Indian economy. It
examines regulations in the food supply chain in order to help international businesses
understand the regulations. Based on secondary information and a primary survey, it
identifies the barriers faced by international businesses and suggests a go-to-market
strategy for them.

The report makes policy recommendations to the Indian government so that the country
can attract the desired foreign investment and technology, encourage the growth of the
organised sector and manufacturing, create quality employment and link Indian suppliers
(farmers, manufacturers, etc.) to the global supply chains and production networks of global
multinationals in the food supply chain business. The report covers the retailers,
manufacturers and food logistics service providers.

Dr. Parthapratim Pal, Associate Professor, Indian Institute of Management (Calcutta), said,
There are a number of possible advantages from increased foreign private investment in
food supply chain. However, there are a few concerns as well. We tried to look at the issues
and come up with some recommendations. We find that the international business must
understand the realities of the Indian market and not underestimate the effectiveness of
the existing supply chain and operational problems of operating in India. Taking these into
account they must develop their go-to-market strategy for India.

Dr. Tanu M Goyal, Research Associate, ICRIER, said that the study found there are several
implementation issues in the Food Safety and Standard Act (2006), particularly related to
packaging and labeling of products. Difference in implementation at different ports, needs
to be addressed through great clarity am9onmg port officers and businesses.

Dr. Saubhik Deb, Independent Economist, said that the report highlights the need for a
simplified retail policy and regulations that would ensure competition, safeguard consumer
interests and create employment. The report focuses on the importance of giving flexibility
to foreign investors to decide where they want to invest and recommends that the
government should phase out the brand based retail policy and replace it with a
consolidated and simplified policy on FDI in retail and is done globally.

ENCLOSED: Report summary of Food Supply Chain in India: Analyzing the Potential
for International Business

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FICCI MEDIA DIVISION