Investment Environment &

Opportunities in Food Processing

Compendium of
KARNATAKA
financing options for the
food processing sector

Ministry of Food Processing Industries

Government of India
Knowledge Partner 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.

Karnataka - key highlights

State capital Bengaluru

Geographical area1 191,791 km2

Population2 6.1 Crores** (61 million)
(Census 2011)
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 income4
INR 80,884 (USD 1246)
(Measured as Per Capita NSDP at
current prices for 2013-14)
INR 123,212 crore** (USD 22
FDI inflows5 billion)- FY2000-FY2017 Karnataka
Bengaluru
Total road length (kms)6 26,129 Km (state + national
highway)

Rail length (route kms)7 3,073 km

11 ports in Karnataka, of

Ports8 which New Mangalore is a
major port
International: Bangalore,
Airports9 Mangalore
Domestic : 5 domestic

Why Karnataka

1 A state with 10 agro climatic zones and a diverse portfolio of products to select

Among top 5 producers in more than 30 food categories in India

2

Part of the Bangalore – Mumbai Industrial Corridor (BMIC) and Chennai –

3 Bangalore Industrial Corridor (CBIC)

17 districts covering 45% of the state to benefit from the industrial corridor
4
development

Investment Environment & Opportunities in Food Processing: Karnataka

*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

Snapshot of Land under cultivation (Year 2013-14)
Karnataka a major agricultural belt. Few of the leading
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
(‘000 Ha)
Karnataka is the largest producer of coffee and cocoa in
the country.

Karnataka has a wide range of climatic zones

Northern Dry Zone: Koppal,

North Eastern Transition North Eastern Dry Zone: Gadag, Dharwad, Belgaum,
Zone: Bidar & Gulbarga Gulbarga, Yadgir & Raichur Bijapur, Bagalkot, Bellary,
Davangere & Raichur

Central Dry Zone: Chitradurga, Eastern Dry Zone: Bangalore Southern Dry Zone: Mysore,
Davangere, Tumkur, Rural, Ramanagar, Bangalore Chamarajnagar, Mandya,
Chickmagalur & Hassan Urban, Kolar, Chikkaballpur & Tumkur & Hassan
Tumkur

Southern Transition Zone: Hilly Zone: U.Kannada,

Northern Transition Zone:
Hassan, Chickmagalur, Belgaum, Dharwad, Haveri,
Belgaum , Dharwad, Haveri &
Shimoga, Mysore & Shimoga, Chickmangalur,
Gadagr
Davanagere 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.

Investment Environment & Opportunities in Food Processing: Karnataka

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

Investment Environment & Opportunities in Food Processing: Karnataka

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

Coarse Grains 5705

CROPS Maize 3269
‘ (000 MT) Paddy 2702

Banana 2371
Mango 1726
Fruits
‘ (000 MT) Grapes 430

Onion 2696
VEGETABLES Tomato 2046
‘(000 MT)
Chilly 570

Milk 6344
LIVESTOCK & Fish 580
FISHERIE Meat 196
‘(000 MT)

Investment Environment & Opportunities in Food Processing: Karnataka

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 Maize

Tumkur, Ramnagar, Hassan, Devangere, Belgam,
Bangalore Rural, Chitradurga, Haveri, Hassan, Bellary,
Chitradurga, Shimoga

Coffee Safflower
Chikmanglur, Kodagu, Bidar, Gulbarga,
Hassan Dharward, Kupal

Mango Banana
Belgaum, Haveri, Bijapur, Kolar, Belgaum, Bijapur,
Chitradurga, Kolar Haveri, Chitradurga

Grapes Fisheries
Belgam, Bangalore, Mandya, Kodagu, Hassan,
Gulbarg, Kolar D. Kannada, U. Kannada,
Shimoga, Raichur, Bellary

Meat
Bangalore, D. Kannada,
Milk
Hassan, Kodagu, Udupi, U. Belgaum, Hassan
Kannada, Dharward,
Shimoga

Investment Environment & Opportunities in Food Processing: Karnataka

 Production Clusters

Investment Environment & Opportunities in Food Processing: Karnataka

Agriculture marketing (1/2)

Karnataka has the following marketing facilities in the state:

155 main
market
yards
353 sub
24 poultry
institutions market
yards
Agricultural
markets in
Karnataka

4 Agri
24 poultry
Export
institutions
Zones
23 District
Agriculture
Training
Centres


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

Investment Environment & Opportunities in Food Processing: Karnataka

Agriculture Marketing (2/2)

15.22 Lakh* MT 2.97 Lakh* MT 98

Karnataka State Total capacity of cold
Warehousing Corporation Cold storages
storage
(KSWC)


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)

Investment Environment & Opportunities in Food Processing: Karnataka

Processing Clusters (1/2)
Karnataka has about 54,905 agro processing units10 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 & Hector Beverages, Bangalore

