Table of contents

State Introduction 1

Why Telangana 1

Raw Material Base 2

Production Clusters 4

Agricultural Marketing 6

Processing Clusters 7

Infrastructure 9

State Government Initiatives 12

Snapshot of Investable Projects 15

References 17

Investment Environment & Opportunities in Food Processing: Telangana 1

State Introduction

The youngest state in India, Telangana is one of the fastest growing and one of the few revenue surplus states in India. It is surrounded by Maharashtra and Chhattisgarh in the North; Karnataka in the West;and Andhra Pradesh in the South and East direction. Major cities of the state include Hyderabad, Warangal, Nizamabad and Karimnagar. The state capital Hyderabad is identified as not only the most livable city but also one of the best locations in India for countrywide logistics.

*- including Andhra Pradesh

Why Telangana

Telangana key highlights

State capital Hyderabad

Geographical area i 112,077 Sq. Kms

Population (Census 2011)ii

35.19 mn

Gross state domestic product (GSDP)iii

USD 99.78 bn (2016-17,current prices@ 65.54 INR/USD)

CAGR 13.13% (2014-15 to 2016-17)

Per capita incomeiv USD 2,416 (2016-17, current prices @65.54 INR/USD)

FDI inflowsv USD 14,137 mn * (2011-12 to 2016-17)

Total road length (kms)vi 96,929

Rail length (route kms)vii 1736.67

Airportsviii Rajiv Gandhi International Airport, Shamshabad, Hyderabad

Telangana

Hyderabad

Leading food producer- Rank 1 in production of Turmeric and Citrus Limetta ; Rank 3 in production of dried Chillies and Maize, Rank 3 in production of Eggs in India

Youngest state with a very proactive Government and a progressive and transparent industrial policy

Availability of robust infrastructure- 300MLD surplus industrial water supply (Mission Bhagiratha); power surplus (6.3% power in 2017-18); international airport; along with 4 mega food parks, 146 industrial parks, 27 SEZs, 2 agri-export zones

Presence of leading food processors including ITC, MTR, Heritage, KRBL Limited etc. leading agri-research institutions such as ICRISAT, and 10+ training institutions for food technology

1

2

3

4

Investment Environment & Opportunities in Food Processing: Telangana 2

Raw material base (1/2)

Telangana is an agrarian state with 54% of workforce employed in agriculture and allied activities (in 2015-16). The sector contributed 13% to the state’s GSDP (in 2015-16). Telangana is endowed with bountiful resources with good soil, diversified cropping pattern and major irrigation systems fed by rivers including Godavari and Krishna. The state’s climate is well suited for horticulture and agri-research, thereby making the state the “seed bowl of India”.

The state has favourable agro-climatic conditions with three agro-climatic zonesix to allowing for cultivation of a multitude of crops, vegetables and fruits round the year.

SNAPSHOT OF LAND UNDER CULTIVATION12

Arable land 6,929

Net sown area 4,961

Total area sown 6,288

(2013-14, ‘000 hectare)

Northern Telangana Zone

Districts: Adilabad, Kumuram Bheem, Nirmal, Mancherial,

Nizamabad, Jagtial, Peddapalli, Kamareddy, Rajanna Sircilla,

Karimnagar

Southern Telangana Zone

Districts: Vikarabad, Rangareddy, Medchal,

Hyderabad, Yadadri bhuvanagiri, Suryapet, Mahbubnagar, Nagarkurnool, Nalgonda, Wanaparthy, Jugulamba Gadwal, Rajanna Sircilla,

Karimnagar

Central Telangana Zone

Districts: Sangareddy, Medak, Siddipet, Jangaon, Warrangal

urban, Warrangal rural, Mahbubabad, Jayashankar

bhupalpally, Bhadadri kothagudem, Khammam,

Rajanna Sircilla, Karimnagar

Investment Environment & Opportunities in Food Processing: Telangana 3

CROPS (‘000 tonnes)

LIVESTOCK & FISHERIES

VEGETABLES (‘000 metric tonnes)

Raw material base (2/2)

Telangana is the largest producer of agro-products including grains such as Rice, Wheat, Ragi, Maize; fruits such as Citrus Limetta, Mango, Guava, Papaya, Pomegranate, Sugarcane; and vegetables such as Tomato, Onion, Carrot. Spices including Tamarind, Chilli and Turmeric are extensively grown. Poultry and animal meat is also available in abundance.

Some of the key production highlights (2015-16) of the state include:

Among Top 3 in area and Top 10 in total fruit production amongst all states of India- Total fruit

production at 4, 319.87 thousand metric tonnes over an area of 331.49 thousand hectares

2nd largest producer of dried Chillies (producing 227.61 thousand metric tonnes)

Rank 3 in production of Eggs and Rank 5 in Meat production amongst all states of India

The key production statistics for the state (year 2015-16) are presented as below:

Milk 4.44 mn tonnes

Eggs 11.20 bn

Fish Inland : 0.26 mn

tonnes

Meat 542

(‘000 tonnes)

Paddy 1,479

Maize 1,736

Wheat 5

Tur 104

Citrus Limetta 1,172

Limes and Lemons 196.12

Grapes 2,861

Papaya 191.57

LadyFinger

188.52 Onion 433.08

Tomato 1,035.29

FRUITS (‘000 metric

tonnes)

Investment Environment & Opportunities in Food Processing: Telangana 4

Production clusters

The major production clusters of Telangana are given in the table below:

Nalgonda, Suryapet, Nizamabad, Kamareddy, Jagtial,

Pedapalli, Karimnagar, Mahbubnagar

Paddy

Nizamabad, Kamareddy, Adilabad, Nirmal, Kumuram

bheem, Mancherial

Soyabean

Nizamabad, Rajana Sircilla, Karimnagar, Peddapalli,

Jangaon, Warangal, Siddipet, Mahbubnagar,

Maize

Sangareddy, Mahbubnagar, Vikarabad, Jogulamba gadwal

Millets

Warangal, Khammam, Mahbubnagar

Chillies

Nizamabad, Karimnagar, Warangal

Turmeric

Nalgonda, Mahbubnagar

Citrus Limetta / Sweet Orange

Khammam, Warangal, Mahabubnagar, Rangareddy,

Karimnagar, Medak

Mango

Milk Meat and Egg

Khammam, Mahbubnagar, Medak

Medak, Mahbubnagar, Rangareddy

Investment Environment & Opportunities in Food Processing: Telangana 6

Agriculture marketing

As per the Annual Survey of Industries- 2014-15, there are 3,967 registered food processing units in the statex. A snapshot of other agricultural markets is given below:

Agricultural markets in Telangana

151

Regulated Markets

36

Rythu Bazaar

176 Godowns

44 Registered

FPOs

21Collection

Centres

19

Mana Kurgayalu

Glossary

Regulated markets- periodically held markets wherein produce comes from neighboring villages. Small

merchants purchase from primary wholesale market and sell in these markets. 44 of these markets are

connected to e-NAM.

Rythu bazar- The Rythu Bazars (markets) facilitate direct marketing between consumers and farmers. They have

temporary/semi-permanent structures funded by Agricultural Market Committees. No service charges and no

market fee is levied in Rythu Bazars.

Mana Kurgayalu- These are state of art retail markets present in urban areas. This marketing system attempts

to link the distant farmers to market their fresh produce through shortening the supply chain by establishing

Farmer Interests Groups (FIGs)/Farmer Producer Organizations (FPOs) and Societies in the production clusters

by Horticulture Department. The vegetables supplied in this project are low residual.

Collection centres- Collection Centres organize farmers to collectively market their produce. These centres are

equipped with necessary infrastructure and equipment to conduct preliminary sorting/grading, for which

Tables, Plastic Crates, Electronic Weighing Scale with printer, full set of Computer with printer etc, is provided

free of cost.

Investment Environment & Opportunities in Food Processing: Telangana 7

Processing clusters

Some of the major processing clusters in the state include:

Adilabad, Karimnagar, Nizamabad

Turmeric

Rangareddy, Adilabad, Warangal, Hyderabad

Fruits and vegetables

Khammam, Nalgonda, Nizamabad, Rangareddy, Sangareddy

Packaged food processing

Rangareddy, Mahbubnagar, Medak, Hyderabad

Poultry and Meat processing

Nalgonda, Karimnagar, Nizamabad

Rice milling

Hyderabad, Warangal, Nizamabad, Rangareddi

Snack food, confectionery and Bakery

Warangal, Mahbubnagar, Karimnagar, Medak, Nalconda

Edible oil processing

Rangareddy, kamareddy, Khammam, Mahbubnagar, Nizamabad

Dairy Processing

Pulses

Rangareddy, Vikarabad

Investment Environment & Opportunities in Food Processing: Telangana 9

Infrastructure

The status of key physical and agricultural infrastructure in Telangana is as follows:

Parameter Status

Existing Industrial Areas/ SEZs

146 industrial parks xi 27 SEZs 2 agri-export zones 4 mega food park xii

Installed power xiii Thermal- 7500.07 MW Hydro- 2306.60 MW Renewables- 1545.88 MW

Utilities

Electricity cost xiv Food processing unit: USD 0.1225/KWH, USD 0.26/KVA/Month Cold storage & dairies with chilling plants: USD 0.1/KWH, USD 5.61/KVA/Month

Water rates Industrial: USD 1.8323/ Kilo litre

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.

