investment environment & opportunities in food processing...

Compendium of financing options for the food processing sector

Investment Environment & Opportunities in Food Processing

KARNATAKA

Ministry of Food Processing Industries Government of India

Knowledge Partner National Event Partner

Table of contents

State Introduction 2

Why Karnataka 2

Raw Material Base 3

Production Clusters 6

Agricultural Marketing 8

Processing Clusters 10

Infrastructure 12

State Government Initiatives 15

Contact Us 20

Snapshot of Investable Projects 18

Karnataka

Bengaluru

Domestic : 5 domestic

Karnataka, a state in southern India, is the 7th largest state in terms of area and 8th largest in terms

of population. It comprises of 30 districts. The state’s capital city is Bengaluru. The State is known to

have a population density of 319 per Sq. Km. The State has a 320 km coast line and is surrounded on

other sides by States such as Maharashtra, Telangana, Andhra Pradesh, Tamil Nadu, Kerala and Goa.

Karnataka - key highlights

State capital Bengaluru

Geographical area1 191,791 km2

Population2 6.1 Crores** (61 million) (Census 2011)

INR 1044717 Crores** (USD Gross state domestic 152.96 billion) in 2014-15 product (GSDP)3 Growth over previous year (at current price, base year 2011-12) 13.5%

Per capita income4

INR 80,884 (USD 1246) (Measured as Per Capita NSDP at current prices for 2013-14)

INR 123,212 crore** (USD 22 FDI inflows5

billion)- FY2000-FY2017

Total road length (kms)6 26,129 Km (state + national highway)

Rail length (route kms)7 3,073 km

11 ports in Karnataka, of

Ports8 which New Mangalore is a major port

International: Bangalore, Airports9 Mangalore

Investment Environment & Opportunities in Food Processing: Karnataka

*1 Million= 10 lakhs

4

17 districts covering 45% of the state to benefit from the industrial corridor development

3

Part of the Bangalore – Mumbai Industrial Corridor (BMIC) and Chennai – Bangalore Industrial Corridor (CBIC)

2 Among top 5 producers in more than 30 food categories in India

1

A state with 10 agro climatic zones and a diverse portfolio of products to select

Why Karnataka

State Introduction

Raw material base (1/4)


Snapshot of Land under cultivation (Year 2013-14)

Karnataka is agriculturally strong state with large number of crops in which it has national leadership while in other crops as well it has sufficiently large base to support industrial processing.

The presence of rich climatic and soil conditions make

Karnataka a major agricultural belt. Few of the leading

crops produced in the state include Coffee, Sunflower, Gross Cropped Area 12,267 Coarse Cereals, Tomato, Onion, Watermelon, Cucumber, (‘000 Ha) Chilies, Capsicum, pomegranates, Grapes and Sapota.

Karnataka is the largest producer of coffee and cocoa in

Net Sown Area (‘000 Ha)

9,923

the country.

Karnataka has a wide range of climatic zones

In addition to agricultural crops, the state is also strong in animal products. While it is one of the top

five producers of mutton and pork, it also produces process able volumes in other products such as

milk, egg and fish.

Coastal Zone: Udupi, D. Kannada & U.Kannada

Hilly Zone: U.Kannada, Belgaum, Dharwad, Haveri, Shimoga, Chickmangalur, Kodagu & Hassan

Northern Transition Zone: Belgaum , Dharwad, Haveri & Gadagr

Southern Transition Zone: Hassan, Chickmagalur, Shimoga, Mysore & Davanagere

Southern Dry Zone: Mysore, Chamarajnagar, Mandya, Tumkur & Hassan

Eastern Dry Zone: Bangalore Rural, Ramanagar, Bangalore Urban, Kolar, Chikkaballpur & Tumkur

Central Dry Zone: Chitradurga, Davangere, Tumkur, Chickmagalur & Hassan

Northern Dry Zone: Koppal, Gadag, Dharwad, Belgaum, Bijapur, Bagalkot, Bellary, Davangere & Raichur

North Eastern Dry Zone: Gulbarga, Yadgir & Raichur

North Eastern Transition Zone: Bidar & Gulbarga



Major strength of Karnataka’s food processing industry lies in the following:

