1.1 Processed food industry for India.
India, with the second largest arable land in the world and with diverse agro-climatic zones across the country, has tremendous production advantages in agriculture, with the potential to cultivate a vast range of agricultural products. (S Venkatraman, August 25, 2007). According to Nanchill J Rajkumar, if these advantages are utilised optimally for developing Processed Food Industry, India can become the leading food supplier of the world and become the significant player in global agricultural and food trade.
There is a growing demand of Processed food in Europe (keynote), hence it is a great opportunity for an agricultural country like India to enter this market and reap the benefits of its growing demand. With the efforts of Indian government, exporters of fruits and vegetables and also local suppliers of various food stuffs have realised that there is a big market for processed food with a very high profit margin compare to exports of other food stuffs. According to WTO report on Indian population world over, Indian population in Europe is increasing steadily every year. Unlike India there are no domestic help available for cooking and other household work, not only Indians but most of the Asians and some Europeans prefer to buy ready to eat Indian food. (WTO food report, Europe, 2005). Government of India is working hard to promote exports of processed food by providing various subsidies under different programmes and schemes specially design for the same. Government formed various committees and groups to assist in the development of processed food industry among which Subject Group on Food and Agro Industries under the Prime Minister's council was somewhat beneficial. Such groups and committees provided many recommendations and issued various subsidies to develop Processed Food industry. But the final outcome of all these committees according to APEDA, (Agriculture & Processed Food Products Export Development Authority) is that almost every committee fail to give guidance on major issues faced by the industry, some of them being- Maintaining SPS standards, Providing advanced technology for processing, Marketing the products in international markets. Government bodies like APEDA have realised that India is not likely to face any tough competition in near future in the markets like spices, tobacco, castor oil, guar gum, molasses, basmati rice, shellac etc. which enjoys the commanding position in the EU market but a little value addition in these products could fetch India handsome foreign currency. Hence government is coming up with new schemes and subsidies to especially promote export of processed food. And therefore it is the time to take the advantage of the government support and try to overcome all the hindrances, manufacture and export products in the upcoming market of Processed Food.
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But inspite of such a comfortable situation for the growth of Export of processed food, there are many overlooked problems faced by the producers and exporters of processed food. (Press release of 17th June, 2010, Department of Commerce). Though, India's exports of Processed Food was Rs. 8975 Crores in 2007-08, which is including the share of products like Mango Pulp (Rs. 509.69 Crores), Dried and Preserved Vegetable (Rs. 429.94 Crores), Pickles and Chutneys (Rs. 250.62 Crores), Other Processed Fruit and Vegetable (Rs. 712.20 Crores), Pulses (Rs. 549.01 Crores), Groundnuts (Rs. 1054.08 Crores), Guargum (Rs. 1125.75 Crores), Jaggery & Confectionary (Rs. 2810.68 Crores), Cocoa Products (Rs. 42.26 Crores), Cereal Preparations (Rs. 677.35 Crores), Alcoholic and Non-Alcoholic Beverages (Rs. 338.56 Crores) and Miscellaneous Preparations (Rs. 474.47 Crores). (STUDY REPORT, 2007-08, APEDA). Ample of natural resources which can be utilised for developing Processed Food industry are not yet been leverage optimally.
Local manufacturers of processed foods or the exporters of fresh fruits and vegetables who potentially wish to start the export of processed food face various kinds of problems like difficulty in setting up the processing unit as it requires huge investment. Moreover there is a lack of technological knowhow. Also due to the lack of marketing research, there is a lack of knowledge of the products which are in demand in the European markets. There are also many other macro environment problems which are not under the firm's control, like the government policy, various institutional interference, various trading block and many other problems which will be discussed in detail further in this paper.
1.2 Research aims and objectives.
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This paper aims at finding the problems right from the Manufacturing of processed food to the Export of processed food and indentifying the opportunity for Export of processed food to Europe.
The research aims at achieving the following objective:
Identify problems in Exporting Processed food from India which are not under firm's control. (Macro).
Identify the obstacles in the growth the of processed food industry.
This paper will also bring out the potential solutions to overcome all the obstacles and provide a guideline for the export firms exporting processed foods and also for all those who wish to start export of processed food.
1.3 Dissertation Outline:
The paper is divided in four sections. The First section gives a brief introduction of the processed food industry in India and the market for Indian processed food.
The 2nd section will review the literature on SMEs, Exports, Processed food industry and firms in the processed food industry. This section will also give out the opportunities for the Indian firms in the processed food industry to grow and develop in European market. It will also give a brief of the problems faced by these firms in growing and expanding.
The Third section will be the analyses of the data collected. This section will also answer the research questions and will fulfil the aims and objectives of the paper. It will give a guideline for the firms which are exporting processed food and also for the manufacturers who wish to start export of processed food.
The Fourth section will conclude the dissertation with all the results and findings related to Export of processed food to Europe from India.
