The food processing sector is an integral contributor towards India's economic development. It establishes vital linkages and synergy between industry & agriculture, the two building blocks of any economy.
India is the world's second largest producer of food and has the potential to become the food provider of the world. The growth of this industry will bring immense benefits to the economy, raising agricultural yields, enhancing productivity, creating employment opportunities and increasing living standards of people all across the country, especially in rural areas.
The liberalization of the Indian economy and world trade with rising consumer prosperity has supplemented new opportunities for diversification in the food-processing sector and opened new vistas for growth. India has made satisfactory progress in the global horticultural market and is also one of the largest producer, consumer, and exporter of spices.
External liberalization poses a significant threat from stiffer competition under a new world trade order with WTO agreements; relaxing quantitative restrictions and non-tariff/sanitary barriers on importing countries which expose the Indian farmer directly to global market forces. Under the new trade regime, the food sector will be confronted by challenges of Trade-related Intellectual Property Rights, comprising of patent laws, copyrights, trade links, etc.
The inherent strength to produce output with the given raw material and the capacity to cater to the domestic market base can be made efficient by enabling processing units to operate at the optimum capacity levels as per economies of scale which would result in harnessing the competitive edge of domestic product over imported products.
The food and vegetable processing sector in India face numerous challenges hampering its potential in numerous ways.
Today, fruit and vegetable processing industry in India is highly decentralized. A large number of units are part of the micro and small scale sector and have limited production capacities of 250 tons/annum whereas, large production units have capabilities to produce 30 tons per hour or so.
The domestic consumption of value-added fruit and vegetable products is less as compared to the primarily processed food and fresh fruits and vegetables in particular; which is attributed to a higher incidence of tax and duties.
The primary reason behind the lack of food processing growth in India is a missing sustainable market strategy.
Commercial R&D activities in the food industry have remained confined to only limited regions. R&D activities have scarcely emerged as laboratory testing is deemed to be an expensive endeavor.
Most Financial Institutions lack the capacity to appraise hi-tech export-oriented projects. There are no suitable insurance schemes for such projects, most of which deal in export of perishable goods. In financing such projects, the banks face considerable credit risks. With new technology, the risk perception is higher than the existing one.
Supply chain efficiencies together with a focused approach to enhancing exports are the key to ensuring India's success in new product/market opportunities.
Auto component SMEs are among the fastest growing companies in India. In the context of a highly fragmented industry, these companies are mostly part of the unorganized sector. However; SME's share towards an aggregate export production of auto elements of the exports is immense.
As per the report of Automotive Component Manufacturers Association of India (ACMA), the turnover of the auto component industry was estimated at over US$ 19.1 billion in 2008-09. The industry's turnover is likely to touch US$ 40 billion by 2015-16. The potential compounded annual growth rate (CAGR) of the auto component industry is estimated to be 11 percent in the period 2008-15.
Exports from the auto component industry are expected to be worth US$ 3.8 billion in 2008-09, recording a rise of 8 percent over the previous fiscal, according to an ACMA report. This shows the high prospect of growth in the auto component industry and the need to invest in the industry.
In developing countries such as India, informal sector plays a crucial role in providing employment to the ever increasing workforce in income generating activities. There are more than 400 million workers employed in this sector thus highlighting the role of the sector in the Indian economy.
Informal sector due to its inherent traditional nature is close to being redundant. The traditional industry faces numerous challenges, namely; low productivity; lack of access to schemes; lack of access to formal credit; product diversification; among others. Moreover, due to low productivity and income returns, future generations are moving away from traditional crafts towards the tertiary sector.
The micro-producers in the informal sector face immense financial loss due to diminishing traditional markets. Even though it is an impossible to formalize all activities within the informal sector. However, it is possible to bring about regulatory and legislative control with simultaneous infrastructural and institutional framework alteration. Today, Govt and other multi lateral agencies have to recognise the importance of this sector and have undertaken varied programs for competitiveness and capacity building of the enterprises within the informal sector.
IT & ITES
The Indian IT sector is growing rapidly and has made its presence felt in all parts of the world. It has a significant contribution to strengthening the economic and technical foundations of India.
Indian professionals are an example due their proficiency in IT sector, in India as well as abroad. This is evident from the number of Indian IT professionals within the industry growing significantly every year.
In the FY06, the direct employment in the IT-ITES sector was of 1.3 million people, and the indirect employment was 3 million, approximately.
IT industry has the capability to translate customer insight into value preposition, for each segment of business. IT & ITES Sector are necessary for sustained growth. Considering the value addition IT and IT Enabled Services can provide to the business, Small, and Medium players are demanding IT & ITES services as to streamline their business operations.
