Compendium of financing options for the food processing sector

Investment Environment & Opportunities in Food Processing Compendium of financing options for the food processing sector KARNATAKA Knowledge Partner Ministry of Food Processing Industries Government of India 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 Snapshot of Investable Projects 18 Contact Us 20

State Introduction 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. State capital Bengaluru Karnataka - key highlights Geographical area 1 Population 2 (Census 2011) 191,791 km2 6.1 Crores** (61 million) 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 income 4 INR 80,884 (USD 1246) (Measured as Per Capita NSDP at current prices for 2013-14) INR 123,212 crore** (USD 22 FDI inflows 5 billion)- FY2000-FY2017 Total road length (kms) 6 Rail length (route kms) 7 Ports 8 26,129 Km (state + national highway) 3,073 km 11 ports in Karnataka, of which New Mangalore is a major port Karnataka Bengaluru Airports 9 International: Bangalore, Mangalore Domestic : 5 domestic Why Karnataka 1 A state with 10 agro climatic zones and a diverse portfolio of products to select 2 Among top 5 producers in more than 30 food categories in India 3 Part of the Bangalore Mumbai Industrial Corridor (BMIC) and Chennai Bangalore Industrial Corridor (CBIC) 4 17 districts covering 45% of the state to benefit from the industrial corridor development *1 Million= 10 lakhs

Raw material base (1/4) 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 Snapshot of Land under cultivation (Year 2013-14) 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. Net Sown Area 9,923 Karnataka is the largest producer of coffee and cocoa in ( 000 Ha) the country. Karnataka has a wide range of climatic zones North Eastern Transition Zone: Bidar & Gulbarga North Eastern Dry Zone: Gulbarga, Yadgir & Raichur Northern Dry Zone: Koppal, Gadag, Dharwad, Belgaum, Bijapur, Bagalkot, Bellary, Davangere & Raichur Central Dry Zone: Chitradurga, Davangere, Tumkur, Chickmagalur & Hassan Eastern Dry Zone: Bangalore Rural, Ramanagar, Bangalore Urban, Kolar, Chikkaballpur & Tumkur Southern Dry Zone: Mysore, Chamarajnagar, Mandya, Tumkur & Hassan Southern Transition Zone: Hassan, Chickmagalur, Shimoga, Mysore & Davanagere Northern Transition Zone: Belgaum, Dharwad, Haveri & Gadagr Hilly Zone: U.Kannada, Belgaum, Dharwad, Haveri, Shimoga, Chickmangalur, Kodagu & Hassan Coastal Zone: Udupi, D. Kannada & U.Kannada 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.

Raw material base (2/4) 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) 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 Horticulture products: Key production highlights (2015-16) 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 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

Raw material base (3/4) Poultry & Meat: Key production highlights (2015-16) 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 CROPS (000 MT) Coarse Grains Maize Paddy 5705 3269 2702 Fruits (000 MT) Banana Mango Grapes 2371 1726 430 VEGETABLES (000 MT) Onion 2696 Tomato 2046 Chilly 570 LIVESTOCK & FISHERIE (000 MT) Milk Fish Meat 6344 580 196

Production Clusters 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 Tumkur, Ramnagar, Hassan, Bangalore Rural, Chitradurga, Maize Devangere, Belgam, Haveri, Hassan, Bellary, Chitradurga, Shimoga Coffee Chikmanglur, Kodagu, Hassan Safflower Bidar, Gulbarga, Dharward, Kupal Mango Belgaum, Haveri, Bijapur, Chitradurga, Kolar Banana Kolar, Belgaum, Bijapur, Haveri, Chitradurga Grapes Belgam, Bangalore, Gulbarg, Kolar Meat Bangalore, D. Kannada, Hassan, Kodagu, Udupi, U. Kannada, Dharward, Shimoga Fisheries Mandya, Kodagu, Hassan, D. Kannada, U. Kannada, Shimoga, Raichur, Bellary Milk Belgaum, Hassan

Production Clusters

Agriculture marketing (1/2) Karnataka has the following marketing facilities in the state: 155 main market yards 24 poultry institutions 353 sub market yards 4 Agri Export Zones Agricultural markets in Karnataka 23 District Agriculture Training Centres 24 poultry institutions 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

Agriculture Marketing (2/2) 15.22 Lakh* MT Karnataka State Warehousing Corporation (KSWC) 2.97 Lakh* MT Total capacity of cold storage 98 Cold storages 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)

Processing Clusters (1/2) Karnataka has about 54,905 agro processing units 10 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: Fruits & Vegetables Hector Beverages, Bangalore Mysore Fruits Products, Mysore Exotic Agro Pvt. Ltd., Bangalore Grain and downstream: ITC (Indian Tobacco Company Ltd. ), Bangalore Cargill India Pvt. Ltd., Bangalore Britannia Industries Ltd., Bangalore Dairy and analogues products Nestle India Ltd., Nanjanagudu Karnataka Cooperative Milk Producers' Federation Limited (KMF), Bangalore Geographical Indication for Agricultural Products in Karnataka 11 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 Kamalapur Red Banana Bangalore Rose Onion