Cereals & Nutri-cereals– Maize & Rice, Finger millet (Ragi), Sorghum & other small

millets

Pulses- Pigeon pea & Gram

Fruits – Sapota, Grapes, Pomegranate, Mango, Papaya, Custard Apple & Pineapple

Vegetables – Ginger, Capsicum, Chilles-vegetable, Cucumber, Watermelon, Onion,

Tomato, Pumpkin, Beans, Carrot & Musk melon

Spices – Pepper, Cinnamon, Cardamom, Turmeric & Chillies (spices)

Oilseeds- Groundnut, Soyabean, Safflower & Sunflower

Commercial crop- Coffee & Sugarcane

Livestock: Sheep & Pig population

Food Grains: Key production highlights (2015-16)

Horticulture products: Key production highlights (2015-16)

Fisheries: Key production highlights (2015-16)

Total production of 5.8 lakh* tonnes of Fishes

o 320 km long coastline, about 27,000 sq. km of continental shelf area

o About 8,000 hectares of brackish water area

Total production of 195.7 Lakh* tonnes of horticulture products

o Fruits – 70.24 lakh* tonnes

o Vegetables – 78.05 lakh* tonnes

o Plantation – 40.41 lakh* tonnes

o Spices – 3.88 lakh* tonnes

Total production of 99.69 lakh* tonnes of food grains

o Nutri-cereals – 57 lakh* tonnes

o Maize – 33 lakh* tonnes

o Rice – 27 lakh* tonnes



VEGETABLES

‘(000 MT)

Poultry & Meat: Key production highlights (2015-16)

Onion 2696

Tomato 2046

Chilly 570

LIVESTOCK &

FISHERIE

‘(000 MT)

Milk

Fish Meat

6344

580 196

Fruits ‘ (000 MT)

Banana

Mango

Grapes

2371

1726

430

CROPS ‘ (000 MT)

Coarse Grains Maize Paddy

5705 3269 2702

Total production of 47,660 Lakh* of Eggs

o Poultry population of 833 lakhs* with 547 lakh* broilers and 286 lakh*

layers housed in 5,903 broiler farms and 445 layer farms

o Ranks 3rd in poultry meat production with 87,117 tonnes of meat

Total production of 1.9 Lakh* tonnes of meat products

o 95.83 lakhs* of sheep and 47.96 lakhs* of goat


Karnataka provides: 70% of coffee produced in India,

60% of production of safflower in India

60% of production of Ragi (Finger Millet) in India

Finger millet Maize

Coffee Safflower

Mango

Grapes

Banana

Fisheries

Meat

Milk

Belgaum, Hassan

Mandya, Kodagu, Hassan, D. Kannada, U. Kannada, Shimoga, Raichur, Bellary

Belgam, Bangalore, Gulbarg, Kolar

Kolar, Belgaum, Bijapur, Haveri, Chitradurga

Bidar, Gulbarga, Dharward, Kupal

Chikmanglur, Kodagu, Hassan

Devangere, Belgam, Haveri, Hassan, Bellary, Chitradurga, Shimoga

Tumkur, Ramnagar, Hassan, Bangalore Rural, Chitradurga,

Production Clusters

Bangalore, D. Kannada, Hassan, Kodagu, Udupi, U. Kannada, Dharward, Shimoga

Belgaum, Haveri, Bijapur, Chitradurga, Kolar


Production Clusters


Karnataka has the following marketing facilities in the state:

Status of Logistics and warehousing facilities in the State:

Karnataka State Warehousing Corporation (KSWC) at present has 15.22 Lakh* MTs

capacity warehouses

o About 47 warehouse centers are connected to Railway good shed facility

o Warehouse Receipts Pledge Loan facility available through Commercial banks

for the depositors

98 cold storage units having 2.97 Lakh* MT for handling fruits and vegetables.

o KSWC is creating the scientific cold storage facility of 32800 MTs in

Bengaluru (R), Chickballapura, Mysore, Gulbarga, Bijapur, Bagalkote & Bidar

155 main market yards

24 poultry institutions

353 sub market yards

Agricultural markets in Karnataka

4 Agri Export Zones

24 poultry institutions

23 District Agriculture

Training Centres

Agriculture marketing (1/2)


Farmer Producer Organisation

As a part of the marketing effort the state has developed 92 Farmer Producer

Organisations (FPO) for marketing of various horticultural products directly to the

processors. There are 14 exclusive farmer federations on organic produce and millets.

