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The Indian processed, ready-to-eat
(RTE) food industry is using the right ingredients
of pricing and quality to give India yet another
global business advantage in this sector. For the
food segment, cost of production in India is lower
by as much as 40% over a location in the EU. Off-shore
development and onsite marketing is the flavour
of the season, with some changes being made to ‘customise’
products for overseas markets.
The
players looking for a slice of that market are not
just the established brands. While some of them
are national players, others are very regional,
some even city-specific. All of them, however, see
global opportunities, and have prepared themselves
for global norms and certification.
For
example, the price-quality advantage of an Indian
location is one which Weikfield Products has found
favourable even for products like custard and baking
powder, seen as being non-Indian. Weikfield Products
are said to have been able to stay competitive in
the UK market, being 10-15% lower cost than locally
made products.
An
impediment being noticed however, is the listing
fee for exporting processed food from India. The
listing fees are as much as Rs 3 crore (over half
million US $), an amount beyond the reach of a mid-sized
player like Weikfield.
On
the outbound investment front, Indian manufacturers
are trying innovative methods of sourcing their
global opportunities. For example Gits is said to
have gone to the UK in early ‘04 to invest
in a greenfield project, in a high cost centre of
production. They were targeting the EU market from
there since the EU has high non-tariff barriers
for exports from India. However, the rigidity of
UK regulations prevented them from setting up a
plant there. Now, Gits is looking at existing manufacturers
who want to expand capacities which can then be
shared.
Having
said that, most players are of the opinion that
India too has immense market potential in this segment.
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