2. Literature Review:
1.1 Problems faced by Small and medium enterprise.
3.1 Research Overview:
This chapter provides the reader with an in-depth understanding about the research methodology which will be used to achieve the aim and objectives explained earlier. The basic aim of the research is to give out all the macro as well as most of the micro problems that are faced by the existing exporters and also by those who will be the potential exporters of processed food. This research will also indentify the opportunities for reaping the benefits like government subsidies, fast growing and developing European market, etc.
After executing thorough secondary research which involves- referring to many journals, magazines, internet search, it was evident that there was more than enough information on SMEs in general, Export firms and their problems all over the world. But as far as the topic 'Processed food industry in India' is concerned there is very limited information regarding the same. Not many articles were published covering this area. Hence secondary research could only give the problems faced by SMEs and Export firms in India as well other parts of the world. Hence, to identify the problems faced in exporting processed food, one to one interviews will be used, as interviews are the effective and the only source of data collection method. A comprehensive literature review along with the group interviews with the managerial staff and one to one interviews with the executives of the companies exporting Processed food and the interviews with the Head of different government bodies, incharge for the promotion of export of food products will provide us enough data to achieve the aims and objectives.
3.3 Research Paradigm:
The term paradigm refers to the progress of scientific practice based on people's philosophies and assumptions about the world and the nature of knowledge. (Collis and Hussey, 2003). According to Kuhn (1962), paradigms are universally recognised scientific achievements that for a time provide model problems and solutions to a community of practitioners. (Cited in Collis and Hussey, 2003). A framework comprising of methods of defining data and accepted set of theories are offer by this paradigms. The two research paradigms are Positivistic Paradigm which is also known as Quantitative and Phenomenological Paradigm which is also known as Qualitative. Different authors use different terms for the above paradigms. This is mainly because different authors wish to denote different approach. (Collis and Hussey, 2003).
3.3.1 Quantitative/ Positivistic Paradigm:
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Historically, quantitative paradigm in social sciences is based on the approach used in natural sciences such as botany, biology and physics. Social scientist started adopting this approach by the end of 19th century following the success of this approach in natural science. According to Pervez Ghauri and Kjell Gronhaug (2005), the quantitative approach emphasis on testing and verification, focus on facts or causes of the social phenomena, it gives objective 'outsider view' distant from data. Hence logical and critical reasoning is applied to the research procedure. Positivists are particularistic and analytical and are concerned about the interrelationships of the objects being studied. They are result oriented and not process oriented and use laws to explain casual relationships between variables and linking them to theory. (Collis and Hussey, 2003).
3.3.2 Qualitative/ Phenomenological Paradigm:
The criticisms of the quantitative paradigm like the inability of the researchers to be objective, not giving the emphasis on understanding, etc. are the main reasons for Qualitative paradigm to come into existence. In this paradigm more emphasis is given to subjective state of individual. It gives 'insider view' and closeness to data. (Collis and Hussey, 2003). These research methods are design in such a way that researchers can understand people and what they say and do; they are mostly a record of what people have said. (Myers, 2009). It is the best method to adopt if the researcher is to study a particular subject in depth. Qualitative data are more consistent with the research questions and research objectives. Hence if a researcher has to research on a topic that has not been researched in the past or has no literature based on such topic then Qualitative method is the best method to adopt. The following are some of the most popular and important qualitative methods used for collection of data.
Interviews: Interview is the most important data collection techniques under qualitative method. According to Rubin and Rubin (2005) interviews are like night goggles, 'permitting us to see that which is not ordinarily on view and examine that which looked at but seldom seen'. (Cited in Myers, 2009).
3.4 Scope of the research:
3.4.1 Secondary research:
a) Literature review.
Literature review always forms the base of any research. Secondary data helps to formulate and understand the research problem, it also broadens the base from which relevant and agreeable conclusions can be drawn.(Ghauri and Gronhaug, 2005). Secondary sources are easier to compare similar data from two or more countries, hence secondary sources facilitates cross cultural and international research. A number of international surveys for example the survey by WTO on SMEs, on export of food products, can be used as an important data source as a sole data source or in combination with primary data source. It is necessary to consult some secondary data as it not only saves time and money but also facilitates better handling of our research questions. (Pervez Ghauri and Kjell Gronhaug, 2005).
As Churchill (1999: 215) put it, "Do not by pass secondary data" and also considering the advantages of the secondary data, many relevant literatures since 1988 to 2010 have been reviewed to get a picture of the core problems that are faced by the SMEs, export firms in different countries and exports firms of processed food in India. Journals being the main source, magazines, books and internet have also been used to collect the secondary data. The model revealed from literature review is taken as the base for deduction and to prepare questions for primary research. After thorough research, a gap is identified in the literature review which can be filled with the primary research methods.
3.4.2 Primary research: