How Startups Are Transforming The Food Processing Space In India?

Vinay Nair, Managing Partner, Nair VenturesAn Indian born entrepreneur, Vinay is widely known for his expertise in brand expansion and business strategies

India, with a current population of 1.37 billion, is already poised at the brink of a massive expansion in those numbers by around 15 million this year. Considering how many more people the country is gearing up to add to its rapidly urbanizing population just this year alone, we can safely say that the food processing industry in the country is one sector that will see nothing but growth in the near future.

The food processing industry is crucial for India because of a number of reasons, the first being its unique position at the crossroads between the agriculture, manufacturing and service industries. Despite the presence of some established players in this sector, like ITC, for example; the industry has also seen the emergence of a number of startups that are trying to reach out to India's dual income families and millennial consumers by promising the delivery of healthy, nutrient-dense food that is also on-trend, in keeping with the consumers' exposure to an increasingly globalized media.

Even though corporates may still be responsible for a huge chunk of the approximate 260 billion dollars this industry is valued at, I think the future of the field lies with startups, that are tapping into the unique needs of Indian customers with innovative solutions today. These startups may not quite have the same economies of scale the biggies enjoy, or might have much fewer resources to work with; but they are blessed with innovation, flexibility and local reach that the corporates cannot always boast of. Besides, the flourishing entrepreneurial landscape of the country has fortunately birthed a number of growth leaders, many of whom have gone on to spearhead the Indian startup culture, especially in the food processing industry.

The food processing startups in India sometimes reach out directly to the consumer, in other instances they
provide robust processing, packaging or storage services to fellow businesses. A startup that is an example of the former is Teabox, which connects tea planters with consumers who are connoisseurs of high quality tea, to eliminate the role of intermediaries and preserve value. On the other hand, Ecozen's cold chain solutions to safely store perishable horticulture goods is an example of a service that targets producers and sellers instead of the final consumer. Clearly, there is space for both of these approaches in the ecosystem, considering that both the backend and the consumer end need to be adequately serviced as the need for properly processed, attractively packaged trendy food products grows exponentially in the country.

In terms of funding, I feel the situation is ripe for both angel investors and venture capital firms to step in, to work with and incubate startups at varying stages of development. While the angel investors can identify new startups with high potential, venture capitalists will have a great deal of choice be-tween maturing and fast-growing startups that have already demonstrated a history of profitability or at least reasonable success. Since the startup ecosystem in the space is quite variegated, with new companies at varying levels of maturity offering a large variety of products and services, the investors are likely to be spoiled for choice when it comes to financing these promising growth engines.

By minimising food waste, and increasing the shelf life of food products, the food processing industry has positive implications in terms of environmental protection, which only adds to its future feasibility

As a FICCI-Yes Bank report recommended last year, a streamlined tax regime that account for the investors' risks in the food processing business, can potentially inject the space with much more funds than it stands to get as of now. Moreover, further exemptions and growth-oriented taxation can bring further benefits to the food processing startups, which are already enjoying the advantages of a number of government schemes.

With funding and a conducive regulatory environment in place, the startups also need to focus on technological innovations to give them an edge. Blockchain technology, in this respect, has an immense potential as it can positively transform the crucial supply chain management process in this industry and can satisfy the consumers' increasing need for transparent, accurate data about the food they consume, and the raw materials that go into it.

Essentially, the road ahead for food processing startups in the country seems to be bright with possibilities. By minimising food waste, and increasing the shelf life of food products, the food pro-cessing industry also has positive implications in terms of environ-mental protection, which only adds to its future feasibility. With only a little more help from government schemes and the timely adoption of relevant technology, this sector can easily soar to new heights and fill the gap that has begun to widen between demand and supply of high quality, healthy and smartly packaged food products in our cities and towns.