Punjab, also known by the name “Bread Basket of India”, offers diverse set of investment opportunities in food processing sector. Here is a bird’s-eye view of investments potential for food processing sector here.

Punjab is one of the most northern states in India. It borders Jammu & Kashmir to the north, Himachal Pradesh to the northeast, Haryana to the south and southeast and Rajasthan to the southwest. To its west, it is bordered by the Pakistani province of Punjab. Punjab’s agricultural land is rich and productive because of the confluence of five rivers. About 82 percent of Punjab’s land are under cultivation, compared to the national average of 40%. Punjab is also known by the name “Bread Basket of India”.

Why Punjab

  • Punjab, also known as the “Food Bowl of India”, contributes the most wheat and paddy to India’s central pool.
  • India’s largest producer of many fruits and vegetables, including peach, pear, sweet orange, kinnow, musk melon and peas.
  • It has a strong dairy sector with many milk collection centers, support infrastructure, and cold chain. It is India’s largest honey producer.
  • Strong infrastructure for the Agro & Food Processing sector, with 40% of India’s total warehousing and storage capacity.

Access to Raw Material

Punjab has been famously considered the food bowl of India. With more than 40% of the central pool of wheat and 26% of rice, Punjab has an essential stake in staple foods in India. Agriculture and allied industries continue to play a significant role in the economy, contributing 21% to the GDP.

Agriculture and allied fields such as dairy, fisheries and animal husbandry are major sources of employment in Punjab. These sectors are an essential part of Punjab’s economy. Punjab is also known for its high milk production and high productivity. Sahiwal is an Indian native breed of cow that produces the highest yielding milk. Punjab has high-quality soil that is fertile and can therefore produce high amounts of wheat, cotton, cotton, paddy, lemon fruits, etc.

Punjab raw material production custer for food processingOpportunities in Food Processing 1">
Source: Department of Agriculture Cooperation & Farmers Welfare, Ministry of Agriculture, Department of Animal Husbandry, Dairying & Fisheries, Ministry of Agriculture.

Major strength of Punjab’s food processing industry lies in the following:
Food Grains: Paddy, Wheat, Barley
Fruits: Guava, Citrus Fruits, Musk Melon, Peach, Pear
Vegetables: Cabbage, Carrot, Cauliflower, Onion, Peas, Potato
Plantation: Sugarcane
Livestock: Milk , Honey

Food Grains Production

Total production of 28.4 Million MT of food grains
oPaddy – 11.8 million MT
oWheat – 16 million MT

Horticulture Products Production

Total production of 6.2 million MT of horticulture products
oFruits – 1.8 million MT
oVegetables – 4.3 million MT

Livestock production

  • Total Milk production of 10.8 million MT
  • Total Eggs production of 4.4 billion (number)
  • Total Meat production of 0.25 million MT
  • Total Fish production of 0.11 million MT

Punjab also contributes largest share of paddy and wheat to the central pool:

  • The largest contributor of wheat and paddy to the central pool in India
  • The largest producer of Honey in India

Geographical Indications for Agricultural Products in Punjab

Rice grown in Punjab ( Basmati) is a geographical indicator

The major production clusters of Punjab are given below:

Wheat: Amritsar, Tarn Taran, Kapurthala, Jalandhar, Gurdaspur, Hoshiarpur, SBS Nagar, Rupnagar, SAS Nagar, Patiala, Sangrur, Ludhiana
Paddy: Kapurthala, Fatehgarh Sahib, Jalandhar, Gurdaspur, Hoshiarpur, Moga, Faridkot, Muktsar, Bathinda
Barley: Amritsar, Hoshiarpur, Fazilka, Ludhiana
Potato: Amritsar, Hoshiarpur, Jalandhar, Ludhiana
Sweet Orange/ Kinnow: Sangrur, Barnala, Muktsar, Bathinda, Mansa, Ferozepur
Sugarcane: Gurdaspur, Kapurthala, SBS Nagar, Rupnagar, Patiala
Honey: Amritsar, Hoshiarpur, Jalandhar, Fazilka
Milk: Ludhiana, Amritsar, Taran, Taran, Sangaur, Gurdaspur, Moga, SBS Nagar, Kapurthala, Jalandhar, Fatehgarh Sahab
Cauliflower: Amritsar, Hoshiarpur, Jalandhar, Fazilka

Agriculture Marketing

Punjab has the following marketing facilities12 in the state:

o 153 Agricultural Produce Market Committees in the State,

o Punjab has 33 mega agro processing projects

o 20 mega projects in agro and allied sectors such as Ethanol manufacturing, grain based distilleries, Baby food, Health foods, etc. are under commercial operations and few under-implemented stage

o Agri-Export Zones: Agri Export Zones have been planned by state Government for potato,rice, honey and vegetables. The Govt. of India has notified Fatehgarh Sahib, Patiala, Sangrur, Ludhiana and Ropar districts as Agri Export Zone for vegetables.

o There are over 3100 purchase centers operated by Punjab State Agricultural Marketing Board in the state.

o Punjab has 16 cold chain projects approved by Ministry of Food Processing Industries under the Scheme for Cold Chain, Value Addition and Preservation Infrastructure. Out of these approved projects, the projects at Ropar, Sangrur and Kapurthala have already beencompleted and started commercial operations.

o 162 warehouses across 22 districts

Punjab processing cluster for food processing
Source: Food Safety and Standards Authority of India (FSSA) – Central and State Licence

Processing Clusters

Punjab is host to a large number of food processing companies and the sector is growing at a rapid pace in the state. An indicative of key companies and their district of presence in the state is given below.

Fruit & Fruit based products
Mrs. Bectors Food Specialties Ltd
Glacier Products Pvt. Ltd.
Flingo Foods And Agro P. Ltd.

Ready to Eat Products
Nestle India
Pepsico India
Punjab Agri Ventured Ltd.

Meat Processing:
Mirha Exports Pvt. Ltd.
Meat Masters Pvt. Ltd.
SHL Agro Foods Pvt. Ltd.

Milk Processing:
Nestle India
Danone India
Milkfed Punjab (Verka Coop.)

The major processing clusters of Punjab are the following:
Rice Milling: Amritsar, Ludhiana, Patiala, Sangnur, Batala, Ferozpur, Kapurthala
Fruits & Vegetable Processing: Amritsar, Jalandhar, Ludhiana, Patiala, Rupnagar, Sangrur
Potato Processing: Fatehgarh Sahib, Hoshiarpur, Jalandhar, Ludhiana, Sangrur
Milk Processing: Ludhiana, Jalandhar, Moga, Patiala, Sangnur, Fatehpur Sahab
Meat Processing: Barnala, Jalandhar
Kinnow/Orange/ Sweet Lemon: Fazilka, Hoshiarpur
Snacks Processing: Moga, Patiala, Sangnur

Punjab infrastructure for food processing
Source: Ministry of Food Processing Industries

Infrastructure

A number of industrial areas and food parks are available in the state for investors keen on setting up food processing units in the state. The key food parks in the state include:

Mega Food Parks
International Mega Food Park Pvt. Ltd., Fazilka (Multi products)
Punjab Agro Industries Corp. Ltd., Ludhiana (Multi products)
The Sukhjit Starch & Chemicals Ltd., Kapurthala (Multi products)

Industrial Parks
Industrial Growth Center, Bathinda (Engineering, Food Processing)
Industrial Growth Center, Pathankot (Food Processing)
Export Industrial Park, Dhandhari Kalan (Food Processing)

The objective of the Scheme of Cold Chain, Value Addition and Preservation Infrastructure is to provide integrated cold chain and preservation infrastructure facilities, without any break, from the farm gate to the consumer.

Below is the list of cold chains present in the state:

Alchemist Foods Ltd, Ropar (Meat)
B.D. Agro, Kapurthala (Fruits & Vegetables)
Chanakya Dairy Products Limited, Fatehgarh Sahib (Dairy)
International Fresh Farm Products (India) Ltd., Sangrur (Fruits & Vegetables)
K.F. Milk Foods, Jalandhar (Dairy)
Kool tech Infra & Logistics, Kapurthala (Fruits & Vegetables)
Pagro Frozen Foods Pvt. Ltd., Fatehgarh Sahib (Fruits & Vegetables)
Resource Foods Pvt. Ltd., Patiala (Fruits & Vegetables)
Sangha Refrigeration, Jalandhar (Fruits & Vegetables)
Supreme Agro Foods Pvt. Ltd., Ludhiana (Dairy)
EBI Cremica Industries Pvt. Ltd, Jalandhar (Dairy)
Asian lak Health Foods Ltd., Ludhiana (Fruits & Vegetables)
Goyal Farm Fresh, Mohali (Fruits & Vegetables)
Pagro Frozen Foods Pvt. Ltd., Fatehgarh Sahib (Fruits & Vegetables)
Kathpal Dairies Unit-II, Jalandhar (Dairy)
Siberian Tiger Foods, Amritsar (Fruits & Vegetables)
State government initiatives

Comprehensive State Policies

  • Single window clearances
  • Digitalizing Land Records: Property registration application and paymenthas been made online
  • Single window form available for processing of investment application
  • The registration process to avail incentives has been simplified and thenumber of documents required has been reduced substantially.