Vegetables
Mysore Fruits Products, Mysore
Exotic Agro Pvt. Ltd. , Bangalore

Grain and ITC (Indian Tobacco Company Ltd. ), Bangalore

downstream:
Cargill India Pvt. Ltd. , Bangalore
Britannia Industries Ltd. , Bangalore

Nestle India Ltd. , Nanjanagudu

Dairy and
analogues Karnataka Cooperative Milk Producers' Federation
products
Limited (KMF), Bangalore

Geographical Indication for Agricultural Products in Karnataka11

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 Appemidi Mango Bangalore Rose Onion
Coffee
Monsooned Malabar Robusta Kamalapur Red Banana
Coffee

Investment Environment & Opportunities in Food Processing: Karnataka

Processing Clusters (2/2)
Rice processing Spice & Condiment
Yadgir , Bellary, Mysore, Bellary, Chikkaballapura,
Tumkur and Udupi Belgaum

Beverages Milk Processing

Bangalore, Belgaum,
Bangalore, Belgaum Tumkur and Dakshik
Kannada

Fruits & Vegetables

Processing Cereals
Bangalore & Belgaum Udupi, Tumkur and
Gulbarga

Prepared Products Bakery

Mysore, Dakshin Kanndan Udupi, D. Kannada and
and Gulburga Bangalore

Prepared Foods
Mysore, Dakshin Kannada Meat
and Gulbarga 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

Investment Environment & Opportunities in Food Processing: Karnataka

 Processing Clusters

Investment Environment & Opportunities in Food Processing: Karnataka

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

Parameter Status
Two ICDs
Inland container depots one in Bangalore under Control Components India Pvt. Ltd.( CII),
(ICD)
one in Belgaum

Four Agri Export Zones,

Existing Industrial Areas/
SEZs
Food Parks
Installed power
(including allocated shares
in Joint & Central Sector
Utilities as on 31 Jan 2017)
26 SEZs however only one of these is multi product and may be be
suitable for food processing12
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

Hight Tension (HT) power tariff INR 8:25 per unit for 1st 200,000 units and
Electricity cost beyond that INR 8.35( USD 0.13) per unit13

Domestic - slab 0-8000-INR 7 (USD 0.11)

Water rates
Non Domestic - 0-10,000- INR 50 (USD 0.77)

Investment Environment & Opportunities in Food Processing: Karnataka

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 Total Area

product)
(in Ha)

1. India Food park Tumkur Staples, Fruits & 100

Vegetables

2. Akshaya Food Park Hiriyur Organic cereal, Onion 106

dehydration, baby foods,
organic millets, organic
spices, etc

3. M/S Green Food Park Bagalkot Fruit juices, Dairy 100

products, Maize,
Groundnut, Pulses,

Bakery etc.

4. Jewargi Food Park Jewargi Pulses and cereals 105

5. Innova Agri Bio Park Malur Coffee products, Animal 87

health care products,
spices- oleoresins

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,

Investment Environment & Opportunities in Food Processing: Karnataka

 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

Investment Environment & Opportunities in Food Processing: Karnataka

Infrastructure

Investment Environment & Opportunities in Food Processing: Karnataka

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

Investment Environment & Opportunities in Food Processing: Karnataka

State Government Initiatives (2/2)
Highlights of Karnataka Agri Business & Food Processing Policy 2015
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
Investment Environment & Opportunities in Food Processing: Karnataka
Highlights
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
Process-able Products/
Project name Value Proposition
infrastructure
1. Onion cold Cold Storage Unit For Fresh Price difference between off season and
storage Onions harvest season is 6-7 times

2. Maize Starch from Maize by wet States is leading producer of maize

processing milling

3. Peanut Peanut Butter from As a strong producer of ground nut, it

Butter groundnut creates a new product opportunity

4. Bottling Bottling plant focussed on As leading fruit producing state, drink

plant fruits drinks 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 As leading fruit producing state, freeze
Processing Unit dried fruits is a high value product

7. Fishing Harbour for fishing trawlers As given by the state for taking advantage
Harbour of the coast line – for PPP project

8. Malting unit Malting manufacturing from The state is top supplier of course grains
coarse grains and malting a good value addition option

9. Cattle Feed Cattle Feed from maize, As a major supplier of maize, cattle feed is
coarse grains & de-oiled good value addition option for the state
cakes

10. Abattoir Modern slaughter house for As a top producer of mutton and pork, the
small ruminants state needs a network

Investment Environment & Opportunities in Food Processing: Karnataka

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

Investment Environment & Opportunities in Food Processing: Karnataka

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 TRANSFORMING THE FOOD ECONOMY
3-5 November, 2017 | Vigyan Bhawan, New Delhi, India

About World Food India

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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/
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