Famous Ethnic Food of Karnataka

Korri Gassi: It is a traditional Mangelorean dish, chicken curry in coconut

and tamarind flavour, taken with rice or flat bread (roti)

Mysore Pak: Mysore pak is a traditional sweet prepared by mixing equal

quality of besan (gram powder), sugar and ghee (clarified butter)

Mysore Masala Dosa: The traditional Karnataka dosa (made with batter

of rice and black gram served with mashed potato filling)

98 Cold storages

2.97 Lakh* MT Total capacity of cold

storage

15.22 Lakh* MT

Karnataka State Warehousing Corporation

(KSWC)

Agriculture Marketing (2/2)


Processing Clusters (1/2)

Karnataka has about 54,905 agro processing units10 with an investment of INR 4429 crores** (USD 651 millions) lakhs as of 2015. There are 80+ food processing companies in the food parks in Karnataka.

Some prominent food processing companies are:

Geographical Indication for Agricultural Products in Karnataka11

Coorg Orange Coorg Green Cardamom Byadagi Chilli

Mysore Betel leaf Dharwad Pedha Udupi Mattu Gulla Brinjal

Nanjanagud Banana Devanahalli Pomello Bangalore Blue Grapes

Monsooned Malabar Arabica Coffee

Monsooned Malabar Robusta Coffee

Appemidi Mango Bangalore Rose Onion

Kamalapur Red Banana

Dairy and analogues products

Nestle India Ltd. , Nanjanagudu

Karnataka Cooperative Milk Producers' Federation

Limited (KMF), Bangalore

Grain and downstream:

ITC (Indian Tobacco Company Ltd. ), Bangalore

Cargill India Pvt. Ltd. , Bangalore

Britannia Industries Ltd. , Bangalore

Fruits & Vegetables

Hector Beverages, Bangalore

Mysore Fruits Products, Mysore

Exotic Agro Pvt. Ltd. , Bangalore


Processing Clusters (2/2)

Rice processing Spice & Condiment

Beverages Milk Processing

Fruits & Vegetables Processing

Prepared Products

Cereals

Bakery

Prepared Foods

Meat

Processing clusters planned by Government of Karnataka o Sea Food Park near Mangaluru which is in the conceptualization stage

o Rice Technology Park at Karatagi in Koppal district, over 315 acre land

o Maize Technology Park in Haveri district, over 60 acre land

o Spice Technology Park in Haveri district, over 100 acre land

o Favorich Infra Pvt Ltd., Mandya - 120 acres - Mega Food Park supported by GOI

Bangalore, Kodagu

Udupi, D. Kannada and Bangalore

Mysore, Dakshin Kanndan and Gulburga

Udupi, Tumkur and Gulbarga

Bangalore & Belgaum

Bangalore, Belgaum, Tumkur and Dakshik Kannada

Bangalore, Belgaum

Bellary, Chikkaballapura, Belgaum

Yadgir , Bellary, Mysore, Tumkur and Udupi

Mysore, Dakshin Kannada and Gulbarga

Processing Clusters



The status of key physical and agricultural infrastructure in Karnataka is as follows:

Inland container depots (ICD)

Two ICDs

one in Bangalore under Control Components India Pvt. Ltd.( CII),

one in Belgaum

Installed power (including allocated shares

in Joint & Central Sector

Utilities as on 31 Jan 2017)

Thermal 8461.58 MW

Nuclear-475.86 MW

Hydro-3599.80 MW

RES- 6104.54 MW

Water rates

Domestic - slab 0-8000-INR 7 (USD 0.11)

Non Domestic - 0-10,000- INR 50 (USD 0.77)

Utilities

Electricity cost Hight Tension (HT) power tariff INR 8:25 per unit for 1st 200,000 units and

beyond that INR 8.35( USD 0.13) per unit13

Existing Industrial SEZs

Areas/

Food Parks

Four Agri Export Zones,

26 SEZs however only one of these is multi product and may be be

suitable for food processing12

There are four food parks in Karnataka and one Mega Food Park in

Tumkur

Parameter Status

Infrastructure


Food parks in Karnataka

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:

S. No. Industrial Park Location Type (Multi/ single

product)

Total Area

(in Ha)

1. India Food park Tumkur Staples, Fruits &

Vegetables

100

2. Akshaya Food Park Hiriyur Organic cereal, Onion

dehydration, baby foods,

organic millets, organic

spices, etc

106

3. M/S Green Food Park Bagalkot Fruit juices, Dairy

products, Maize,

Groundnut, Pulses,

Bakery etc.

100

4. Jewargi Food Park Jewargi Pulses and cereals 105

5. Innova Agri Bio Park Malur Coffee products, Animal

health care products,

spices- oleoresins

87

Cold Chain in Karnataka

Ministry of Food Processing Industries’ 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.

S.no

Project

Type of Product

District

1 Atharvass Traders Pvt Ltd. F&V Hassan, Belgam,


2 Basweshwar Industry F&V Belgaum, Bijapur

3 Innova Agri Bio Park Ltd Irradiation Kolar

4 Vijaykant Dairy & Food Products Ltd Dairy Belgaum

5 Dairy Classic Ice Creams Pvt Ltd Dairy Ramnagara

6 Namdhari Animal Genetics Private Limited Dairy Bangalore

7 Srikrishna Milks Private Limited Dairy Uttar Kannada

8 Supermarket Grocery Supplies Pvt Ltd F&V Bangalore

9 Malpefresh Marine Exports Private Limited. Marine Udipi

Total Nine, completed Four, ongoing Five


Infrastructure


Investment Facilitation

"Invest Karnataka Forum" established to promote "Brand Karnataka" globally

and to attract investments to the State

Timelines fixed for providing most of the industry related services under

Karnataka Guarantee of Services to Citizens Act (SAKALA ACT)

Validity of Consent for Establishment (CFE) made 5 years for all categories

Validity of Consent for Operation (CFO) made 10 years for Green Category

Validity of Consent for Operation (CFO) for Red & Orange categories extended

from existing I year to 5 years

Ease of Doing Business

First state in India to pioneer the EODB initiative by introducing the Karnataka

Industries Facilitation Act in 2002

Government has introduced key initiatives across 5 major areas of Single

Window, Land and utilities, Industrial Relations, Pollution Control and

Commercial Taxes

Single Window clearance for projects under Karnataka Facilitation Act, 2002

through online portal including registrations and approvals of II line

departments

"Guide to Investors on setting up of Industrial Enterprise" providing holistic

information on infrastructure, registrations, approvals, etc. on Single Window

Entire State defined as single zone for availing incentives

Investment promotion subsidy @ 35% of fixed assets for MSME (capped at INR 65

lakh).

Interest subsidy to micro enterprises @ 6% per annum for 7 years

Subsidy for technology adoption from recognized national labs, 50% of the cost (max

INR 1 lakh)

First State to establish an unified, e-trading platform - Rashtriya e-Market Services

Limited (ReMS) in 2014

Rashtriya e Market Services Private Limited (ReMS) has been established as a joint

venture company, with Government of Karnataka and the NCDEX Spot Exchange

First State to introduce a Multi-Sector Startup Policy in 2015 which supports new

product development in Agri-business and Food Processing

State Government initiatives (1/2)


Highlights of Karnataka Agri Business & Food Processing Policy 2015

Highlights

Sector Agriculture, Horticulture, Animal Husbandry, Fisheries and allied sectors

Nodal Department Karnataka Agri Business Development Corp. (KABDC) and Karnataka

Udyog Mitra (KUM)

Capital Subsidy Investment promotion subsidy @ 35% of the value of fixed assets (VFA)

irrespective of zonal and promoter classification up to a maximum of INR

65 Lakhs (USD 100131 ) for MSME

Single Window Clearances The State Government having amended the ‘Rules of Business’ has created three empowered committees to provide all desired clearances in one go. Single application form has been designed for availing the clearances.

Land Conversion Simplified Provision has been made for automatic conversion of land in rural areas upto 5 hectares. If nothing has been heard within 30 days of filing the application complete in all respects from Authority competent for land conversion, the land shall be deemed to have been converted and concerned GM, D.I.C. shall issue a certificate to this effect. Accordingly Tehsildar/Gram Panchayats shall make necessary entries in the land record within 7 days.