Clusterkraft has enabled numerous SME units to upgrade their business by providing IT Enabled Services and assistance to them. Our ICT services have given remarkable value addition to these enterprises and help them streamline majority of their activities towards a sustainable growth through Business Process Reengineering, Enterprise Resource Planning, Capacity Building through e-governance and much more. Clusterkraft has also helped IT services by providing SMEs in developing their brand, business and collaborating them with parallel giants in the sector as to attain a sustainable establishment.
The Leather Industry is spread over the formal as well as informal sectors and produces a broad range of products from raw hides to fashionable shoes. The industry comprises of firms in all capacities starting from small artisans to prominent global players and employs 2.5 million persons. A large part (nearly 60-65%) of the production is in the Small/Cottage Sector and today, the Leather Industry is amongst top eight export earners for India.
India ranks first among major livestock holding countries in the world thus has a rich endowment of raw materials regarding the cattle population. India is endowed with 10% of the world raw material, and Indian Leather export constitutes about 2% of the world trade. It can fulfill 10% of the global leather requirement.
The leather sector in India has enormous potential for future growth and very high-value addition within the country.
The identified challenges before the Indian Leather Industry highlighted by Central Government are capacity inadequacy, raw material base, environmental issues, availability of the human resources and inadequate investment. To address these problems under Indian Leather Development Programme (ILDP), 11 sub-schemes have been approved for implementation during the 11th Five Year Plan period by Central Government. The emphasis of schemes is mainly on infrastructure development, capacity building, human resource development, investment promotion and addressing environmental issues for the leather industry.
The Indian Pharmaceutical Industry, a highly organized sector is estimated to be worth US$ 10 billion, growing at an annual rate of 9%. In world rankings, the domestic industry stands fourth in volume and 13th in value terms. It is amongst the high ranking counterparts of the India's science-based industries with wide ranging capabilities in the complex field of drug manufacture and technology. It ranks very high, regarding technology, quality, and range of medicines manufactured.
The Indian Pharmaceutical sector is highly fragmented with more than 20,000 registered units. It has expanded drastically in the last two decades. This industry meets around 70% of the country's demand for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals, and injectibles. There are about 250 large units and about 8000 Small Scale Units, which form the core of the pharmaceutical industry in India. These units produce the complete range of pharmaceutical formulations, indigenously.
Clusterkraft has been working for these pharmaceutical units for quality assurance, BDS availability, cluster development, etc. Since it has a high growth rate as well as a highly vulnerable sector; Clusterkraft's experience and expertise come in handy for its sustainable growth and development. Our numerous projects in various parts of the country have helped the pharmaceutical industry deliver the best results.
The textile industry in India is independent on every stage; starting from the procurement of raw material to the final production of textiles.
According to studies, close to 14% of the industrial output and 30% of the export market share is contributed directly by the Indian textile industry. When it comes to employment Indian textile industry has a significant contribution. As per a recent survey, the textile industry contributed by generating 12 million new jobs in India by 2010. The textile export market of India is expected to reach an all-time high of $50 billion in 2010 and has made a profit of 300%. Indian textile industry is all set to meet international standards and is planning to invest $5 billion in machinery in the coming years.
The industry possesses advantages such as low-cost skilled labor, availability of raw materials, high operational efficiencies in spinning and weaving and design capabilities. However, the drawback of it faces is primarily in the field of market awareness, technology, new product development and product improvement services.
Our approach involves empowering small units through Local Economic Development techniques which are critical to the competitiveness of any industry or business cluster. The analysis includes multi-sector assessment of economic risk, development opportunities and markets for identified artisanal and industrial clusters. By using the cluster-based approach, we improve the supply chain process thereby enhancing the quality of products, exports, economies of scale and creating business opportunities.
The garments industry in India is also an extremely well-organized sector and is one of the best in the world. There are numerous garments exporters, garments manufacturers; readymade garments exporters, etc. both in the small-scale as well as large-scale. Indian readymade garments and textiles are extremely popular in the world. During the period April-December 1999-2000 exports of readymade garments registered an 11.6% increase in rupee terms.
The Global economic contraction supplemented by cheaper imports has made it difficult for Indian textile and garment manufacturers and exporters to work smoothly. Hence, a suitable strategy is needed as to bring units together thematically and structurally that are operating in similar industries. Our core team with the help of key stakeholders/actors associated with the clusters is working and will continue to do so to make the textile sector more competitive nationally and internationally.