Food Park Location Area * (in acres)

Area to be allotted

(in acres)

Website

1 Smart Agro food park

Nizamabad 35 35 smartagrofoodpark.com

2 TSIIC food park Khammam 29 29 tsiic.telangana.gov.in

3 Basavashakti food park

Sangareddy 26 26 basavashakthi.com

4 Raagamayuri food park

Mahabubnagar 61 61 ragamayurimegafoodpark.com

Investment Environment & Opportunities in Food Processing: Telangana 10

In addition to the food parks, land is also available at various industrial parks/ growth centres across the state.

S. No. Industrial Park/Growth Centre

Location Owner/ Developer

Type Total Area

(acres) Area available

(acres)

1 Agro cluster Jangaon TSIIC Industrial area 100 100

2 Agro cluster Sircilla TSIIC Industrial area 200 200

3 Agro cluster Adilabad TSIIC Industrial area 30 30

4 Seed cluster Siddipet TSIIC Industrial park 400 400

5 Spice park Nizamabad TSIIC Industrial park 50 50

6 Agro industrial

zone Sangareddy

TSIIC NIMZ

3200 3200

7 Agro industrial

zone Rangareddy

TSIIC Industrial area

1800 1800

8 Snack food

cluster Medchal

TSIIC Industrial park

60 60

9 Agro cluster Nalgonda TSIIC Industrial area 50 50

Further, the state has 2 cold chain units xvsanctioned by MoFPI.

S. No. Cold Chain Project Location Type

1 Prima Foodtech Pvt. Ltd. Medak Fruits & vegetables

2 Gubba Cold Pvt.Ltd. Rangareddy Fruits & vegetables

Investment Environment & Opportunities in Food Processing: Telangana 12

State government initiatives (1/2)

The state government has undertaken number of reforms to offer an enabling and investor- friendly business climate to the investors. Some of the key Ease of Doing Business initiatives in Telangana include:

Telangana State Industrial Project Approval and Self Certification System (TS-iPASS) established as a single point for clearances of industrial set up.

Single Window system, combined application form (CAF) with provision to submit multiple applications in one form, Paperless application and incentive disbursement

Predefined timelines (max 30 days for processing applications) with provision for deemed approvals in case of no response

Minimum inspection, maximum facilitation with paperless application and incentive disbursement

Telangana Government has formulated a number of policies to provide impetus to the sector. Some of the key incentives to significantly increasae raw material base across agri-food, livestock, dairy and fisheries include:

Mission Kakatiya- More than USD 6 billion is being spent on increasing the area under irrigation by 2.7

mn hectares through revival of irrigation tanks and other major irrigation projects. This will double the total area under irrigation for the state, thereby producing manyfold increase in agri-horticulture production

Sheep distribution- More than 8 mn sheep units are being distributed across the state thereby doubling the sheep population and making Telangana no.1 in sheep availability across India by the next year

Ksheera Viplavam (milk revolution)- Upto 75% subsidy on purchase of milch animals to double the dairy output of the state in the next 3 years

Blue revolution- Revival of irrigation tanks has increased the state’s fish potential to 4 mn tonnes per annum. More than 270 mn fish seedlings were distributed to fishermen communities to double the state’s fish production by next year

Polyhouse development- Upto 95% capital subsidy for polyhouse infrastructure to promote precision agriculture and production of high value fruits, vegetables and flowers

Investment Environment & Opportunities in Food Processing: Telangana 13

State government initiatives (1/3)

Some of the key incentives available for the food processing industry under major policies of the state are summarized in the table below:

Key incentives Micro & Small Enterprise < 5 Cr Medium Enterprise < 10 Cr Large Industry > 10 Cr *

Investment subsidy 15% of investment (max 20 lakh)

