Food-processing minister to take decision on allowing non-food items in FDI

The government could decide by November this year to allow foreign food retailers to sell non-food items, food-processing minister Harsimrat Kaur Badal said while releasing a draft on the model food processing policy.

The government last year allowed 100% FDI in food retailing, but dropped plans to include some general merchandise, such as soaps and shampoos, in the policy, which retailers have been pushing for.

Badal said, "I think before November, when the World Food India 2017 fair is held in Delhi, the government will take a decision on this (allowing non-food items in FDI in food retailing)."

According to the draft policy, the suggested incentives and support measures include credit to set up new food-processing units or buy new equipment as part of technology up gradation, exemption of electricity duty for a few years, availability of water on a priority basis and VAT refunds.

To support marketing and promotion of Made in India brand for processed food, the draft policy has suggested to establish a special-purpose-vehicle fund in public private partnership to brand and market products followed by giving freight subsidy — air, sea and road — and support in research and development.

"Once we get comments from the state governments on the draft policy, we will fine-tune it and adopt it. This will then drive the national policy," Badal said, adding that despite a large production base, the level of processing is low — less than 10%. According to official figures, approximately 2% of fruits and vegetables, 8% marine, 35% milk, 6% poultry are processed in the country.

The minister recently met ambassadors and high commissioners of various states inviting them to invest in the country.

"The government wants to position India as a world food factory by creating a framework for the growth of the food processing industry," she said.

The food-processing ministry has suggested that states should focus on providing single-window clearance to improve ease of doing business and boost investors confidence, Badal said, pointing out that state governments should focus on commodity base cluster development, which would ensure farmers get remunerative prices for their produce.