Moving up the Value Chain – India Agri-Food Supply Chains – UKIBC Report

India supply chains - The Logistics Business UK - International consultancy

‘Nation states are engaged in a relentless competitive chase’, says Evan Davies in Made in Britain, the BBC TV series based on the book of the same name. When poorer countries gain access to modern technology and skills they are able to out-compete richer nations in traditional sectors thanks to their lower cost base. The wealthier countries then seek out high-value areas where they can be more competitive, be it through technical innovation, increased efficiency or marketing appeal.

But while many bemoan the loss of manufacturing in the UK, the country has always had a strong knowledge sector. Our companies are constantly using science and innovation to generate so-called invisible earnings. But the ultimate outcome of these activities is often anything but invisible. One such area is international consultancy – an area where the UK excels. Take logistics consultancy for instance; logistics operations and infrastructure around the world are built on the strength of British knowledge. Such developments always start with analysis, and a recent example of this was provided by The Logistics Business.

Following our participation in a trade delegation to India led by Vince Cable (Trade & Industry Secretary), The Logistics Business undertook a study of agri-food supply chains in India for the UK India Business Council (UKIBC). The Logistics Business produced a report that aimed to support the JETCO (Joint Economic and Trade Committees) initiatives that develop links between the UK and Indian governments.

The purpose of the report was to provide an overview of typical agri-food supply chains in India. It is aimed at those companies and individuals who are interested in developing food chains, whether it is to serve domestic Indian markets, supply goods and services to India or source products and services from India.

India warehouse - The Logistics Business UK

While India is generally known to be one of the world’s largest food producers, it is worth mentioning some of the actual figures involved:

  • Largest producer of milk (105 million tonnes per annum)
  • Largest livestock population (485 million tonnes per annum)
  • Second largest producer of fruits and vegetables (197 million tonnes per annum)
  • Third largest producer of food grain (230 million tonnes per annum)
  • Third largest producer of fish (7 million tonnes per annum)

But India faces an enormous challenge to modernise its food production and distribution. Most farms are very small, with an average size of 1.4 hectares (cf an average farm size in the UK of 50 hectares). The supply chain is long and fragmented, and the product is handled many times. Road and rail links, particularly in rural areas, are often poor; while cold-chain infrastructure is maintained only for the dairy industry. Frequent checking on the product owing to the trading methods in India means that packaging is often introduced late in the supply chain, and even then, the packaging does not always provide adequate protection. About 30% of farm produce is currently wasted or lost before it reaches the market.

Although a very small proportion of India’s agricultural produce is currently processed, social changes will no doubt help to drive development in this area. For instance, the increasing number of women in employment means more disposable income per family – but less spare time; and there is a trend away from purchasing food predominantly on the basis of price, to consideration of factors such as quality, branding and ease of preparation.

During the past 20 years, India has undertaken a process of economic reform and progressive integration with the global economy that has contributed to its rapid and sustained growth. Many of the former constraints on the share capital ownership of companies operating in India in a number of sectors are now being relaxed, and the Indian government is encouraging Foreign Direct Investment (FDI) in all sectors. India is a EU strategic partner, and negotiations for a EU-India Free Trade Agreement (FTA) are ongoing.

Meanwhile a wide range of Indian Government initiatives is being undertaken to improve the infrastructure within the country and introduce new supply chain techniques and technologies. The report outlines several relevant case studies demonstrating how modern techniques have the capacity to be successfully implemented.

By 2030 India is predicted to be the third largest economy in the world, behind only the US and China; and there is huge potential, in view of the country’s scale and ambitions, for agri-food development and retail sector growth. Even in second and third tier cities, good universities are producing thousands of graduates and engineers. Industries such as outsourcing, retailing and IT are therefore developing quickly as a result of the available employees and the consumer base.

Examples of UK companies already successfully operating in India include Tesco and Marks & Spencer. Tesco’s investment in logistical infrastructure and modern technologies in Thailand in 1997 helped to eliminate waste, keep costs low and increase availability and affordability in a less developed supply chain. The same principles can be applied to India. the time to see how we go o the time to see how the time is on.

Opportunities across the logistics spectrum include:

  • Strategic consultancy in supply chain design
  • Design, funding and development of Logistics Parks
  • Design, construction and specification of new warehousing
  • Supply and design of refrigeration systems
  • Specification of modern packaging

This report is an invaluable reference document for anyone within the logistics and supply chain industry wishing to explore such opportunities, and provides a good example of how important the UK knowledge sector is in supporting growth in the so-called BRIC economies. Please contact The Logistics Business to obtain your copy, or view the PDF version in the Knowledge Centre.