Additional 10% for

Women Entrepreneurs (max 10 lakh)

Fixed power cost reimbursement

INR 1 per unit for 5 years INR 1 per unit for 5

years INR 1 per unit for 5

years

VAT/CST Reimbursement

100% for 5 years 75% for 7 years (max of

value of capital investment)

50% for 7 years (max of value of capital investment)

Interest subsidy Excess of 3% (max of 9%)

Interest subsidy for textile units

4% for spinning and 6% for composite activity under textile policy

4% for spinning and 6% for composite activity under textile policy

4% for spinning and 6% for composite activity under textile policy

Stamp duty on sale 100% 100% 100%

Stamp duty on lease & mortgage

100% 100% 100%

Land cost rebate in Ind.Estates

25% (max 10 lakh) 25% (max 10 lakh) 25% (max 10 lakh)

Land conversion charges

25% (max 10 lakh) 25% (max 10 lakh)

Seed capital assistance

10% of machinery cost

Skill up gradation 50% (max of 2000 per person)

50% (max of 2000 per person)

Quality certification

50% (max of 2 lakh) 50% (max of 2 lakh)

Investment Environment & Opportunities in Food Processing: Telangana 14

Key incentives Micro & Small Enterprise < 5 Cr Medium Enterprise < 10 Cr Large Industry > 10 Cr *

Cleaner Production measures

25% (max of 5 lakh) 25% (max of 5 lakh) 25% (max of 5 lakh)

Infrastructure support under IIDF

50% (subject to a max of 1 cr or 15% of capital investment)

50% (subject to a max of 1 cr or 15% of capital investment)

*Additional incentives for mega industries for investment > Rs. 200 Crores or employment >1000 on a case to case basis

Investment Environment & Opportunities in Food Processing: Telangana 15

Snapshot of potential investable projects

Telangana offers tremendous opportunities for investment across the entire value chain in the food processing

sector. An indicative list of potential projects for investment is presented in the table below:

Project name Processable products Value proposition

Breakfast cereal manufacturing

Cornflakes, Muesli, Rice Flakes

The global breakfast cereal market is expanding at a CAGR of 4.1% against the rapidly growing Indian market with a CAGR of 22.07%

Telangana is the 2nd largest producer of Maize (key ingredient) along with high demand in the neighbouring cities as ready to target markets.

Turmeric and chilli extraction

Turmeric Powder, Chilli Powder, Chilli Flakes and Dry Red Chilli

Asia-Pacific market is expected to witness fastest growth with a CAGR of 7% during 2015–20, thereby presenting investment opportunities in a rapidly growing market for spices

Telangana Ranks No.1 in turmeric and ranks 2 in dry chilli production in India and has of abundant raw materials

Corn extraction

Dextrose, Sorbitol, Glucose (Corn Starch based sweeteners), Starch

The global corn starch market was valued at USD 22.1 bn 2016 and is expected to grow at a CAGR of 4.8% (2016-24)

India's consumption of corn has been rising at a CAGR of ~6% during 2006-07 to 2011. Thus, there is ample scope for new players to enter the sector

Milk Processing

Range of value added milk products apart from packed pasteurized Milk, flavoured Milk, Butter, Ghee, Curd, Paneer, Cheese, Whey powder, Probiotic Milk drink etc.

In Telangana, rural milk trade practices are not established and milk marketing network is not well developed. Milk is produced mostly for household consumption and local marketing.

Unmet needs along with changing consumption patterns and rising incomes offer a huge scope for new entrants to tap the markets.

Millet based food Millet Based Pasta, Vermicelli, Pasta, Noodles

While the global market has grown at a CAGR of 1.8% during 2009-2016, in India, market for noodles, pasta and Vermicelli witnessed a growth of 7.6% from 2010 to 2017.

With minimal entry barriers, changing consumption patterns, and rising disposable incomes, Telangana with its large production of coarse cereals would be an ideal destination to set up a unit to cater to this fast growing market.

Investment Environment & Opportunities in Food Processing: Telangana 16

Telangana through its various signature initiatives is at the forefront of providing digital inclusion, innovation ecosystem, rural employment, reliable industrial infrastructure, predictable and transparent policy environment. The state has a strong agriculture raw material base with surplus production of meat, dairy, fisheries; a large and widespread industrial land bank, and skilled manpower.