Interest Rebate/Subsidy Interest subsidy of 6% per annum on term loans will be provided to Micro enterprises

Stamp duty & Reg. fee

exemption

Exemption from Stamp Duty & Concessional Registration for MSME, Large and Mega agro based industries and Agri-infrastructure

Market Fee Exempted New Agricultural Produce Processing Industries are exempted from payment of market fee for a period of ten years in respect of purchases of agricultural produce by such industries

Land Related

Concession/Exemption

For all loan documents, lease deeds and sale deeds, the registration charges shall be at a concessional rate @ INR0.50 (USD 0.77) per INR1000 (USD 15.40) irrespective of promoter classification for MSME, Category ‘A’, ‘B’ & ‘C’ enterprises

Link of policy document http://www.investkarnataka.co.in/assets/downloads/agriculture-policy-2015.pdf

State Government Initiatives (2/2)

http://www.investkarnataka.co.in/assets/downloads/agriculture-policy-2015.pdf


Project name Process-able Products/

infrastructure Value Proposition

1. Onion cold

storage

Cold Storage Unit For Fresh

Onions

Price difference between off season and

harvest season is 6-7 times

2. Maize

processing

Starch from Maize by wet

milling

States is leading producer of maize

3. Peanut

Butter

Peanut Butter from

groundnut

As a strong producer of ground nut, it

creates a new product opportunity

4. Bottling

plant

Bottling plant focussed on

fruits drinks

As leading fruit producing state, drink

manufacturing and bottling is a high

potential opportunity

5. Jam & Jelly Manufacturing jams & jelly As leading fruit producing state, jam & jelly

manufacturing and packing is a high

potential opportunity

6. Fruits IQF Freeze Dried Fruit

Processing Unit

As leading fruit producing state, freeze

dried fruits is a high value product

7. Fishing

Harbour

Harbour for fishing trawlers As given by the state for taking advantage

of the coast line – for PPP project

8. Malting unit Malting manufacturing from

coarse grains

The state is top supplier of course grains

and malting a good value addition option

9. Cattle Feed Cattle Feed from maize,

coarse grains & de-oiled

cakes

As a major supplier of maize, cattle feed is

good value addition option for the state

10. Abattoir Modern slaughter house for

small ruminants

As a top producer of mutton and pork, the

state needs a network

Snapshot of Potential Investable Projects


1https://data.gov.in/catalog/land-use-pattern-karnataka 2http://censusindia.gov.in/ 3http://mospi.nic.in/sites/default/files/press_releases_statements/State_wise_SDP-28october2016.xls 4http://pib.nic.in/newsite/PrintRelease.aspx?relid=123563 5http://dipp.nic.in/sites/default/files/FDI_FactSheet_January_March2017.pdf 6 http://www.mospi.gov.in/sites/default/files/statistical_year_book_india_2015/Table%2021.1%20.xlsx 7http://pib.nic.in/newsite/PrintRelease.aspx?relid=155019 8http://commerce.nic.in/trade/ICD_list.pdf 9https://www.aai.aero/ 10Sources in Government of Karnataka 11http://www.ipindia.nic.in/writereaddata/Portal/Images/pdf/Registered-GIs-of-India.pdf 12http://www.sezindia.nic.in/writereaddata/pdf/ListofoperationalSEZs.pdf 13http://www.karnataka.gov.in/kerc/Court%20Orders/Tariff%202017/ENGLISH-Press%20Note.pdf

References

https://data.gov.in/catalog/land-use-pattern

http://censusindia.gov.in/

http://mospi.nic.in/sites/default/files/press_releases_statements/State_wise_SDP-28october2016.xls

http://pib.nic.in/newsite/PrintRelease.aspx?relid=123563

http://www.mospi.gov.in/sites/default/files/statistical_year_book_india_2015/Table%2021.1%20.xlsx

http://pib.nic.in/newsite/PrintRelease.aspx?relid=155019

http://commerce.nic.in/trade/ICD_list.pdf

https://www.aai.aero/

http://www.ipindia.nic.in/writereaddata/Portal/Images/pdf/Registered-GIs-of-India.pdf

http://www.sezindia.nic.in/writereaddata/pdf/ListofoperationalSEZs.pdf

http://www.karnataka.gov.in/kerc/Court%20Orders/Tariff%202017/ENGLISH-Press%20Note.pdf

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TRANSFORMING THE FOOD ECONOMY 3-5 November, 2017 | Vigyan Bhawan, New Delhi, India

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Ministry of Food Processing Industries, Government of India Panchsheel Bhawan, New Delhi, India.

Telephone Number: +91 11 -26492216/ 26492174/ 26493227/ 26490933 Find us at: http://mofpi.nic.in/

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