Processing Clusters (2/2) Rice processing Yadgir, Bellary, Mysore, Tumkur and Udupi Spice & Condiment Bellary, Chikkaballapura, Belgaum Beverages Bangalore, Belgaum Milk Processing Bangalore, Belgaum, Tumkur and Dakshik Kannada Fruits & Vegetables Processing Bangalore & Belgaum Cereals Udupi, Tumkur and Gulbarga Prepared Products Mysore, Dakshin Kanndan and Gulburga Bakery Udupi, D. Kannada and Bangalore Prepared Foods Mysore, Dakshin Kannada and Gulbarga Meat Bangalore, Kodagu 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

Processing Clusters

Infrastructure The status of key physical and agricultural infrastructure in Karnataka is as follows: Parameter Inland container depots (ICD) Existing Industrial SEZs Food Parks Installed power (including allocated shares in Joint & Central Sector Areas/ Utilities as on 31 Jan 2017) Two ICDs one in Bangalore under Control Components India Pvt. Ltd.( CII), one in Belgaum Four Agri Export Zones, 26 SEZs however only one of these is multi product and may be be suitable for food processing 12 There are four food parks in Karnataka and one Mega Food Park in Tumkur Thermal 8461.58 MW Nuclear-475.86 MW Hydro-3599.80 MW RES- 6104.54 MW Utilities Status 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 unit 13 Water rates Domestic - slab 0-8000-INR 7 (USD 0.11) Non Domestic - 0-10,000- INR 50 (USD 0.77)

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) 1. India Food park Tumkur Staples, Fruits & Vegetables 2. Akshaya Food Park Hiriyur Organic cereal, Onion dehydration, baby foods, organic millets, organic spices, etc 3. M/S Green Food Park Bagalkot Fruit juices, Dairy products, Maize, Groundnut, Pulses, Total Area (in Ha) 100 106 100 Bakery etc. 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

State Government initiatives (1/2) 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 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 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

State Government Initiatives (2/2) Highlights of Karnataka Agri Business & Food Processing Policy 2015 Highlights Sector Nodal Department Capital Subsidy Single Window Clearances Land Conversion Simplified Interest Rebate/Subsidy Stamp duty & Reg. fee exemption Market Fee Exempted Land Related Concession/Exemption Link of policy document Agriculture, Horticulture, Animal Husbandry, Fisheries and allied sectors Karnataka Agri Business Development Corp. (KABDC) and Karnataka Udyog Mitra (KUM) 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 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. 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 subsidy of 6% per annum on term loans will be provided to Micro enterprises Exemption from Stamp Duty & Concessional Registration for MSME, Large and Mega agro based industries and Agri-infrastructure 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 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 http://www.investkarnataka.co.in/assets/downloads/agriculture-policy-2015.pdf

Snapshot of Potential Investable Projects Project name 1. Onion cold storage 2. Maize processing 3. Peanut Butter 4. Bottling plant Process-able Products/ infrastructure Cold Storage Unit For Fresh Onions Starch from Maize by wet milling Peanut Butter from groundnut Bottling plant focussed on fruits drinks Value Proposition Price difference between off season and harvest season is 6-7 times States is leading producer of maize As a strong producer of ground nut, it creates a new product opportunity 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 9. Cattle Feed Cattle Feed from maize, coarse grains & de-oiled cakes 10. Abattoir Modern slaughter house for small ruminants The state is top supplier of course grains and malting a good value addition option As a major supplier of maize, cattle feed is good value addition option for the state As a top producer of mutton and pork, the state needs a network

References 1 https://data.gov.in/catalog/land-use-pattern-karnataka 2 http://censusindia.gov.in/ 3 http://mospi.nic.in/sites/default/files/press_releases_statements/state_wise_sdp-28october2016.xls 4 http://pib.nic.in/newsite/printrelease.aspx?relid=123563 5 http://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 7 http://pib.nic.in/newsite/printrelease.aspx?relid=155019 8 http://commerce.nic.in/trade/icd_list.pdf 9 https://www.aai.aero/ 10 Sources in Government of Karnataka 11 http://www.ipindia.nic.in/writereaddata/portal/images/pdf/registered-gis-of-india.pdf 12 http://www.sezindia.nic.in/writereaddata/pdf/listofoperationalsezs.pdf 13 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 About World Food India A global event to facilitate partnerships between Indian and international businesses and investors, World Food India (WFI) is a gateway to the Indian food economy and an opportunity to showcase, connect, and collaborate. 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/ https://www.worldfoodindia.in/