Warehousing, packing processing and forwarding

Packaged fruit juices, milk, dal, upma

The value of food and beverage packaging market in India is estimated to have risen to around $16 billion in 2015 from $12 billion in 2010, besides registering a CAGR of over 6%. The share of packaged food in the processed food market is expected to increase marginally to around 29% in 2016 from around 28% in 2015.

Growing GDP, increasing population and improved purchasing power parity are creating new demand for warehouse space. Rising share of organized retail and GST implementation are all growth drivers for this sector.

Ready to eat food – Quick serve meals

Chapattis or roti, pasta, fresh cut vegetables and fruits, salads, veggies, rice, biryani, soups, dal.

While the global ready-to-eat (RTE) food products market is expected to expand at a CAGR of 7.2% (2016–2026), India’s RTE food market is projected to grow at a CAGR of around 21.99% during 2014-19.

Investment Environment & Opportunities in Food Processing: Telangana 17

References

I. http://www.mospi.gov.in/statistical-year-book-india/2017/171II. http://www.mospi.gov.in/statistical-year-book-india/2017/171III. http://www.mospi.gov.in/publication/state-domestic-product-state-series-2004-05# Exchange rate:

year average 61.147 (https://www.rbi.org.in/scripts/referenceratearchive.aspx)IV. http://pib.nic.in/newsite/PrintRelease.aspx?relid=123563V. http://dipp.nic.in/sites/default/files/india_FDI_July2013_0.pdf

a. http://dipp.nic.in/sites/default/files/india_FDI_May2014_0.pdfb. http://dipp.nic.in/sites/default/files/FDI_FactSheet_January_March2017.pdf

VI. http://www.mospi.gov.in/statistical-year-book-india/2017/190 ; excludes project roadsVII. http://pib.nic.in/newsite/PrintRelease.aspx?relid=155019

VIII. http://www.aai.aero/allAirports/airports.jspIX. http://niti.gov.in/writereaddata/files/Telangana_Presentation_1.pdfX. http://www.mofpi.nic.in/sites/default/files/asi_state_wise_2014-15.pdf XI. http://tsiic.telangana.gov.in/wp-content/uploads/2016/10/LandBank.pdf

XII. http://www.telangana.gov.in/PDFDocuments/Socio-Economic-Outlook-2017.pdf/http://tsiic.telangana.gov.in/special-economic-zones/http://foodprocessingindia.co.in/status-of-andhra-pradesh-telangana-food-processing-industry-telangana.html

XIII. http://www.cea.nic.in/reports/monthly/installedcapacity/2017/installed_capacity-01.pdfXIV. http://tserc.gov.in/file_upload/uploads/Tariff%20Orders/Current%20Year%20Orders/Retail%20Supply%20Tariff%20Order%20for%20FY%202015-16.pdfent of IndiaXV. http://www.mofpi.nic.in/sites/default/files/website_cold_chain_status_18.08.2017.pdf

Investment Environment & Opportunities in Food Processing: Telangana 18

Disclaimer

Without limiting the rights under the copyright reserved, this publication or any part of it may not betranslated, reproduced, stored, transmitted in any form (electronic, mechanical, photocopying, audiorecording or otherwise) or circulated in any binding or cover other than the cover in which it is currentlypublished, without the prior written permission of MoFPI. EY and CII.

All information, ideas, views, opinions, estimates, advice, suggestions, recommendations (hereinafter‘content’) in this publication should not be understood as professional advice in any manner or interpreted aspolicies, objectives, opinions or suggestions of EY and CII. Readers are advised to use their discretion and seekprofessional advice before taking any action or decision, based on the contents of this publication. The contentin this publication has been obtained or derived from sources believed by EY and CII to be reliable but MoFPI,EY and CII do not represent this information to be accurate or complete. MoFPI, EY and CII do not assume anyresponsibility and disclaim any liability for any loss, damages, caused due to any reason whatsoever, towardsany person (natural or legal) who uses this publication.

This publication cannot be sold for consideration, within or outside India, without express written permissionof MoFPI, EY and CII. Violation of this condition of sale will lead to criminal and civil prosecution.

Ministry of Food Processing Industries, Confederation of Indian Industry (CII) and Ernst & Young (EY) © 2017

Investment Environment & Opportunities in Food Processing: Telangana 19

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.

Write to us at:

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/ Telangana State Food Processing Society Government of Telangana Room No.347, ‘D’ Block, Telangana Secretariat, Hyderabad Telangana 500022 Telephone Number: 08588987376

Investment Environment & Opportunities in Food Processing: Telangana 20