Highlight of Punjab Industrial and Business Development Policy

Nodal Department: Department of Industries & Commerce, Government of Punjab

Capital Subsidy: In addition to central funding, state government offers retention based recovery of fixed capital investment

Stamp duty and Registration fee exemption: 100% exemption/ reimbursement from Stamp Duty for purchase or lease of land and building.

Exemption of Mandi Fee/Market Fees: 100% reimbursement of all taxes and fees paid for purchase of raw material for food processing units up to 10 years.

Electricity Duty exemption: 100% Electricity Duty exemption for 7 years
Freezing of Power Tariff @ Rs. 5 per unit for five year

Land Related Concession/Exemption
100% exemption from CLU/EDC
100% exemption from Property Tax for 10 years

Skill development / Human resource development: Anchor Units: Employment Generation subsidy @ Rs 30000 per employee per annum for five years, provided that the employee has been trained and certified by PSDM/any other State Government/Central Government Skill Development Scheme/State approved Institutions. The total amount per annum is subject to a maximum of 20% of the net (SGST+IGST), deposit by the unit within a calendar year. Evidence of employment would include statutory returns filed under EPFO/ESIC, etc.

State GST: 100% of net SGST for 10 Years with a cap at 125% FCI (FOR ANCHOR UNITS – 15 years’ subject 200% FCI).
FCI – Fixed Capital Investment

Eligibility: ‘Invest Punjab’ acts as the unified regulator of all state-level regulatory and fiscal clearances, thereby reducing investor contact with individual government departments. Site link to policy document http://investpunjab.gov.in

Potentially Invest-able Projects

Establishing a Health Drink Manufacturing Plant
The project envisages establishing a Health drink manufacturing plant that can be used for production, processing, packing, and export. This project was inspired by the growing demand for packaged beverages from the Indian population.

Establishment of Fruit Processing Unit
Unit manufacturing pulp, squash/ juices jam & jelly, pickles, and so on. The rising demand to reduce wastage by processing, despite the availability of plentiful raw materials.

Medical Herbs Extraction Unit
Extracting essential oils from aromatic herbs and spices using an extraction unit. The state has a strong production base for high-quality aromatics. The unit would meet domestic and international demand.

Whey and Casein Products
The state is the largest producer and exporter of milk. Units that develop products using milk, but not traditional products, will increase milk demand. An ample supply base of milk, growing demand for Whey Protein, and development of alternative markets will make it more attractive.

Milk Processing Plants
High milk production means that processed dairy products such as Whole Milk Powder, Skimmed Milk Powder, and Dairy Whitener are available. The products would be able to meet the increasing demand.

Cattle Feed Manufacturing Plants Development (Food grains & Byproducts)
The state’s production capacity and domestic demand for high-quality cattle feed have been considered factors in selecting the project.

Useful links/References

https://data.gov.in/catalog/land-use-pattern
http://censusindia.gov.in/
http://pib.nic.in/newsite/PrintRelease.aspx?relid=123563 5
http://dipp.gov.in/sites/default/files/FDI_FactSheet_January_March2017.pdf
http://commerce.nic.in/trade/ICD_list.pdf
http://ourairports.com/countries/IN/OR/airports.html
mofpi.nic.in/Schemes/list-identified-agri-horti-production-clusters" target="_blank" rel="noreferrer noopener">http://mofpi.nic.in/Schemes/list-identified-agri-horti-production-clusters
http://www.punjabstat.com/agriculture/2/warehouses/206862/foodcorporationofindiafci/32724/stats.aspx

Disclaimer: This article was derived or obtained from multiple sources, including information on the websites of KPMG, state government, MoFPI, and CII. Any information, ideas or opinions presented here should not be taken as professional advice. Before taking any action or making any decision based on this article, readers are advised to exercise their discretion and seek professional guidance.