Processed food industry likely to grow over 15%: CII

NEW DELHI: Processed food industry is likely to register a growth of over 15 per cent in 2008-09 owing to rising exports and expanding domestic market, according to the industry chamber CII.

Confederation of Indian Industries (CII) arrived at the positive growth outlook after speaking to CEOs of its member companies from the processed food industry, a release said.

Seventy-eight per cent of the CEOs attributed factors like growth in domestic market size, launch of new products and increase in exports during the current year for achieving over 15 per cent growth rate.

The companies said the pressure on their profit margins would be high due to increased cost and high interest rates. Rising commodity prices have also led to a spike in raw material costs.

However, despite the pressure on margins, there would be capacity expansion in the processed food industry, said CII Director General Chandrajit Banerjee.

The CII poll also found that firms are ready to spend 1-2 per cent of their annual turnover on research and development during the year.

Though the processed food product exports would increase but the outlook is grim during medium term due to several factors as pressure on cost competitiveness, inefficient supply chain and domestic regulatory burden.

Difficulty to comply with international food regulations and other non-tariff barriers in overseas markets are the major impediments affecting export growth, the release added.